Researchers and policymakers are re-examining the idea of import substitution industrialization (ISI). Consequently, trade policy has emerged as an essential instrument for promoting ISI. This research looks at the effect of trade policy on ISI, breaking down how tariff rates impact domestic industry by utilizing information from Pakistan in the range of 1998 and 2022. To empirically examine the impact that tariff rates have on ISI, the current research and makes use of Granger Causality, the vector autoregressive (VAR), and the autoregressive distributed lag model (ARDL), as well as the unit root with structural break technique in EViews. The findings show a conclusive two-way connection between tariff rates and ISI. In addition, although an initial increase in tariff rates increases ISI, a subsequent decrease in ISI quickly offsets this effect. Additionally, ISI suffers short term and long-term consequences from rising tariff rates. These findings highlight the necessity of gradual integration into global markets for long-term sustainability, despite the initial industrial development fostered by trade protectionism.

Background:Scholars in developed and emerging economies have widely tested the interactions between foreign direct investment, financial development, economic growth and environmental degradation. Despite a number of empirical and review studies, it is not yet wrap up either the associations are negative, positive, direct or indirect. Additionally, minor attention is given to the indirect role of foreign direct investment in environmental degradation; perhaps no study has yet demonstrated the mediating role of financial development and economic growth between foreign direct investment and environmental degradation in Asian economies. Referring to the fragmented outputs and consequences as well as lacking the indirect role, the present study examines the influence of foreign direct investment on environmental degradation with the mediating role of financial development and economic growth. Results:Secondary data of 21 Asian countries from 1980-2018 were gathered from World Bank Indicators and then performed STATA to test the paths. Our findings are slightly different from the studies conducted in developed economies. The results indicate that foreign direct investment significantly improves environmental quality by deteriorating environmental pollution. It also significantly improves economic growth in the selected regions. Surprisingly, our study shows that foreign direct investment has a significant negative influence on financial development in the Asian regions. Both financial development and economic growth significantly negatively influence environmental degradation in Asian regions. However, financial development partially mediates while economic growth does not play any mediating role between foreign direct investment and environmental degradation in the Asian countries. Trade openness and population growth as control factors do not show any significant role in the model. Conclusions:This research recommends policymakers to focus on the inflow of foreign direct investment in order to enhance economic growth and environmental quality. It is strongly suggested for policymakers to attenuate the political intervention (e.g. ensure the political stability) in the inflow of foreign direct investment, so financial resources can be impartially distributed in the industrial sector and thus the nations will have an effective financial development system. Other implications have described.