Nexus of economic growth, energy consumption, FDI and emissions: a tale of Bangladesh

Bangladesh observed an unprecedented growth in gross domestic product (GDP) and foreign direct investments (FDI) over the last decade. However, the country also observed an annual average increase in greenhouse gas emissions (GHGs) by 3.3% between 2000 and 2016. Therefore, this study aims to underst...

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Bibliographic Details
Published in:Environment, development and sustainability development and sustainability, 2022-05, Vol.24 (5), p.6327-6348
Main Authors: Hasan, Md Arif, Nahiduzzaman, Kh Md, Aldosary, Adel S., Hewage, Kasun, Sadiq, Rehan
Format: Article
Language:English
Subjects:
Causality
Earth and Environmental Science
Ecology
Economic development
Economic Geology
Economic Growth
Economic models
Economics
Emissions
Emissions control
Energy consumption
Environment
Environmental Economics
Environmental Kuznets curve
Environmental Management
Error analysis
Error correction
Foreign investment
GDP
Greenhouse effect
Greenhouse gases
Gross Domestic Product
Hypotheses
Kuznets curve
Per capita
Sustainable Development
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Summary:Bangladesh observed an unprecedented growth in gross domestic product (GDP) and foreign direct investments (FDI) over the last decade. However, the country also observed an annual average increase in greenhouse gas emissions (GHGs) by 3.3% between 2000 and 2016. Therefore, this study aims to understand the dynamic relationship among GDP, FDI and GHGs, and investigate the existence of the Environmental Kuznets Curve (EKC) so that appropriate policy options could be taken to reduce emissions while sustaining economic growth. This study adopted the Vector Error Correction Model (VECM) and Granger Causality tests to achieve the objectives. Results suggest the EKC hypothesis to be positive for the nation. The causality test negates short- and long-run causality from energy consumption per capita (ECPC), GDP per capita (GDPPC), and FDI to GHGs at a significance level of 0.05. However, a bi-directional causality is running from ECPC to FDI and GDP per capita in the short-run. By scholarly contributing to the debate between development and GHGs, this study attempts to bridge-up the current gap in the literature, i.e., scientific investigation of the EKC hypothesis and the effects of FDI on energy consumption and GHGs in Bangladesh.
ISSN:1387-585X
1573-2975
DOI:10.1007/s10668-021-01704-6