Industrialization boosts economic growth but causes pollution, harming public health and raising healthcare costs. Inflation compounds this challenge, as rising prices make healthcare services, both preventive and curative, less accessible and affordable for the public. This research aims to identify the impact of industrialization and environmental pollution on health expenditure in Bangladesh. The study used time series data collected from 1997–2023. The study uses Johansen’s co-integration test, which identifies one co-integrated equation, and applies the Vector Error Correction Model (VECM) for estimation. The VECM results show a strong long-term connection. The error correction coefficient for health expenditure (which is the dependent variable) is negative and significant at 1%, showing a stable long-term connection between environmental pollution, industrialization, inflation, and health expenditure. Furthermore, all independent variables—industrialization, pollution and inflation—have a positive and significant impact on health expenditure. There is also evidence of short-term causality among these variables. To address these issues, the study recommends that the Bangladeshi government adopt targeted policies, including promoting sustainable agriculture practices, expanding renewable energy sources, and restoring ecosystems. Enhancing urban green spaces, regulating industrial waste, and investing in healthcare infrastructure are crucial steps to mitigate pollution's health impacts and support sustainable economic growth. Community engagement in environmental practices would support these efforts, fostering sustainable development and economic resilience.

Keywords: Industrialization, Environmental pollution, Inflation, Health expenditure, VECM.