Foreign Direct Investments, Renewable Electricity Output, and Ecological Footprints: Do Financial Globalization Facilitate Renewable Energy Transition and Environmental Welfare in Bangladesh?

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 restrict the developing countries, in particular, from undergoing the renewable energy transition that is necessary for easing the environmental hardships. Against this background, this study makes a novel attempt to evaluate the impacts of FDI inflows on enhancing renewable energy use 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 of Bangladesh. Hence, it can be said that FDI promotes renewable electricity generation in Bangladesh 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 inflows and renewable electricity generation is evidenced. Besides, the findings also verify the authenticity of the Environmental Kuznets Curve hypothesis in Bangladesh’s context. Therefore, economic growth can be referred to as being both the cause and the panacea to the environmental problems faced by Bangladesh. 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 achieved in tandem. In line with these findings, several appropriate financial globalization policies are recommended.

Pathways to decarbonization in India: the role of environmentally friendly tourism development

“…Danish et al ( 2019 ) concluded that accelerated adoption of renewable energy may help in the reduction of CO 2 emissions for Brazil, China, India, and Russia while investigating the existence of the EKC hypothesis for the period 1990–2015. Murshed et al ( 2021a , b ) evidenced the beneficial role of REC in the abatement of carbon emissions for five selected South Asian nations over 1995–2015.…”

“…The ARDL technique is favored over other existing co-integration techniques as it is best suited to smaller sample sizes, better accuracy, independent of the level of integration, and allows for investigation in different optimal lags compared to other conventional tests. Finally, following Murshed et al ( 2021a , b ), the ARDL technique can effectively address the potential endogeneity problems associated with some of the variables and offers unbiased estimates.…”

The asymmetric associations between foreign direct investment inflows, terrorism, CO2 emissions, and economic growth: a tale of two shocks

“…For empirical analysis, we take the annual data of our concerned economies, i.e., Afghanistan, Iraq, Nigeria, Syria, Pakistan, Somalia, India, Yemen, Philippines, and Thailand from 1973 to 2016. Following Murshed et al (2021aMurshed et al ( , 2021b and Murshed et al (2021e), all the data are transformed into the logarithmic form to lessen the magnitude of variation and hence skewness. The selection of this panel of economies is based on the reason that these are the most-impacted countries by terrorism.…”

“…FDI is the believed to be the FDI inflows foremost driver of economic development since it plays an essential role in transferring capital and technology to developing nations (Murshed et al 2021b). Furthermore, the FDI inflows help the host economy to reap benefits of the latest know-how, management, and communication systems whereby such spillovers enhance productivity and economies of scale within the host nation.…”

Revisiting the energy-economy-environment relationships for attaining environmental sustainability: evidence from Belt and Road Initiative countries

“…Moreover, since more developing countries are opting to join the BRI scheme, the energy consumption-induced environmental problems can be expected to escalate in the years to come. This is because the developing countries are predominantly fossil fuel-intensive whereby a lion's share of their respective electricity outputs from gas, coal, and furnace oils (Rehman et al 2019;Murshed and Tanha 2021;Murshed et al 2021a). Besides, it is believed that the developing countries, in quest of globalization, tend to prioritize attainment of economic growth at the cost of environmental degradation (Murshed 2020a, b;Murshed et al 2021bMurshed et al , 2021c.…”