Oil Subsidy, Economic Growth and Environmental Concerns in the Brics Countries

Abstract

This research examined the relationship existing between subsidies, economic growth and environmental performance and also tested empirically; the existence or otherwise of Environmental Kuznets Curve (EKC) in four of the BRICS’ countries using the method of Panel Least Squares and Fully Modified Least Squares (FMOLS). The data for this study spanned from 1990 to 2018. The study found among others; the non-significant EKC for the BRICS countries analysed. Trade openness did not increase economic growth of the BRICS significantly, but it significantly fuelled emissions. Capital formation however, positively contributed to economic growth. Subsidies and transfers significantly increased productivity in the BRICS. Subsidy exerted no significant impact on carbon dioxide emission in the BRICS. The study recommends that BRICS countries must reorganise their economies so as to gain more from trade while putting up measures towards reducing the environmental impacts of trade liberalisation. Capital formation needs boosting so as to encourage growth. In addition to the above, more beneficial subsidies which do not raise environmental concerns may be encouraged so as to enhance further economic growth.