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

Md Arif Hasan (), Kh Md Nahiduzzaman (), Adel S. Aldosary (), Kasun Hewage () and Rehan Sadiq ()
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Md Arif Hasan: Ministry for the Environment
Kh Md Nahiduzzaman: The University of British Columbia (UBC) Okanagan
Adel S. Aldosary: King Fahd University of Petroleum and Minerals
Kasun Hewage: The University of British Columbia (UBC) Okanagan
Rehan Sadiq: The University of British Columbia (UBC) Okanagan

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2022, vol. 24, issue 5, No 14, 6327-6348

Abstract: Abstract 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.

Keywords: Foreign direct investment; GDP growth; Greenhouse gas emissions; Energy consumption; EKC hypothesis (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10668-021-01704-6

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