Exploring the Environmental Kuznets Curve in Pakistan: Economic Growth and Sustainability

Abstract

This study employs the Kuznets Curve framework to explore the intricate relationship between economic growth and environmental impact in Pakistan. The framework, rooted in the Environmental Kuznets Curve hypothesis, postulates that environmental degradation initially increases with economic growth but eventually decreases as economies mature and adopt cleaner technologies. By applying this theoretical model, the research aims to assess whether Pakistan's economic development aligns with the inverted U-shaped trajectory suggested by the EKC. This approach provides insights into the critical turning points where economic policies could transition from fostering growth at the expense of the environment to promoting sustainable development practices. The study utilizes descriptive statistics, pairwise correlations, and regression analysis to investigate the complex interactions among key variables, including pollution, environmental performance, GDP, income, and taxation, over the period from 1980 to 2021. Descriptive statistics provide an overview of the data's central tendencies and variability, offering foundational insights. Pairwise correlations identify the strength and direction of relationships between variables, highlighting potential associations. Regression analysis, the core methodological approach, delves deeper to quantify the influence of independent variables such as income and taxation on dependent variables like pollution and environmental performance. This comprehensive analytical framework aims to uncover nuanced patterns that inform policy and theoretical implications regarding economic growth and environmental sustainability. The results highlight the intricate trade-offs and non-linear dynamics underlying the relationships among pollution, environmental performance, GDP, income, and taxation. These findings emphasize the critical need for informed and context-sensitive policy decisions to achieve sustainable development. In the case of Pakistan, this involves striking a delicate balance between economic growth and environmental preservation. By acknowledging and addressing these complexities, policymakers can craft strategies that foster economic advancement while mitigating environmental degradation, ensuring long-term sustainability.