Asymmetric analysis of environment, ethnic diversity, and international trade nexus: empirical evidence from Pakistan

The ethnic diversity generally subsists in different countries which may have consequential effects on the various socioeconomic factors including international trade and environment. It is more arduous for nations when the high degree of ethnic diversity shatters trust amongst nations, obstructs trade contracts and may affect environment. Given this unique nexus, the present study explores the distinctive linkages among ethnic diversity, international trade, and environment for the case of Pakistan by utilizing time series data from 1970 to 2015 of Pakistan. This study applies nonlinear autoregressive distributed lags technique to observe negative and positive effects of ethnic diversity on environmental performance and international trade. This study found strong evidence of asymmetric co-integration among the concerned variables. GDP per capita is more consistent for trade and exports in both positive and negative shocks and responsible for CO2 emission to increase, whereas a negative shock to social exclusion may decrease CO2 emission via uniform consumption pattern. This study suggests that problems of diversity can be curtailed through the assurance of equal opportunity for society in order to make it cohesive.