New Evidence on the Correlation of Green Innovation, Foreign Direct Investment, Economic Growth, and Carbon Emissions: Implications for Practical Applications

Abstract

The purpose of this study is to explore the interplay of green innovation, foreign direct investment, economic growth, and carbon emissions for practical implications in developing economies such as Pakistan. We employ an autoregressive distributed lag (ARDL) framework to examine the hypotheses of this study utilizing time series data from 1990 to 2022 for Pakistan. The findings indicated that FDI and economic growth had a positive and substantial influence on carbon emissions, while green innovation had a negative and significant impact. The study emphasizes the need to invest in the development of environmentally friendly technology to decrease carbon emissions in Pakistan. Moreover, the findings indicate a meaningful link between green innovation, FDI, economic growth, and carbon emissions in Pakistan in both the short and long run. The policy implications of the study include promoting green innovation, implementing environmental regulations, and encouraging foreign investment in environmentally sustainable technology. To the best of the author's knowledge, this is the first study investigating the interplay of green innovation, foreign direct investment, economic growth, and carbon emissions for practical implications in developing economies. The empirical highlights are novel to the environmental literature on the interplay of green innovation and carbon emissions for developing economies like Pakistan in the current environment.