CO2 Emissions and Development Indicators: a Causality Analysis for Bangladesh

This paper aims to check the dynamic linkages between CO2 emissions and development indicators (per capita Gross Domestic Product (GDP), population density, and urbanisation) of Bangladesh. Using annual data in IPAT model for the period of 1972-2015, we have applied Johansen co-integration and Granger causality tests to examine the long-run co-integration and short-run dynamics of the concerned variables. The obtained results reveal that there is bidirectional causality between CO2 emissions and urbanisation, and CO2 emissions and GDP per capita for the study period in Bangladesh. This implies that GDP growth and urbanisation process are the major sources of CO2 emissions in the country. Therefore, policy makers should take extreme care in designing and implementing the environmental protection policies to curb CO2 emissions with a desired level of economic growth and urbanization.