The Effect of Trade Development on Fossil Fuel Consumption in South Asian Countries

Abstract

Utilizing the Autoregressive Distributed Lag (ARDL) framework for cointegration, this study performs a comprehensive long and short-run analysis of the connection between trade development and fossil fuel consumption using data from 1980 to 2020. Fossil fuel consumption in Bangladesh and Pakistan is influenced by exports, based on co-integration among the variables. Trade openness is positively significant in Nepal. This is in contrast to Bangladesh, where it is negatively significant. Additionally, the exchange rate employs a positive significance in Bangladesh and India while negative in Nepal. The short-run analysis reveals similar relational dynamics, whereas the exchange rate positively influences Pakistan.