Abstract
Investments in green energy projects are highly critical to promoting climate transition and sustainable development. This objective motivates the investigation of the effect of green investments on inclusive growth. We develop an endogenous inclusive growth model that illustrates the channel through which private and public investments in green investments contribute to inclusive growth. By employing a dataset of the BRICS economies from 1990 to 2019, we fit both linear fixed-effects and fixed-effects threshold regression, the latter of which exhibits better prediction of green investment effects. Accordingly, the threshold regression estimates reveal that higher thresholds of green investments substantially accelerate inclusive growth in the BRICS economies. Furthermore, by controlling for the threshold role of financial sector development, we document the heterogeneous effects of green investments on inclusive growth. Unlike financial institutions’ development thresholds, a higher level of overall financial development and financial market development strengthens the positive role of green investments. Our findings offer impeccable policy actions to the governments and policymakers of the BRICS economies on pathways to promote green energy investments for sustainable development.
Published Version
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