Amid accelerating industrialization and ecological degradation in Asia, understanding the dual role of pollution as both a by-product and a potential input in production has become a critical policy and research imperative. This study explores the multidimensional impact of pollution on the ecological degradation embedded in industrial production. Moving beyond the conventional focus on single pollutants such as CO2, an industrial pollution index was developed that integrates non-renewable energy consumption, wastewater, waste gas and solid waste. Findings of the robust panel estimations, fixed effects with Driscoll–Kraay standard errors and feasible generalized least squares, indicate that industrial value-added significantly increases all dimensions of pollution. Foreign direct investment (FDI) and technology have mixed effects, while FDI exacerbates wastewater and solid waste, it can reduce waste gas and energy intensity through cleaner technology transfer; however, reliance on fossil fuel-based technologies worsens environmental degradation. Westerlund and Pedroni tests confirm a long-run equilibrium relationship among the variables. The findings highlight that unchecked industrial growth leads to unsustainable outcomes, underscoring the urgency for holistic pollution measurement, ecological tax reforms and stricter regulatory frameworks. Policy measures should prioritize circular economy practices, renewable energy investment and enhanced institutional monitoring to support sustainable industrialization.
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