Economic growth, technology, and CO2 emissions in BRICS: Investigating the non-linear impacts of economic complexity.

Abstract

Upgrading economic structures and producing less pollution-intensive goods are indispensable for achieving Sustainable Development Goals (SDGs) in BRICS (Brazil, Russia, India, China, and South Africa) that produce 41% of global CO2 emissions. Economic complexity (ECC), which measures the sophistication of productivity and economic structure, has important environmental repercussions. Theoretically, the environmental impacts of economic complexity at higher levels and lower levels of complexity vary from each other. However, the majority of previous studies haveoverlooked these theoretical underpinnings while assessing the environmental repercussions of economic complexity. In addition, technological competencies are necessary to boost the economic complexity levels. Accordingly, this study uncovers the non-linear effects of economic complexity on CO2 emissions including technology, population density, and economic growth in a STIRPAT model. To this end, the panel data from 1992 to 2018 is analyzed using the Continuously Updated Fully Modified method (CuP-FM) in the context of BRICS. The long-run results uncovered that CO2 emissions intensify at a lower level of economic complexity. On the flip side, a higher level of economic complexity is beneficial in mitigating CO2 in BRICS. Hence, the economic complexity and CO2 connections follow an inverted U-shaped curve. The results also disclosed that expanding the level of technology lessens CO2 and stimulates the quality of the environment. Further, population density and economic growth are evidenced to intensify CO2. Moreover, economic complexity and technology Granger cause CO2. Lastly, strategies are directed in the context of Sustainable Development Goals 9 and 13 to control CO2 emissions by upgrading technology and products complexity.