Growth In BRICS Countries Research Articles

Impact of natural resources and globalization on green economic recovery: Role of FDI and green innovations in BRICS economies

Considering the green perspective of economic growth, researchers, policymakers, and environmental activists have shown their deep concerns in recent times. However, determining sustainable economic growth is not an independent phenomenon. Hence, this study examines the impact of natural resources, globalization, foreign direct investment, and environmental technologies on the green growth in BRICS countries during 1990–2020. Initial results confirm the presence of cross-sectional dependency and slope; therefore, we employ a cross-sectionally augmented autoregressive distributed lags (CS-ARDL) estimator. The empirical finding shows that globalization, environmental technologies, and human capital encourage green growth in the BRICS. In contrast, the inflow of foreign investment and dependency on natural resources reduces green growth. The results suggest that the government in BRICS should promote international association through economic, political, and social globalization along with green technology innovations to achieve sustainable economic growth. Policy suggestions are also provided to control the adverse effect of foreign investment and natural resources toward a green economic recovery.

Causal nexus between air transportation and economic growth in BRICS countries

Air transportation is important factor which helps to vibrate economic activities in any economy. This paper explore causal nexus between air transportation and economic growth in BRICS countries by using balanced panel date for the period 1993–2019. Numbers of air passengers and air freight are used as measures of air transportation. Panel time series econometric techniques coupled with panel Vector Error Correction Model and Dumitrescu and Hurlin tests are applied for causal analysis. Unidirectional long run causalities are found from air passengers and airfreight to economic growth in these countries. Likewise, one way short run causal relation from air transportation to economic growth is found in these countries. Based on the findings of this, there is economic significance of air transportation in these countries, hence, important policy implications are discussed.

BRICS-T Ülkelerinde Ekonomik Büyüme Üzerinde Yenilenebilir Enerji Tüketiminin Etkisi

In this study, it is aimed to investigate the effect of renewable energy consumption on economic growth in BRICS countries and Turkey. In this context, panel data analysis in the form of coefficient estimates and causality analysis was applied using annual data for the period 1990-2018. Within the scope of the determinants of economic growth, besides the renewable energy consumption variable which forms the basis of the study, the variables of capital accumulation, population, trade openness, foreign direct investments and non-renewable energy consumption are also used. According to the coefficient estimation results made with the fixed effects model, it has been determined that the increase in renewable energy consumption has negative and significant effects on economic growth. On the other hand, it has been determined that the increase in non-renewable energy consumption has a positive effect. In addition, it is among the findings that the increase in capital accumulation has a positive effect on economic growth and the increase in trade openness has a negative effect. Finally, Dumitrescu-Hurlin (2012) panel causality test results revealed that there is a unidirectional causality relationship from renewable energy consumption to economic growth. Accordingly, it was seen that the growth hypothesis was valid among the variables.

Does investment in energy matter for economic growth? Evidence from BRICS countries

PurposeThis study aims to explore the impact of energy investment on economic growth. Specifically, the study investigates the impact of energy consumption, foreign investment, infrastructure development, tax revenue, human capital, international tourism revenue and trade volume on economic growth.Design/methodology/approachTo achieve the aim, the authors sample the 24-years (1996–2019) financial statistics of BRICS countries. Given the econometric recommendations supplemented by the Johnsen cointegration test, the current study uses the fully modified ordinary least square model for regression analysis and checks the robustness through robust least square model.FindingsThe statistical analysis shows a direct impact of energy investment on economic growth. In addition, the statistical results indicate a positive impact of energy consumption, foreign investment, infrastructure development, tax revenue, human capital and trade volume on economic growth.Research limitations/implicationsThe results present practical implications for policymakers regarding the adequate investment in energy production that can further promote the economic growth in BRICS countries. Policy officials should enhance the volume of renewable energy production, foreign investment and tax revenue. Additionally, it is equally suggested to policymakers regarding the development of infrastructure and human capital to ensure economic growth.Originality/valueThis study supplements the novel and robust evidence on investment in energy-leading economic growth.

