THE EFFECT OF TOURISM AND FOREIGN DIRECT INVESTMENT ON ENVIRONMENT: TIME SERIES EVIDENCE FROM PAKISTAN

Abstract

The main focus of the present research work is to scrutinize the effect of Tourism and Foreign Direct Investment (FDI) on Environment in case of Pakistan. For this motive, the research work put to use annual time series data for from 1990 to 2021. In the affairs of dependent and independent variables, the make use of CO₂ Emission as dependent and Tourism, Foreign Direct Investment, GDP, GDP2, Renewable Energy and Non-Renewable Energy are utilized as independent variables. The study used Ordinary Least Square (OLS) approach. The empirical results show the optimistic and statistically significant effect of Tourism, GDP and Non-Renewable Energy on the CO₂ Emissions in Pakistan. Other independent variables like Foreign Direct Investment, Renewable Energy and GDP² have a negative and significant impact on CO₂ Emissions in Pakistan. The study also supports the existence of Environmental Kuznets Curve (EKC) Hypothesis in Pakistan. The results of Granger Causality Test Indicate that