How infrastructure development and technical efficiency change caused resources consumption in BRICS countries: Analysis based on energy, transport, ICT, and financial infrastructure indices

Abstract

Improved environmental quality and resource efficiency are essential policy plans for emerging economies. The vulnerability to climatic adversities initiates the need to construct and identify how to evaluate and ensure resource efficiency. Although many studies explore multiple deriving factors of resource consumption, very little is known regarding the integration of infrastructure, technical change, and trade-adjusted resource consumption. Hence, this study intends to examine the empirical links between disaggregated infrastructure development, technological efficiency change, and resource consumption using annual data of BRICS countries from 1990 to 2018. In doing so, we employ a cross-sectional augmented auto-regressive distributed Lag (CS-ARDL) estimator for short-term and long-term estimations that allows heterogeneity in the slope parameters and dependencies across countries. The results exhibit that cumulative and disaggregated (transport, energy, financial, and information and communication (ICT)) infrastructure development increase resources consumption across all model specifications; however, the magnitude of different infrastructure indices vary, such as transport and energy (financial and ICT) infrastructure producing the highest (lowest) impact. In contrast, technical efficiency changes and their interactive terms with each infrastructure development index decrease resource consumption, implying that the resource-depleting consequence of infrastructure development can be neutralized with higher technical efficiency, and the highest decoupling exists in energy and ICT infrastructure. Similar results are obtained using the Common Correlated Effect Mean Group (CCEMG) estimator. These results provide substantial policy implications.