Pollution haven hypothesis and the environmental Kuznets curve of Bangladesh: an empirical investigation

Mahamuda Firoj, Nair Sultana, Sharmina Khanom, Md Harun Ur Rashid () and Abeda Sultana
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Mahamuda Firoj: International Islamic University Chittagong (IIUC)
Nair Sultana: International Islamic University Chittagong (IIUC)
Sharmina Khanom: International Islamic University Chittagong (IIUC)
Md Harun Ur Rashid: International Islamic University Chittagong (IIUC)
Abeda Sultana: Premier University

Asia-Pacific Journal of Regional Science, 2023, vol. 7, issue 1, No 9, 197-227

Abstract: Abstract This study investigated pollution haven hypothesis (PHH) validation and existence of the environmental Kuznets curve (EKC) hypothesis in Bangladesh. The study used CO2 emissions as the key indicator of environmental pollution. Moreover, we considered relevant explanatory variables such as foreign direct investments, trade openness, financial development, gross fixed capital formation, energy consumption and urbanization to achieve our goals. Covering the time series data from 1986 to 2018, the autoregressive distributed lag (ARDL) approach was applied. The findings revealed a long-run cointegration between the considered variables, and the ARDL results cannot validate the PHH in Bangladesh. These results contribute to the existing literature by concentrating on the EKC hypothesis for financial development purposes. Furthermore, we found that urbanization, gross fixed capital formation and trade openness positively influence CO2 emissions, while energy use reduces CO2 emissions. These findings suggest that Bangladesh should take advantage of the invalidity of the PHH and introduce eco-friendly urbanization planning to mitigate detrimental effects of environmental pollution.

Keywords: Bangladesh; CO2 emissions; Pollution haven hypothesis; Environmental Kuznets curve (search for similar items in EconPapers)
JEL-codes: Q51 Q53 R11 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s41685-022-00258-3

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