Trade openness and CO2 emissions: Evidence of Bangladesh

Abstract

This study investigates the relationship between economic growth, energy consumption, trade openness, population density, and carbon dioxide (CO2) emissions in Bangladesh for the period of 1975 to 2013. It applies the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration for establishing the existence of a long-run relationship. The bounds tests suggest that the variables of interest are bound together in the long-run when CO2 emissions is the dependent variable. The results indicate that energy consumption has statistically significant positive effect on CO2 emissions both in the short-run and long-run. The effect of population density is significant in long-run, but not in shortrun. The estimated coefficients for economic growth and trade liberalization are negative and insignificant both in short-run and long-run. The paper suggests that the government of Bangladesh should undertake the policy actions to develop alternative energy sources which would not emit much CO2.