Econometric Analysis of the Effect of Economic Globalization, Energy Intensity, Urbanization, Industrialization and Growth on CO2 Emissions of Bangladesh

Abstract

This paper examines the effect of economic globalization, energy intensity, urbanization, industrialization and growth on per capita CO2 emissions of Bangladesh employing techniques of Johansen co-integration, Vector Error-Correction Models (VECM) and VEC Granger Causality Tests. To analyse the impacts of innovations in all variables on CO2 emissions, this study additionally employs variance decomposition (VDC) for robust findings. The result of long run and causality test postulates that growth stimulates energy consumption and consequently causes CO2 emissions. VDC result posits that in the long run, energy intensity, urbanization, industrialization and growth contribute more than 60% of the CO2 emission in Bangladesh. On the other hand, effect of economic globalization becomes stronger in the long run but in explaining fluctuations in CO2 emissions it contributes only 9%. To avoid adverse effect of growth implementations of energy conservation policies are needed.

Keywords

• johansen co-integration
• globalization
• co2 emissions
• urbanization
• industrialization