The Linkage between Tourism Transportation Expenditures, FDI and Economic Development in the context of Co2 (carbon dioxide emission): Evidence from Bangladesh

Abstract

The aim of this study is to understand the relationship between tourism transportation expenditures, FDI, electricity consumption. Fossil fuel consumption, urban population. economic development and Co2 (carbon dioxide emission) in Bangladesh using time series data for the period 1973-2014. To achieve this goal, we applied Autoregressive Distributed Lag (ARDL) model bound testing approach and VAR Granger Causality test and found that cointegration exists among the variables. The empirical results reveal that electricity consumption, fossil fuel consumption, urban population and economic growth have positive and significant long-term impacts on carbon emission. However, FDI has negative and significant long-term effects on Co2 emission. The results also reveal that tourism transportation expenditures, fossil fuel consumption, and urban population has short-term effects on Co2 emission. Only the coefficient of economic growth are negative and insignificant. Moreover, the Granger causality results of this study reveal that there are two-way causalities between electricity and urban population, and one way causalities are between GDP and Co2 emission, GDP and fossil fuel consumption, FDI and electricity consumption, FDI and urban population, fossil fuel consumption and urban population in Bangladesh. Only found that tourism transportation expenditures have no Granger causalities. Based on these findings, the study recommends that Bangladesh should adopt environmental friendly technologies (transferring clean and pollution free technologies) from developed or developing countries to reduce carbon emission in the country. Besides, strict environment rules, reform regulatory energy consumption and the most important social welfare would be helpful to reduce environmental degradation in the country and sustainable economic development at the same time.