The effects of infrastructure development and carbon emissions on economic growth

Infrastructure is a basic physical structure that is essential for the facilitation of society in terms of the provision of the basic framework that is required for the economy’s output. The transport infrastructure is one of the most promising tools for generating economic growth and development because of its constructive impact on multidimensional aspects of society. The carbon emissions emanating from different sectors are used to capture the environmental quality in Pakistan and its association with road infrastructure of the country. Transportation is the main source of carbon emissions (GHGs), and road transport is the biggest emitter that accounted for more than 70% of emissions from GHGs in 2014 in Pakistan. We have used fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) approaches to analyze the role of carbon emissions (aggregate and disaggregate forms) along with road infrastructure on economic growth for the period of 1972–2017. Moreover, before the main analysis, the co-integrating relationships are also analyzed in this study. Our findings pronounce that there is a positive observable relationship between road infrastructure and economic growth. However, the impact of carbon emissions (irrespective of aggregate or disaggregate forms) is negative on economic growth. The findings suggest that the improvements in economic growth can be achieved through road infrastructure structure development but at cost of deterioration of environmental quality (increase in carbon emissions). Although emissions diminish economic growth over time but on the other side, the economic incorporation increases through the investment in road infrastructure which is of assistance for the construction and manufacturing industry.