Toufique, Mohammad Mokammel Karim
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Impact of Urbanization, Development Level, and Openness on Institutions in Bangladesh: An ARDL Investigation Using Two Measures of Institutional Quality Toufique, Mohammad Mokammel Karim
Randwick International of Social Science Journal Vol. 5 No. 3 (2024): RISS Journal, July
Publisher : RIRAI Publisher

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.47175/rissj.v5i3.1032

Abstract

Future development policies require a better understanding of the various factors that affect the quality of institutions in Bangladesh. In this paper, we estimate empirical ARDL models to investigate the roles of urbanization, openness, and the level of development as determinants of institutional quality. We use two measures of institutional quality, both derived from the World Bank’s Worldwide Governance Indicators (WGIs). The first proxy, INQ, is a composite index developed from the six WGIs using Principal Component Analysis (PCA). The second indicator, AvgINQ, is the average of the six WGIs. For each indicator of institutional quality, three models were estimated, resulting in six models in total. The impact of urbanization on institutional quality is consistent in terms of sign and significance across all six models, a claim that cannot be made for the other variables in the model. The error correction term reflects dampening convergence to equilibrium for the first proxy for institutional quality but regular convergence when the second proxy is used. In terms of ARDL diagnostics, models with AvgINQ as the dependent variable perform better. The Johansen cointegration test confirms the existence of a long-term relationship among the variables in all the models. Pairwise Granger causality tests are also conducted. The findings emphasize the importance of managing urbanization pressure for better institutional quality.
The Impact of Institutional Quality on Environmental Quality: A Time-Series Analysis of Bangladesh (1996-2015) Toufique, Mohammad Mokammel Karim
Journal of Developing Economies Vol. 10 No. 1 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i1.63447

Abstract

This paper examines the influence of institutional quality on environmental quality in Bangladesh from 1960 to 2015. While institutional quality is the primary explanatory variable, GDP and natural gas electricity consumption are included as moderating variables to control for economic activity and energy-related influences on the environment. The study utilizes the autoregressive distributed lag (ARDL) bounds testing approach and the Toda-Yamamoto (T-Y) Granger causality test to analyze the association. Two measures of institutional quality are developed. One is a composite index constructed from the Worldwide Governance Indicators (WGIs) using principal component analysis (PCA). The other is the average of the six WGIs. Regardless of the index, the findings indicate that higher institutional quality helps reduce CO2 emissions. On the contrary, both GDP and ENG tend to increase CO2 emissions. The ARDL bounds test results confirm the existence of a long-run relationship among the variables in both models. Policymakers need to concentrate on improving institutions to improve environmental quality. Concurrently, they must ensure that economic progress and electricity generation production are sustainable in Bangladesh.