Trade Openness and CO2 Emissions: Evidence of Bangladesh

This study investigates the relationship between economic growth, energy consumption, trade openness, population density, and carbon dioxide (CO 2 ) emissions in Bangladesh for the period of 1975 to 2013. It applies the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration for establishing the existence of a long-run relationship. The bounds tests suggest that the variables of interest are bound together in the long-run when CO 2 emissions is the dependent variable. The results indicate that energy consumption has statistically significant positive effect on CO 2 emissions both in the short-run and long-run. The effect of population density is significant in long-run, but not in short-run. The estimated coefficients for economic growth and trade liberalization are negative and insignificant both in short-run and long-run. The paper suggests that the government of Bangladesh should undertake the policy actions to develop alternative energy sources which would not emit much CO 2 .