Income inequality, economic growth, renewable energy usage, and environmental degradation in the Belt and Road initiative countries: dynamic panel estimation

Abstract

This study investigates the effect of income inequality, carbon dioxide emissions, renewable energy consumption, and economic growth on each other's in the Belt and Road initiative countries from 2002 to 2019. By using OLS, fixed effect, difference GMM, system GMM, and seemingly unrelated regression (SUR) models, the results show that income inequality and renewable energy consumption are reduced while economic growth, foreign direct investment, and financial development have an increasing effect on carbon emissions. The effect of carbon emissions and renewable energy consumption is negative, while economic growth is positive and negative for income inequality across different models. Income inequality, carbon dioxide emissions, economic growth, and foreign direct investment are negatives for renewable energy consumption. Income inequality is positive, while carbon dioxide and financial development negatively affect economic growth. The findings have considerable policy implications for the sample countries regarding income distribution, energy use, environmental quality, and enhancing economic growth. The countries should focus on acquiring renewable energy sources to increase economic growth and reduce environmental pollution.