IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2021-05-32.html
   My bibliography  Save this article

Do Energy Consumption and Environmental Degradation (CO2 Emissions) Matter for Economic Growth? Fresh Evidence from a Developing Economy

Author

Listed:
  • Md. Nazmus Sadekin

    (Department of Economics, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh)

  • Md. Mahbub Alam

    (Department of Economics, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh)

  • Syed Moudud-Ul-Huq

    (Department of Accounting, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh,)

  • Mohammad Ghozali Hassan

    (Disaster Management Institute, School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia, Sintok, Kedah, 06010, Malaysia)

  • Tarequl Islam

    (Department of Economics, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh)

Abstract

The main objective of this study is to examine the impact of energy consumption and environmental degradation (CO2 emissions) on economic growth in Bangladesh covering the periods of 1972 2018 by employing the Johansen cointegration test, VECM approach, and Granger causality test. The Johansen cointegration result indicates that gross capital formation (GCF), labor, Electricity power consumption (EPC), energy consumption (EC) has a positive and statistically significant effect on economic growth (RGDP) while environmental degradation (carbon dioxide emissions) has an inverse effect on it. The results of VECM show that there exists a long-run causal nexus among the variables and there is short-run causality running from the capital formation and electricity power consumption to the economic growth while there is no short-run causality from the labor, energy consumption, carbon emission to the economic growth. The causality test shows that there exist a unidirectional causal relationship from economic growth to labor, EPC to RGDP, GCF to labor, EC to GCF, carbon emissions (CO2) to GCF, labor to EPC, EC to labor, CO2 to labor, and carbon emissions to EPC and a bi-directional causal nexus between GCF and RGDP; GCF and labor; EPC and carbon emission in Bangladesh. However, the study suggests that a huge change of low carbon advancements like renewable energy and energy sufficiency may contribute to decrease emissions and thus support the long-run economy.

