Evaluating the influence of Green Growth, Foreign Direct Investment and Financial Development towards Sustainable Environment: Evidence by Green Finance Theory

Abstract

In today's world, environmental sustainability and sustainable development are critical issues that are emphasized by the urgent need for coherent and practical solutions to the ecological effects of economic activity. Hence, this study examines how Pakistan's carbon emissions are affected by green growth, foreign direct investment, human capital, and financial development between 2004 and 2022. Based on the theory of financial development and green finance, this research utilizes a sound theoretical framework, the Auto-Regressive Distributed Lag (ARDL) model, which helps to explain this problem’s short-run and long-run relation. The research conclusions reveal that green growth positively correlates with environmental sustainability by improving green activities and investing in better technology to minimize carbon emissions. At the same time, the study demonstrates that human capital remains a key driver of environmental success. This implies that intensified workforces require higher education and training to adopt and sustain sustainable green practices. On the other hand, FDI has been positive but has a insignificant impact on Pakistan's environment. This evidence highlights legislators' need to associate financial development with economic policy to ensure ecology preservation and continuing economic stability. Pakistan can gain environmental and financial benefits from its sustainable human capital development and integrated investment promotion policies.