The Relationship between Oil Consumption and Economic Growth in Bangladesh: An Empirical Analysis

Today, oil is considered as a dynamic factor that helps to sustain
modern economic activities as well as wellbeing of a nation. To the
best of our knowledge, no study has been done in the context of
Bangladesh regarding the causal relationship between oil
consumption and economic growth. Hence, the aim of this paper is to
empirically analyze the long-run causal relationship between oil
consumption and economic growth in Bangladesh by using annual
data ranging from 1980 to 2015. Johansen’s Cointegration test
results reveal that all variables are cointegrated and Granger
Causality test results show that a unidirectional causality is running
from oil consumption to economic growth, which goes hand to hand
with the growth hypothesis. Thus, Bangladesh should adopt
appropriate energy policy to curb down the constraints regarding oil
consumption and oil products distribution in order to continue the
stable economic growth and reach Middle-Income status by 2021.

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