Impact of Energy Consumption, Economic Growth, and FDI through Environmental Kuznets Curve: Perspective from Belt and Road Initiative and Pakistan

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Abstract
A significant corridor under the Belt and Road Initiative is announced by the government of China for numerous transport and energy projects. China focuses greatly on the sustainability of these projects, in accordance with Green Investment Principles. For this, environmental, social, governance, and technological considerations are taken into account. This paper offers a novel assessment of the impact of green sustainability under BRI and the current emission scenario in Pakistan. The question that needs to be addressed here is whether the projects under Belt and Road Initiative are as environment friendly as they claim. In the first phase of this study, we review theories establishing evidence based on existing literature to determine the influence of Belt and Road on economic development. In the next phase, we use Environment Kuznets Curve and apply estimates from Johanssons Cointegration Test to quantify the present environmental scenario of Pakistan and probable environmental risk portrayed by the China-Pakistan Economic Corridor (CPEC). This paper helps in determining the relationship between carbon emission and three major variables including energy consumption, economic growth, and foreign direct investment (FDI). Cointegration analysis is applied on time series data comprising of a 40 years period from 1979 to 2019. The paper finds that (i) the belt and road corridors could substantially improve trade, foreign investment, and living conditions for citizens in participating countries; (ii) moreover, this study confirms the presence of one cointegrated equation suggesting the presence of a long term relationship between the CO2 and independent variables and a short run association running from EnC to CO2. The study also proposes a Green BRI Model which formulates a body that devises environmental performance standards, reviews procedures, and ensures that they get implemented on all CPEC projects. The Belt and Road Initiative increases emissions among participating countries. China and corridor economies need to adopt strict policy reforms that increase transparency, expand trade, improve debt sustainability, and mitigate environmental, social, and corruption risks.

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