A REVIEW OF THE NEXUS BETWEEN ENERGY CONSUMPTION AND ECONOMIC GROWTH IN THE BRICS COUNTRIES

The study investigates the long run relationship and causal relationship between energy consumption and economic growth in the Brics countries during the period 1990 – 2013. The Pedroni panel co-integration method is applied to analyse the co-integration relationship among the variables. The causality relationship among the variables is analysed using Pair-wise Granger-causality technique. The study’s results reveal that there is a long run relationship between economic growth, energy consumption, employment and trade openness in Brics countries. The research outcome further detected a unidirectional causality flowing from economic growth to energy consumption. This implies that the conservation policies that curb unnecessary loss in energy could be implemented in the Brics countries without adversely affecting economic growth.

Does energy innovation play a role in achieving sustainable development goals in BRICS countries?

ABSTRACT It is widely discussed that greenhouse gases (GHGs) are the main culprit behind global warming. The conventional energy sources (oil, coal, and gas) mainly realize GHGs in the atmosphere. Due to this, the world’s countries are switching towards clean energy sources and investing more in projects related to innovation in the energy sector. Thus, this study investigates the role of energy innovation in combating GHGs emissions by taking the environmental Kuznets curve for BRICS economies. The FMOLS and DOLS estimators are employed throughout 1996-2016. The findings documented that energy innovation plays an important role in mitigating GHGs emissions. Moreover, the result strongly approves the EKC hypothesis for BRICS countries in the significance of energy innovation. Finally, it is recommended that expanding the public budget in energy R&D expenditures can help to reduce GHG emissions and promote sustainable growth in BRICS countries.

Foreign direct investment, trade openness and economic growth in BRICS countries: evidences from panel data

In this paper we investigate the causal relationship between foreign direct investment, trade openness and gross domestic product in BRICS countries over the period of 1990–2018. We applied auto regressive distributed lag model to test cointegration and the Dumitrescu and Hurlin Granger causality tests. Empirical results show that FDI and trade openness have a positive impact on long-term economic growth. We also find there is a long-run relationship from both real effective exchange rate and gross capital formation to economic growth. The main results of causality analysis reveal that there is bidirectional causality from foreign direct investment to economic growth, trade openness to foreign direct investment, and unidirectional causality from trade openness to foreign direct investment.

Is Export Diversification or Export Specialization Responsible for Economic Growth in BRICS Countries?

ABSTRACT The study investigates whether export diversification or export specialization is more useful toward promoting economic growth in BRICS countries. We estimate a dynamic growth model augmented with trade activity to capture the diversification-concentration trade-off with economic growth for BRICS economies over the period of 1995 to 2017 using FMOLS, DOLS, and PMG estimators. Altogether, we find a positive (negative) relationship between export concentration (diversification) and economic growth in BRICS countries. Further analysis points to a semi-inverted U-shaped diversification schedule, of which the BRICS countries have crossed their “inflexion point” of development and need to re-specialize their export baskets.

The impact of infrastructure investment and development on economic growth on BRICS

Purpose The purpose of the paper is to examine the impact of infrastructure investment and development on economic growth in Brazil, Russia, India, China and South Africa (BRICS) countries. The effect is examined for each country separately and also collectively by combining each country. Design/methodology/approach Ordinary least square regression method is applied to examine the effects of infrastructure investment and development on economic growth for each country. Panel data techniques such as panel least square method, panel least square fixed-effect model and panel least square random effect model are used to examine the collective impact by combining all countries in BRICS. The dynamic panel model is also incorporated for analysis in the study. Findings The results of the study are mixed. The association between infrastructure investment and development and economic growth for countries within BRICS is not robust. There is an insignificant relationship between infrastructure investment and development and economic growth in Brazil and South Africa. Energy and transportation infrastructure investment and development lead to economic growth in Russia. Telecommunication infrastructure investment and development and economic growth have a negative relationship in India, whereas there is a negative association between transport infrastructure investment and development and economic growth in China. Panel data results conclude that energy infrastructure investment and development lead to economic growth, whereas telecommunication infrastructure investment and development are significant and negatively linked with economic growth. Originality/value The study is novel as time series analysis and panel data analysis are used, taking the time span for 38 years (1980–2017) to investigate the influence of infrastructure investment and development on economic growth in BRICS Countries. Time-series regression analysis is used to test the impact for individual countries separately, whereas panel data regression analysis is used to examine the impact collectively for all countries in BRICS.

