Impact of Trade Openness & Energy Consumption On The Environment

Purpose of the study is to test the theory of Environmental Kuznets Curve(EKC) that shows inverted U shaped relationship between per capitaCO2 and per capita GDP in long run. To analyze the long run relationship among CO2 emissions, energy consumption, trade openness and gross domestic product along with other control variables, Autoregressive Distributed Lag model (ARDL) technique is applied. The empirical results of the study provide evidence for long-run relationship between the variables. Outcomes confirm the existence of EKC for CO2 emission for Pakistan in the long run. Trade openness is positively related with environmental quality by introducing environment friendly techniques of production. In the light of results it is suggested that Pakistan must formulate policies for the betterment of environment by encouraging trade openness and GDP growth.