Environmental downfall in Bangladesh: revealing the asymmetric effectiveness of remittance inflow in the presence of foreign aid
2022
Kibria, Md Golam
Even though remittance inflow in Bangladesh is a significant earning source for recipient individuals and one of the vital factors to the development model, its environmental impacts have been ignored in the empirical investigation. To fill this research gap, this article aims to elucidate the asymmetric effectiveness of remittance inflow on environmental degradation in Bangladesh by addressing foreign aid as an additional multiplier in a carbon dioxide (CO₂) emissions model, a first for this country. This paper, in doing so, utilizes the newly advanced nonlinear autoregressive distributive lag (NARDL) approach. Data examined are yearly observations throughout 1980–2016, and empirically, the results of the NARDL bound test confirm a long-run cointegrated causality between remittance and CO₂ emissions via approving the theoretical linkage. The asymmetric findings interpret that the intensity of CO₂ emissions raises in the long run relative to the positive shock in remittance, while the elasticity of CO₂ emissions is significant and negative due to the negative shock in remittance. The estimation also reveals the presence of a long-run asymmetric association between the variables. In addition, foreign aid is favorable to ameliorate the quality of the environment over a long period. Focusing on the findings, this paper recommends that the government should concentrate on environment favorable projects and also take measures of tax incentives to remittance investors.
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