The Nexus between Economic Growth, Energy Consumption, and Environmental Pollution in Bangladesh

Abstract

This research investigates the intricate relationships between globalization, environmental degradation, industrial production, energy consumption, and economic growth in Bangladesh over the period from 1972 to 2019. To examine the long-term relationships among these variables, the study employs the ARDL bound test and the combined cointegration approach. These methodologies are used to predict and confirm the existence of long-run relationships between the variables in question. The empirical findings of this study reveal that globalization, industrial production, and energy consumption contribute positively to environmental degradation. This indicates that as Bangladesh becomes more integrated into the global economy, increases its industrial output, and consumes more energy, environmental degradation intensifies. Conversely, economic growth appears to have a negative effect on environmental degradation in both the long run and the short run. This suggests that as the economy grows, measures are likely being implemented that help reduce the environmental impact, such as improvements in technology and efficiency, stricter environmental regulations, or shifts towards less polluting industries. Moreover, the results indicate a unidirectional causality from environmental degradation and energy consumption to industrial production. This means that changes in environmental degradation and energy consumption directly influence industrial production levels. Specifically, environmental degradation may impact industrial production through regulatory mechanisms or resource constraints, while energy consumption is a direct input for industrial activities, dictating the scale and capacity of production. The policy implications of these findings are significant. Policymakers in Bangladesh might focus on several strategies to manage environmental pollution while sustaining industrial and economic growth. One recommendation is to prioritize the importation of advanced technologies that are more energy-efficient and less polluting. Such technologies can help decouple industrial growth from environmental degradation. Another strategic focus could be on export-led growth, encouraging industries to adopt cleaner production methods to meet international environmental standards, thereby reducing domestic environmental impacts. Additionally, investing in renewable energy sources and enhancing energy efficiency could mitigate the negative environmental impacts of energy consumption. By diversifying the energy mix and improving the efficiency of energy use in industrial processes, Bangladesh can reduce its carbon footprint and other pollutants.