Renewable Electricity Consumption, Foreign Direct Investment and Economic Growth in Pakistan: An ARDL Approach and Regression Analysis

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Abdul Raziq, Ghulam Murtaza, Muhammad Rafique, Naveed Sheikh, Khuram Shahzad, Arbab Muhammad Jehandad


The relationship between electric power use, foreign direct investment, CO2 emissions, net financial and economic growth in Pakistan was investigated in this research. The key aim was to define the variables in economic growth that could be managed effectively. The empirical findings show that the variables in this analysis are co-integrated, suggesting that they have a long-term relationship. Furthermore, direct foreign investment, CO2 emissions, and net financial assets have a positive long-term impact on economic growth. The model's stability was also investigated. The effects of Foreign Direct Investment (FDI), CO2, and Net Financial (NF) on economic growth in Pakistan were investigated in this study. The long-run equilibrium between the variables is verified by the ARDL bounds test. The ARDL-ECM is also used to estimate long and short run coefficients. In the long run, a 1% rise in CO2 emissions and FDI has a 0.02 percent and 0.10 percent positive association with GDP, respectively. While the Coefficients Net financial 0.51% decrease in GDP. In the Short run, Co2 emission has a positive correlation with GDP but FDI and NF have not significant. The Coefficient of ECM (-1) is equal to (-0.098) and implies the deviation from long-run increase in GDP is corrected 9.8% over the following year.

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