Does Globalization Impede Environmental Quality in Bangladesh? The Role of Real Economic Activities and Energy Use

Abstract

This research investigates the relationship between globalization, environment degradation, industrial 
\nproduction, energy consumption and economic growth over the period of 1972-2015 for Bangladesh. The
\nlong run relationship between variables is examined using ARDL bound test and combined cointegration
\napproach. These cointegration approaches predict the long run relationship between underlying variables.
\nThe empirical findings demonstrate that globalization, industrial production and energy consumption drives
\nenvironmental degradation positively, but economic growth pushes environmental degradation negatively
\nin the long run as well as short run. Further, the direction of causality is examined by VECM Granger
\ncausality which shows bidirectional causality between energy consumption and environment degradation,
\neconomic growth and environment degradation, industrial production and economic growth, and energy
\nconsumption and economic growth for both short-long run. Our results suggest a unidirectional causality
\nruns from environmental degradation and energy consumption to industrial production. The empirics of
\nInnovative Accounting Approach (IAA) confirm the findings of VECM Granger causality. Our findings
\nsuggest that Policymakers may focus on imports of advance technology and export led growth strategy to
\ncontrol environmental pollution.