Suggested Citation

  • Md. Nazmus Sadekin & Md. Mahbub Alam & Syed Moudud-Ul-Huq & Mohammad Ghozali Hassan & Tarequl Islam, 2021. "Do Energy Consumption and Environmental Degradation (CO2 Emissions) Matter for Economic Growth? Fresh Evidence from a Developing Economy," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 289-297.
    • Handle: RePEc:eco:journ2:2021-05-32
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/11381/6025
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/11381/6025
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vahid Mohamad Taghvaee & Clever Mavuka & Jalil Khodaparast Shirazi, 2017. "Economic growth and energy consumption in Iran: an ARDL approach including renewable and non-renewable energies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(6), pages 2405-2420, December.
    2. Shiu, Alice & Lam, Pun-Lee, 2004. "Electricity consumption and economic growth in China," Energy Policy, Elsevier, vol. 32(1), pages 47-54, January.
    3. Ahmad Farabi & Azrai Abdullah & Rahmat Heru Setianto, 2019. "Energy Consumption, Carbon Emissions and Economic Growth in Indonesia and Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 338-345.
    4. Celil Ayd n & mer Esen, 2017. "Does Too Much Energy Consumption Harm Economic Growth for Turkish Republics in The Transition Process? New Evidence on Threshold Effects," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 34-43.
    5. Ibrahim D. Raheem & Agboola H. Yusuf, 2015. "Energy Consumption-Economic Growth Nexus: Evidence from Linear and Nonlinear Models in Selected African Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 558-564.
    6. Cuma Bozkurt & Yusuf Akan, 2014. "Economic Growth, CO2 Emissions and Energy Consumption: The Turkish Case," International Journal of Energy Economics and Policy, Econjournals, vol. 4(3), pages 484-494.
    7. Yusuf, Sulaimon Aremu, 2014. "Impact of Energy Consumption and Environmental Degradation on Economic Growth in Nigeria," MPRA Paper 55529, University Library of Munich, Germany.
    8. Hlalefang Khobai & Pierre Le Roux, 2018. "Does Renewable Energy Consumption Drive Economic Growth: Evidence from Granger-Causality Technique," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 205-212.
    9. Michael McAleer & Ha Minh Nguyen & Ngoc Hoang Bui & Duc Hong Vo, 2019. "Energy Consumption and Economic Growth: Evidence from Vietnam," Journal of Reviews on Global Economics, Lifescience Global, vol. 8, pages 350-361.
    10. Muhammad Zeshan & Vaqar Ahmed, 2013. "Energy, environment and growth nexus in South Asia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 15(6), pages 1465-1475, December.
    11. Al Aali-Bujari & Francisco Venegas-Mart nez & Alfredo Omar Palafox-Roca, 2017. "Impact of Energy Consumption on Economic Growth in Major Organization for Economic Cooperation and Development Economies (1977-2014): A Panel Data Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 18-25.
    12. Abbas Ali Chandio & Abdul Rauf & Yuansheng Jiang & Ilhan Ozturk & Fayyaz Ahmad, 2019. "Cointegration and Causality Analysis of Dynamic Linkage between Industrial Energy Consumption and Economic Growth in Pakistan," Sustainability, MDPI, vol. 11(17), pages 1-18, August.
    13. Inglesi-Lotz, Roula, 2016. "The impact of renewable energy consumption to economic growth: A panel data application," Energy Economics, Elsevier, vol. 53(C), pages 58-63.
    14. Alshehry, Atef Saad & Belloumi, Mounir, 2015. "Energy consumption, carbon dioxide emissions and economic growth: The case of Saudi Arabia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 237-247.
    15. Anh The Vo & Duc Hong Vo & Quan Thai-Thuong Le, 2019. "CO 2 Emissions, Energy Consumption, and Economic Growth: New Evidence in the ASEAN Countries," JRFM, MDPI, vol. 12(3), pages 1-20, September.
    16. Khalid Eltayeb Elfaki & Adi Poernomo & Nurul Anwar & Abdul Aziz Ahmad, 2018. "Energy Consumption and Economic Growth: Empirical Evidence for Sudan," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 35-41.
    17. Mezghani, Imed & Ben Haddad, Hedi, 2017. "Energy consumption and economic growth: An empirical study of the electricity consumption in Saudi Arabia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 145-156.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paula Donaduzzi Rigo & Carmen Brum Rosa & Graciele Rediske & Julio Cezar Mairesse Siluk & Leandro Michels, 2022. "A Software Application to Support Decision-making in Small-scale Photovoltaic Projects," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 32-39.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Solomon P. Nathaniel & Festus V. Bekun, 2020. "Electricity Consumption, Urbanization and Economic Growth in Nigeria: New Insights from Combined Cointegration amidst Structural Breaks," Research Africa Network Working Papers 20/013, Research Africa Network (RAN).
    2. Karen Fernandes & Y. V. Reddy, 2020. "Energy Consumption and Economic Growth in Newly Industrialised Countries of Asia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 384-391.
    3. Xiao-Ying Dong & Qiying Ran & Yu Hao, 2019. "On the nonlinear relationship between energy consumption and economic development in China: new evidence from panel data threshold estimations," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(4), pages 1837-1857, July.
    4. Hamisu S. Ali & Solomon P. Nathaniel & Gizem Uzuner & Festus V. Bekun & Samuel A. Sarkodie, 2020. "Trivariate Modelling of the Nexus between Electricity Consumption, Urbanization and Economic Growth in Nigeria: Fresh Insights from Maki Cointegration and Causality Tests," Working Papers 20/010, European Xtramile Centre of African Studies (EXCAS).
    5. Vo, Duc Hong & Vo, Anh The & Ho, Chi Minh & Nguyen, Ha Minh, 2020. "The role of renewable energy, alternative and nuclear energy in mitigating carbon emissions in the CPTPP countries," Renewable Energy, Elsevier, vol. 161(C), pages 278-292.
    6. Miloš Žarković & Slobodan Lakić & Jasmina Ćetković & Bojan Pejović & Srdjan Redzepagic & Irena Vodenska & Radoje Vujadinović, 2022. "Effects of Renewable and Non-Renewable Energy Consumption, GHG, ICT on Sustainable Economic Growth: Evidence from Old and New EU Countries," Sustainability, MDPI, vol. 14(15), pages 1-27, August.
    7. Chen, Yiyang & Mamon, Rogemar & Spagnolo, Fabio & Spagnolo, Nicola, 2022. "Renewable energy and economic growth: A Markov-switching approach," Energy, Elsevier, vol. 244(PB).
    8. Alsaedi, Yasir Hamad & Tularam, Gurudeo Anand, 2020. "The relationship between electricity consumption, peak load and GDP in Saudi Arabia: A VAR analysis," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 175(C), pages 164-178.
    9. Henrique Oliveira & Víctor Moutinho, 2021. "Renewable Energy, Economic Growth and Economic Development Nexus: A Bibliometric Analysis," Energies, MDPI, vol. 14(15), pages 1-28, July.
    10. Arshian Sharif & Shrabani Saha & Neil Campbell & Avik Sinha & Dalia M. Ibrahiem, 2020. "Tourism, environment and energy: an analysis for China," Current Issues in Tourism, Taylor & Francis Journals, vol. 23(23), pages 2930-2949, December.
    11. Hlalefang Khobai & Katlego Sithole, 2022. "The Relationship between Economic Growth and Carbon Emissions in South Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 516-525, March.
    12. K, Ashin Nishan M & ASHIQ, MUHAMMED V, 2019. "Role of Energy use in the Prediction of CO2 Emissions and Growth in India: An Application of Artificial Neural Networks (ANN)," SocArXiv gkpbu, Center for Open Science.
    13. Le, Thai-Ha & Nguyen, Canh Phuc, 2019. "Is energy security a driver for economic growth? Evidence from a global sample," Energy Policy, Elsevier, vol. 129(C), pages 436-451.
    14. Fang, Zheng & Chen, Yang, 2017. "Human capital, energy, and economic development – Evidence from Chinese provincial data," RIEI Working Papers 2017-03, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.
    15. Romualdas Ginevičius & Gracjana Noga & Eigirdas Žemaitis & Barbara Piontek & Karel Šuhajda, 2021. "Comparative Assessment of the Impact of Electricity Consumption in Different Economic Sectors on the Economic Development of the EU Member States," Energies, MDPI, vol. 14(24), pages 1-14, December.
    16. Huang, Shi-Zheng, 2022. "Do green financing and industrial structure matter for green economic recovery? Fresh empirical insights from Vietnam," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 61-73.
    17. Mohammed Hadi & George Campbell, 2020. "Relationship among Energy Consumption, Inflation, Human Capital and Economic Growth: Evidence from Indonesia," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 6(2), pages 85-92.
    18. Hussain Ali Bekhet & Nor Hamisham Harun, 2017. "Elasticity and Causality among Electricity Generation from Renewable Energy and Its Determinants in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 202-216.
    19. Balogh, Jeremiás Máté, 2022. "Az egy főre jutó szén-dioxid-kibocsátás meghatározó tényezői a világgazdaságban [Determinants of per capita carbon dioxide emissions at the global level]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 480-501.
    20. Bothwell Nyoni & Andrew Phiri, 2020. "Renewable Energy - Economic Growth Nexus in South Africa: Linear, Nonlinear or Non-existent?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 635-644.

    More about this item

    Keywords

    Economic Growth; Electricity; Energy Consumption; Environmental Degradation; Vector Error Correction Model;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2021-05-32. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.