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Impact of globalization, foreign direct investment, and energy consumption on CO2 emissions in Bangladesh: Does institutional quality matter?

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Abstract

Bangladesh’s recent doorway to the spectacular growth trajectory is largely associated with the shared contributions of globalization, FDI, trade, economic growth, urbanization, energy consumption, innovation, and institutional quality that affect its natural environment. Earlier studies hardly incorporated these dynamics together especially innovation and institutional quality to examine their impacts on environmental degradation in Bangladesh. This study attempts to scrutinize the effect of globalization, foreign direct investment, economic growth, trade, innovation, urbanization, and energy consumption on CO2 emissions in the presence of institutional quality in Bangladesh over the period 1972–2016 by utilizing dynamic ARDL simulations’ model by Jordan and Philips (2018). The investigated results depict that globalization; foreign direct investment, and innovation have a negative effect on CO2 emissions in improving environmental quality while economic growth, trade, energy consumption, and urbanization positively impact CO2 emissions and hence stimulate environmental degradation both in the long and short run. Besides, institutional quality measured by the political terror scale (PTS) affects CO2 emissions positively and thereby degrades the quality of the environment in both the long and short run. Therefore, policy implication should go toward encouraging globalization, foreign direct investment and innovation; and the sensible utilization of income growth, trade potentials, energy consumption, urbanization and institution is required for the sake of environmental quality in Bangladesh.

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Data is available from the corresponding author upon request.

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Acknowledgements

The authors express their gratitude to the editorial board and reviewer for the efforts in reviewing the paper and suggesting key modifications that have enhanced the quality of the article. The authors also appreciate the editor for his cooperation during the review process.

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Authors and Affiliations

  1. Bangladesh Institute of Governance and Management (BIGM), University of Dhaka (Affiliated), Dhaka-1207, Bangladesh

    Md. Monirul Islam & Mohammad Tareque

  2. Management Studies Department, Bahria Business School, Bahria University, Islamabad, Pakistan

    Muhammad Kamran Khan

  3. Department of Economics, Adbul Wali Khan University, Mardan, Pakistan

    Noor Jehan

  4. Amity School of Economics, Amity University, Noida, 201301, Uttar Pradesh, India

    Vishal Dagar

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  1. Md. Monirul Islam
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  2. Muhammad Kamran Khan
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  3. Mohammad Tareque
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  4. Noor Jehan
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  5. Vishal Dagar
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Contributions

Conceptualization, writing, and data analysis: MMI. Supervision and review: MKK. Proofreading: MT. Referencing and final format: NJ and VD. All authors have read and approved the manuscript.

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Correspondence to Muhammad Kamran Khan.

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Highlights

•Globalization helps to reduce the CO2 emissions.

• Economic growth, trade, energy consumption, and urbanization positively affect CO2 emissions.

• The effect of foreign direct investment and innovation on CO2 emissions is negative.

• Institutional quality leads to increase environmental degradation.

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Islam, M.M., Khan, M.K., Tareque, M. et al. Impact of globalization, foreign direct investment, and energy consumption on CO2 emissions in Bangladesh: Does institutional quality matter?. Environ Sci Pollut Res 28, 48851–48871 (2021). https://doi.org/10.1007/s11356-021-13441-4

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