Manufacturing Growth-Inequality-Environment Nexus: An Empirical Evidence from Pakistan

Purpose: This paper incorporates a growth-inequality-environmental triangle using country-specific annual time series data. Impacts of income inequality, manufacturing output growth, foreign direct investment (FDI), and education expenditure on carbon emission in Pakistan. Design/Methodology: The study has used time series data for the analysis of the manufacturing growth-environment-inequality nexus. For this purpose, the study has employed the Auto-Regressive Distributive Lag (ARDL) method owing to its suitability for a combination of I(1) and I(0) time-series variables. Findings: The results show income inequality is beneficial for environmental sustainability. The manufacturing growth in the economy damages the environmental quality. However, the FDI and education contribute to the environmental quality by decreasing carbon emission. The results of the study are statistically robust. Research Limitations/Limitations: The study provides some policy implications for environmental policy in Pakistan. Since time series secondary data has been used for the analysis. The primary data of industries, environmental indicators such as carbon emission from various industries in the economy, and income inequality would provide deeper insights for policymakers. It would be imperative to carry out such analysis in future studies. Originality/Value: Though the existing literature regarding growth, income inequality, and environment in rich. However, there has been a dire need to carry out a single country-specific study for a better understanding of the environmental problems linked to manufacturing growth and income inequality. This study is an attempt to fulfill this gap especially with a special reference to Pakistan's economy.