IMPACT OF ENERGY CONSUMPTION AND ENVIRONMENTAL DEGRADATION ON ECONOMIC GROWTH IN BANGLADESH
Keywords:
Economic Growth, Electricity, Energy Consumption, Environmental Degradation.Abstract
The main objectives of this study are to examine the impact of energy consumption and environmental degradation (CO2 emissions) on economic growth in Bangladesh covering the periods of 1972 to 2018 by employing the Johansen cointegration test, VECM approach, and Granger causality test. The Johansen cointegration result indicates that gross capital formation (GCF), labor, Electricity power consumption (EPC), energy consumption (EC) has a positive and statistically significant effect on economic growth (RGDP) while environmental degradation (carbon dioxide emissions) has an inverse effect on it. The results of VECM show that there exist a long-run causal nexus among the variables and there is short-run causality running from the capital formation and electricity power consumption to the economic growth while there is no short-run causality from the labor, energy consumption, carbon emission to the economic growth. The causality test shows that there exist a unidirectional causal relationship from economic growth to labor, EPC to RGDP, GCF to labor, EC to GCF, carbon emissions (CO2) to GCF, labor to EPC, EC to labor, CO2 to labor, and carbon emissions to EPC and a bi-directional causal nexus between GCF and RGDP; GCF and labor; EPC and carbon emission in Bangladesh. However, the study suggests that a huge change of low carbon advancements like renewable energy and energy sufficiency may contribute to decrease emissions and thus support the long-run economy.
Downloads
References
Sadekin, M., M. Muzib, and A.A. Al Abbasi, Contemporary situation of FDI and its determinants: Bangladesh scenario. American Journal Of Trade And Policy, 2015. 2(2): p. 121-124.
Bildirici, M.E., The relationship between economic growth and biomass energy consumption. Journal of Renewable and Sustainable Energy, 2012. 4(2): p. 023113 DOI: https://doi.org/10.1063/1.3699617.
Aali-Bujari, A., Impact of energy consumption on economic growth in major organization for economic cooperation and development economies (1977-2014). 2017.
Alam, M.J., et al., Energy consumption, carbon emissions and economic growth nexus in Bangladesh: Cointegration and dynamic causality analysis. Energy policy, 2012. 45: p. 217- 225 DOI: https://doi.org/10.1016/j.enpol.2012.02.022.
Alshehry, A.S. and M. Belloumi, Energy consumption, carbon dioxide emissions and economic growth: The case of Saudi Arabia. Renewable and Sustainable Energy Reviews, 2015. 41: p. 237-247 DOI: https://doi.org/10.1016/j.rser.2014.08.004.
Bozkurt, C. and Y. Akan, Economic growth, CO2 emissions and energy consumption: the Turkish case. International journal of energy economics and policy, 2014. 4(3): p. 484-494 DOI: https://doi.org/10.11648/j.ijber.20140306.13.
Chandio, A.A., et al., Cointegration and causality analysis of dynamic linkage between industrial energy consumption and economic growth in Pakistan. Sustainability, 2019. 11(17): p. 4546 DOI: https://doi.org/10.3390/su11174546.
Elfaki, K.E., et al., Energy consumption and economic growth: empirical evidence for Sudan. International Journal of Energy Economics and Policy, 2018. 8(5): p. 35.
Gojayev, Z., et al., Economic Growth, Energy Consumption and Environmental Pollutants: The Case of Turkey. Prosiding Perkem, 2012. 7(2): p. 1047-1057.
Hu, Y., et al., The relationship between energy consumption and economic growth: Evidence from China’s industrial sectors. Energies, 2015. 8(9): p. 9392-9406 DOI: https://doi.org/10.3390/en8099392.
Inglesi-Lotz, R., The impact of renewable energy consumption to economic growth: A panel data application. Energy Economics, 2016. 53: p. 58-63 DOI: https://doi.org/10.1016/j.eneco.2015.01.003.