The impression of technological innovations and natural resources in energy-growth-environment nexus: A new look into BRICS economies

We utilize extended STIRPAT “(stochastic impact of regression on population, affluence, and technology)” model to explore the impact of technological innovations and natural resources in energy-growth-environment nexus for a panel of BRICS “(i.e., Brazil, Russia, India, China, and South Africa)” economies over 1985–2014. Using Augmented Mean Group (AMG), and Fully Modified-Least Square (FM-LS) panel algorithms, the results indicate that technical innovations can reduce CO2 emissions and help to improve economic growth in BRICS countries. Furthermore, our estimates support energy push emissions and validate the existence of the traditional “environmental Kuznets curve (EKC)” for BRICS and partially across the countries. Moreover, the empirical results indicate one-way causality from income to CO2; a two-way causal relationship is operational between income and energy use and between energy use and CO2 emissions in BRICS and individual countries. The results suggest that policymakers may consider the role of innovations as a clean source of technology to achieve energy security and a sustainable environment.

Socio-economic inequality and economic growth in BRICS countries: relationships and policy options

This paper assesses the influence of economic growth on socio-economic inequality in the Brazil, Russia, India, China, and South Africa (BRICS) countries, using a yearly dataset from 1980 to 2017. The long-run equilibrium relationships were established via Pesaran et al.'s autoregressive distributed lag (ARDL) cointegration technique, as well as, Toda and Yamamoto's granger no-causality approach in a two-variable vector autoregression model. The outcome of the estimated causality test detected both unidirectionally and bidirectionally causal effects in the short-run for all the variables. Our study, therefore, concluded that the long-run equilibrium relationships between economic growth and socio-economic inequalities in the BRICS countries vary from one country to another, but were largely insignificant in the models of Russia and China during the study period. This is tacit support for the Kuznets hypothesis in both China and Russia. All robustness checks validated our main findings. Varied policy options and recommendations are highlighted.

Socio-economic inequality and economic growth in BRICS countries: relationships and policy options

This paper assesses the influence of economic growth on socio-economic inequality in the Brazil, Russia, India, China, and South Africa (BRICS) countries, using a yearly dataset from 1980 to 2017. The long-run equilibrium relationships were established via Pesaran et al.'s autoregressive distributed lag (ARDL) cointegration technique, as well as, Toda and Yamamoto's granger no-causality approach in a two-variable vector autoregression model. The outcome of the estimated causality test detected both unidirectionally and bidirectionally causal effects in the short-run for all the variables. Our study, therefore, concluded that the long-run equilibrium relationships between economic growth and socio-economic inequalities in the BRICS countries vary from one country to another, but were largely insignificant in the models of Russia and China during the study period. This is tacit support for the Kuznets hypothesis in both China and Russia. All robustness checks validated our main findings. Varied policy options and recommendations are highlighted.

Human Capital Development and Economic Growth in BRICS Countries: Controlling for Country Differences

This paper investigates the effect of human capital development on economic growth, as well as controlling for country differences, in the BRICS economies – from 1990 to 2017. Ordinary Least Square (OLS) and Generalized Method of Moments (GMM) were used as the estimation techniques. We use one-way ANOVA and Scheffe pairwise comparison tests to understand how human capital development differed between each pair of countries. Findings suggest that the effect of human capital development on economic growth, though significant, was limited in these countries. A comparative analysis of results showed that China, Brazil and Russia were able to utilise their human capital to enhance economic growth more efficiently than South Africa and India. Consequently, this study observed that a 1% increase in government expenditure on education would result in a 0.13% increase in GDP for China, a 0.06% increase in Russia, a 0.07% increase in Brazil, a 0.04% increase in South Africa, and a 0.01% increase in GDP in India. In addition, the study concluded that human capital development practices differ in all the countries. Although this result was previously implied in the literature, comparison of a comprehensive list of human capital development practices among countries was lacking. Overall, the paper argues that the classical theory of economic growth, in combination with the new theory, and also the theory of market value, will not only help sustain a strategy tripod, but also shed significant light on the most fundamental questions confronting human capital development and economic growth in many developing economies.

Do renewable energy consumption and service industry development contribute to CO2 emissions reduction in BRICS countries?

