Assessing the linkages of economic freedom and environmental quality in South Asian Countries: application of CS-ARDL

We examine the linkages of economic freedom (ECF), energy use, and CO2 emissions in selected South Asian countries of Pakistan, India, Bangladesh, and Sri Lanka. Annual data from 1995 to 2018 are analyzed by employing second-generation methodologies. Cross-sectional autoregressive distributed lag (CS-ARDL) is used because this method incorporates the cross-sectional dependence among the data. This work uses three models, where the dependent variables are gross domestic product (GDP), CO2 emissions, and energy use. The findings reveal that ECF and energy use contributes to more economic development. ECF is improving air quality by lowering CO2 emissions. The findings suggest that these countries need to increase the percentage of renewable energy in their energy generation mix. At the same time, there is a need to integrate ECF with environmental awareness programs. This will not only increase air quality but also increase economic growth. GDP is found to be dependent on energy use; however, increased energy use from non-renewable also contaminates the environment. Therefore, South Asian countries need to invest more in research and development projects to promote renewable energy.