The impact of financial development and energy consumption on ecological footprint in economic complexity‐based EKC framework: New evidence from BRICS‐T region

Abstract

AbstractThis study investigates the impact of financial development, nonrenewable energy, renewable energy, and trade openness on the ecological footprint from 1990 to 2020 under the new hypothetical imitations of the economic complexity‐induced environmental Kuznets curve (EKC) framework in BRICS‐T economies. After verifying the potential cross‐sectional dependency, this study employed second‐generation panel data tests to estimate the consistent, unbiased, and robust results. The key results of this research discover that the influence of economic complexity increases pollution at the initial stage; however, at the second stage such as the square of economic complexity significantly reduces it, which indicates the confirmation of the EKC hypothesis in these economies. Moreover, financial development and nonrenewable energy consumption significantly increase the level of ecological footprint. In contrast, renewable energy consumption curtails the pollution level in all quantiles. The results provide insight for government and policymakers to diminish the ecological footprint in BRICS‐T economies through clean energy technologies and diversification, such as carbon storage and capture.