Unraveling the Load Capacity and Economic Growth Nexus: Role of Foreign Direct Investment and Clean Technologies in South Asian Countries

Abstract

CO2 emissions have been greatly criticized in literature for their limited scope, neglecting the effects of other pollutants. Recent studies have increasingly focused on integrating the effects of other pollutants by utilizing the load capacity factor. South Asia ranks among the most polluted regions globally. The study objective explores the impact of economic growth, foreign direct investment, trade openness, and clean technologies on the load capacity curve. Further, to examine the relevance of the load capacity factor in the case of South Asian economies. The study has also examined the parabolic effect of economic growth. Panel unit root tests and quantile regression analysis have been employed between 2000 and 2022. Our results indicated that economic growth, foreign direct investment, and trade openness have a positive relationship with the load capacity factor whereas access to clean technologies has an inverse relationship with the load capacity factor. The study confirms the presence of the load capacity factor in the case of South Asian countries. It can be anticipated that South Asian countries can environmentally perform better with higher levels of economic growth. Founded on empirical findings, the study recommends that South Asian countries should focus on adopting green technologies and should include environmental considerations while doing trade agreements.