Scrutinizing the Existence of the Environmental Kuznets Curve in the Context of Foreign Direct Investment, Trade and Renewable Energy in Bangladesh: Impending from ARDL Method

Abstract

Abstract In this study, annual time-series data from 1972 to 2021 is utilized to evaluate the existence of the environmental Kuznets curve (EKC) in Bangladesh. The study also takes into consideration a number of other characteristics, including openness to trade, renewable energy sources, and foreign direct investment (FDI). In this work, we have used the ARDL model to analyze the cointegration of the variables using the mixed orders or I(0) and I(1) of the variables. Zivot-Andrews demonstrate a single structural break across all variables. The ARDL bound test confirms the notion of long-term cointegration between the variables. The relationship between CO 2 emissions and economic performance is inverted U-shaped. Because of the presence of the EKC hypothesis, per capita carbon emissions (PCCE) raise until a certain level of per capita income is reached, at which point PCCE begin to fall. Although trade has a negative impact on the environment, the uses of renewable energy and foreign direct investment have a positive impact. The study concludes that the best way to reduce environmental degradation is to employ renewable energy. Economic expansion, FDI, and trade growth all result in CO2 emissions. Various economic and environmental policies are also identified in the investigation.