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Title Sways of Environmental Degradation on Economic Growth of Pakistan: A Time Series Analysis

Author(s) Ms. Rizwana Rehman

Abstract The study focuses on the three sources of pollution, specifically air, water and land pollution, and estimates the relationship between environmental degradation and economic growth through the instruments of environmental Kuznets curve over the years 1995 till 2022. Further, to justify environment-economy nexus, an empirical analysis is conducted to determine the extent of the impact of air, water and land pollution, as well as monetary, physical and human capital on economic growth of Pakistan. Indices covering economic, demographic and environmental variables are constructed by using techniques of principal component analysis and principal factor analysis. The results of augmented Dicky-Fuller test show that all series are stationary at first difference of lag length one with-intercept and without trend. The ARDL bound test supports the presence of long-run co-integration. The magnitude and sign of long-run and short-run ARDL coefficients are consistent with the economic growth and environmental theory. The linear, positively sloped environmental Kuznets curve truly represents the early stages of economic growth and development in Pakistan. The negative significant value of the error correction term is an optimistic conclusion that the short-run shocks can be corrected to long-run equilibrium in all types of environmental degradation and economic growth model. The composition of the indices of environmental degradation provides the determinants of different types of pollutions that can be controlled by monitoring these determinants. At the policy level to identify and to mitigate the air, water and soil pollution, the ministry of climate change and environmental coordination should seek international assistance and play a role in tracking and monitoring the performance of SDG-related determinants of pollution. Keywords: environmental degradation, economic growth, environmental Kuznet curve, principal component analysis, principal factor analysis, ARDL. iv

Type Thesis/Dissertation

Faculty Management Sciences

Department Economics

Language English

Publication Date 2023-03-14

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