Foreign Direct Investments, Renewable Electricity output, and Ecological Footprints: Do financial globalization facilitate renewable energy transition and environmental welfare in Bangladesh?

Murshed, Muntasir and Elheddad, Mohamed and Ahmed, Rizwan and Bassim, Mogha (2021) Foreign Direct Investments, Renewable Electricity output, and Ecological Footprints: Do financial globalization facilitate renewable energy transition and environmental welfare in Bangladesh? Asia-Pacific Financial Markets. ISSN 1573-6946

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Official URL: https://link.springer.com/article/10.1007/s10690-0...

Abstract

Phasing out fossil fuel dependency to adopt renewable energy technologies is pertinent for both ensuring energy security and for safeguarding the well-being of the environment. However, financial constraints often bottleneck the prospects of the developing countries undergoing renewable energy transition to ease the environmental hardships. Against this background, this study makes a novel attempt to evaluate the impacts of FDI inflows on the prospects of undergoing renewable energy transition and attaining environmental sustainability in Bangladesh between 1972 and 2015. Using the autoregressive distributed lags with structural break approach to estimate the short- and long-run elasticities, it is found that FDI inflows enhance the share of renewable electricity output in the total electricity output levels of the country. Besides, FDI inflows are also evidenced to directly hamper environmental quality by boosting the ecological footprints figures. The key findings from the econometric analysis reveal that FDI promotes renewable electricity generation but transforms the nation into a pollution haven. However, although FDI inflows cannot directly reduce the ecological footprints, a joint ecological footprint mitigation impact of FDI inflow and renewable electricity generation in Bangladesh is evidenced. Besides, the findings also verify the authenticity of the Environmental Kuznets Curve hypothesis in Bangladesh’s context. This, economic growth can be referred to as being both the cause and the panacea to the environmental problems faced in Bangladesh. Therefore, these results, in a nutshell, calls for effective measures to be undertaken for attracting the relatively cleaner FDI in Bangladesh whereby the objectives of renewable energy transition and environmental sustainability can be ensured in tandem. In line with these findings, some appropriate financial globalization policies are recommended

Item Type: Article
Additional Information: Accepted 3rd April 2021
Uncontrolled Keywords: renewable energy; renewable electricity; FDI; ecological footprints; pollution haven hypothesis; EKC hypothesis; structural breaks
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HD Industries. Land use. Labor
J Political Science > JQ Political institutions Asia
Divisions: School of Humanities > Economics and International Studies
Depositing User: Mohga Bassim
Date Deposited: 04 May 2021 08:58
Last Modified: 30 Jun 2021 08:53
URI: http://bear.buckingham.ac.uk/id/eprint/508

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