Relationship between fixed capital formation and carbon emissions: Impact of trade liberalization in India

The liberalization of economies is aimed at boosting domestic growth through foreign investment and trade. proponents argue that opening up markets in developing provides access to capital enhance production. However, the pollution haven hypothesis (PHH) trade agreements have led export carbon-intensive production from wealthier countries economies. difference between two outcomes lies nature fixed assets built by countries. In this study, we examine role formation on carbon emissions during distinct periods India’s economic development. India liberalized its economy with reforms 1991, thereby providing time closed open policies. data 1971–2021 divided into parts—before (1971–1990) after (1991–2021) liberalization. Gross (GFCF) used as a measure while are represent environmental impact. Auto-regressive distributed lag (ARDL) model for analysis. Results indicate GFCF had no significant relationship emission before liberalization, whereas, there was significant, positive impact post-liberalization. study significance policymakers it suggests change towards low products services. It also strengthens argument investing cleaner energy technologies.