Influence of trade liberalization and digital trade on material footprint in the BRICS region

Abstract

Resource efficiency (REF) is essential in designing a sustainable climate policy. Environmental susceptibility and resource deficiency instigate the economies worldwide on how to maintain and identify the factors of REF. Although numerous studies explore the determinants of sustainable resource management, scant attention has been given which integrates and evaluating its linkage with trade liberalization (TL), digital trade (DT), and technology innovations (TI). In this dimension, our study scrutinizes the influence of TL, DT, and TI on REF in BRICS economies using the annual data from 2005 to 2021. Besides, economic prosperity (GDP) and industrial value addition (IVA) are included as control variables to enhance the model's performance. For empirical assessment, the study employs the cross-sectional autoregressive distributed lag (CS-ARDL) technique to address the issues of cross-section dependency and slope heterogeneity. The model's findings reveal that TL, DT, and TI are the significant factors of REF in reducing the resource footprint; however, GDP and IVA decrease the REF by spurring resource consumption. In addition, the findings are echoed through alternative panel estimators. The overall outcomes provide result-based recommendations to the policymakers that they should promote digital transformation and technological enhancements in international trade policy to achieve resource sustainability.