Investigation of the Environmental Kuznet Curve and the Pollution Heaven Hypothesis : An Empirical Analysis of Bangladesh

Background and Objectives: The paper aims to check the pollution heaven hypothesis validation and the existence of the Environmental Kuznet Curve hypothesis in Bangladesh employing CO2 emission as a key indicator of environmental pollution for the time series data spanning from 198o to 2017. Moreover, this study considered some relevant explanatory variables like foreign direct investment, trade openness, financial development, gross fixed capital formation, energy consumption, urbanization to achieve the goal.Methods: Based on data, the study applied the Autoregressive Distributed Lag approach for achieving the goals. The paper enriches the existing literature by experiencing the present scenario of the association of foreign direct investment and CO2 emission focusing on typical countries like Bangladesh.Findings: The findings of the study revealed the long-run cointegration between the considered variables. This study finds an inverse relationship between foreign direct investment and CO2 emission; thus Autoregressive Distributed Lag results can't provide the validation of the pollution heaven hypothesis in Bangladesh. The results also show that in the case of financial development purposes there is no existence of environmental kuznet curve hypothesis in Bangladesh. This paper revealed that urbanization, gross fixed capital formation, and trade openness have a positive impact on CO2 emission while energy use reduces CO2 emissions.Conclusion: Based on the analysis, the paper suggested that Bangladesh should take the advantage of invalidity of the Pollution Haven Hypothesis and introduce environmentally friendly urbanization planning to mitigate the detrimental effect of environmental pollution