Khobai, H. and P. Le Roux, Does renewable energy consumption drive economic growth: Evidence from Granger-causality technique. 2017.
Liu, X., Aggregate and disaggregate analysis on energy consumption and economic growth nexus in China. Environmental Science and Pollution Research, 2018. 25(26): p. 26512-26526 DOI: https://doi.org/10.1007/s11356-018-2699-2.
Mezghani, I. and H.B. Haddad, Energy consumption and economic growth: An empirical study of the electricity consumption in Saudi Arabia. Renewable and Sustainable Energy Reviews, 2017. 75: p. 145-156 DOI: https://doi.org/10.1016/j.rser.2016.10.058.
Nguyen, H.M., et al., Energy consumption and economic growth: Evidence from Vietnam. Journal of Reviews on Global Economics, 2019. 8: p. 350-361 DOI: https://doi.org/10.6000/1929-7092.2019.08.30.
Saad, W. and A. Taleb, The causal relationship between renewable energy consumption and economic growth: evidence from Europe. Clean Technologies and Environmental Policy, 2018. 20(1): p. 127-136 DOI: https://doi.org/10.1007/s10098-017-1463-5.
Soava, G., et al., Impact of renewable energy consumption on economic growth: Evidence from European Union countries. Technological and Economic Development of Economy, 2018. 24(3): p. 914-932 DOI: https://doi.org/10.3846/tede.2018.1426.
Yusuf, S.A., Impact of energy consumption and environmental degradation on economic growth in Nigeria. 2014.
Aydın, C. and Ö. Esen, Does too much energy consumption harm economic growth for Turkish republics in the transition process? New evidence on threshold effects. International Journal of Energy Economics and Policy, 2017. 7(2): p. 34-43.
Farabi, A., Energy consumption, carbon emissions and economic growth in Indonesia and Malaysia. 670216917, 2019 DOI: https://doi.org/10.32479/ijeep.6573.
Liu, X., et al., Regional income mobility in large cities throughout China. Applied Economics Letters, 2019. 26(16): p. 1322-1327.
Raheem, I.D. and A.H. Yusuf, Energy consumption-economic growth nexus: evidence from linear and nonlinear models in selected African countries. International Journal of Energy Economics and Policy, 2015. 5(2).
Samuelson, P.A. and R.M. Solow, A complete capital model involving heterogeneous capital goods. The Quarterly Journal of Economics, 1956. 70(4): p. 537-562 DOI: https://doi.org/10.2307/1881864.
Zhang, C., et al., On electricity consumption and economic growth in China. Renewable and Sustainable Energy Reviews, 2017. 76: p. 353-368 DOI: https://doi.org/10.1016/j.rser.2017.03.071.
Alam, M. M., et al., Effect of Deficit Financing on Economic Growth in Bangladesh: Co- integration and VECM Approach. FIIB Business Review. 2021. P. 1-14. DOI: https://doi.org/10.1177/23197145211057339.
Alam, M. M., M. N. Sadekin, and S. K. Saha, The impact of macroeconomic variables on the budget deficit in Bangladesh: an econometric analysis. South Asian Journal of Business Studies, 2020. DOI: https://doi.org/10.1108/SAJBS-05-2020-0141
Alam, M. M. and D. Bhowmik, The Causal Relationship among Exports, Imports, Capital Formation and Economic Growth in Bangladesh. IOSR Journal of Humanities and Social Science (IOSR-JHSS), 2020. 25(5), p. 18–26. DOI: https://doi.org/10.9790/0837-2505101826
Sadekin, M. N., et al., (Do Energy Consumption and Environmental Degradation (CO2 Emissions) Matter for Economic Growth ? Fresh Evidence from a Developing Economy. International Journal of Energy Economics and Policy, 2021. 11(5): p. 289–297 DOI: https://doi.org/10.32479/ijeep.11381.
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Author
This work is licensed under a Creative Commons Attribution 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
- Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Notices:
You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .
No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.
