Abstract
Industrial production units discharge large amounts of CO2 as manufacturing facilities directly use fossil fuels and more electricity than any other sector. Although the per capita emissions in the industrialized countries are typically as much as ten times the average in the developing countries, this study is aimed at analyzing the long-run association between CO2 emissions and industrial production in Bangladesh using an Unrestricted Vector Auto Regression approach. For this purpose, the study uses secondary data for the periods of 1960 to 2016 from world development indicators. The variables of interest are co2 emission and industrial production. In general CO2 data are measured in metric tons per capita and the industrial production index is used as the proxy of industrial production. Other econometric techniques, such as unit root test-ADF, Johanson Co-integration test, and OLS techniques are also applied. Firstly, a descriptive analysis finds that there has been a rapid fall in industrial output and co2 emission in 1971 which can be denoted as an adverse effect of the Independence war of Bangladesh. Despite that, industrial production and co2 emission are intended to increase at a positive slope till 2016. But the increasing rate of industrial production is significantly higher than the increasing rate of co2 emission in Bangladesh. Secondly, the Johanson Co-integration test results reveal that there is no long-run relationship between industrial production and CO2 emission in Bangladesh. But the results from Unrestricted VAR and Ordinary Least Square estimation confirm that CO2 emission one period lag has a negative and significant impact on the industrial production of Bangladesh, where the value of the coefficient is -16.01059. This means that if in the last year, co2 emission increased by 1 metric ton per capita, industrial production will be decreased by 16% in the current period. The study concludes that Bangladesh is running conscious industrial production considering energy conservation policies.
Highlights
Economic growth is recognized as one of the key aspects of economic stabilization ever since the industrial revolution
There has been a rapid fall in industrial output in 1971, whichcan be denoted as an adverse effect of the Independence war of Bangladesh
The adverse effect of CO2 in atmosphere cannot be overlooked in present situation of global warming where local and international continuously arguing for a minimal carbon emission
Summary
Economic growth is recognized as one of the key aspects of economic stabilization ever since the industrial revolution. According to the empirical theory of economic development, the economies are becoming more efficient and stable when they transform to an industrial and servicebased economy from a traditional agrarian economy. In that case, developing economies, like Bangladesh, are a great example of economic transformation as the share of industrial production has surpassed the share of agriculture to GDP. Increased industrial production tends to consume a large portion of fossil fuel to intensify its output growth. The energy demand by any industrial unit heavily depends on its technological advancement, production capacity, surrounding environmental conditions, waste management system, and many more. Increasing energy consumption is necessary for industrial expansion to meet the growing demand and support rapid urbanization. A growing number of industrial units in Bangladesh tends to intensify the carbon emission which is the major finding objective in this paper
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