In recent years, BRICS countries have attached great importance to renewable energy development and actively promoted the shift of economic structure towards service industry, in order to achieve the decoupling of economic development from carbon emissions. However, relevant studies mostly neglect the cross-sectional dependence and heterogeneity issues, which may cause biased results. Therefore, this paper selects the panel data of BRICS countries during 1996-2017 and employs the common correlated effects mean group (CCEMG) method, which are based on the cross-sectional dependence and heterogeneity assumptions, to explore the influence of renewable energy consumption and service industry development on CO2 emissions in BRICS countries. Besides, we also use the random effects model and pooled estimated generalized least squares model, as well as fully modified OLS model for comparison. The results indicate that enhancing the proportion of renewable energy consumption in the total energy consumption is an effective measure to reduce CO2 emissions in BRICS countries. Moreover, the steadily rising contribution of service industry to economic growth in BRICS countries during the sample period does not necessarily contribute to reduce CO2 emissions.

Role of External and Domestic Demand in Economic Growth: A Study of BRICS Countries

Despite the global downturn since 2008, the growth in BRICS countries as a group is least hampered as compared to the growth in the world, in general, and developed countries, in particular. Is it due to the strong domestic demand factors or external factors is an empirical question to be answered. Further, some economists are promulgating for a new development strategy of domestic demand-led growth. Hence, this article tries to examine the role of domestic and external demand to growth in BRICS countries. Domestic investment is taken to explore the impact of domestic demand on growth, while export and import variables are used to investigate the role of external demand in economic growth. To cater to the objective, causality analysis is done among exports, imports, domestic investment and economic growth using the vector auto regression analysis. Generalized impulse response functions are plotted to get an insight of dynamic interrelationships among these variables. The results are country-specific and mixed evidence of export-led and domestic demand-led growth is found depending on the individual countries of BRICS.

Financial development, openness in financial services trade and economic growth

PurposeThe purpose of this paper is to examine the relationship between financial development, openness in financial services trade and economic growth in BRICS countries for the period 1990–2012.Design/methodology/approachAn index for financial development has been constructed using principal component analysis technique by including banking sector development, stock market development, bond market development and insurance sector development. For the robustness of the result, the long-run cointegrating relationship amongst the variables has been analyzed.FindingsOverall financial development has a positive and significant impact on economic growth. To take the full advantage of openness in financial services trade, countries need to put more emphasis on the development of their stock markets, bond markets and the insurance sector. The result shows that openness in financial services trade has a positive impact on economic growth when the stock market, bond market and insurance sector are included in the system.Research limitations/implicationsThe policy implication of the findings is that policymakers should focus more on developing all four areas of finance to get the full benefit of the financial system on the process of economic growth.Originality/valueThe authors have constructed the better indicators of financial development in the case of BRICS economies. Most of the studies in BRICS economies have measured the development of the financial sector as either banking sector development or stock market development. However, the present study includes all four areas of finance (banking sector development, stock market development, insurance sector development and bond market development) into account.

Outward FDI, human capital and economic growth in BRICS countries: an empirical insight

This paper examines the impact of outward FDI on human capital, gross capital formation, inflation, trade openness, and economic growth of BRICS countries over the period 1985–2017. In order to measure the outward FDI impact upon the set of regressors and to find out short vs long run relationship, we have used the familiar Fisher and Johansen’s Co-integration tests, and vector-error correction model. Empirical results exhibit that outward FDI has a positive impact on human capital during the short run, whereas in the long run this impact is quite insignificant. Furthermore, results exhibit that outward FDI has substantially raised the economic growth of BRICS countries both in short and long run. Moreover, panel causality result reveals that there is a bidirectional relationship between outward FDI and human capital, indicating that if there is an improvement in the quality of skilled labour through education, it would facilitate to raise the outward investment.

Visiting effects of crude oil price on economic growth in BRICS countries: Fresh evidence from wavelet-based quantile-on-quantile tests

We try to empirically document the effects of crude oil price on the economic growth in BRICS countries using wavelet-based quantile-on-quantile method which is used to decompose the raw information into different investor horizons and address the comprehensive effects across different quantiles. We find evidence that the heterogeneous effects exist in different countries, periods and quantiles due to diverse oil policies and economic development. Moreover, we find a positive effect in the BRICS countries, which weakens when oil price is at a high level in Brazil and Russia, and weakens over time in India. Regarding China, the positive effect is shown in the short and medium term, then a negative impact occurs, however, oil price stimulates economic growth in the long run. For South Africa, a negative effect is only observed in the short run, yet the positive effect reemerges although diminishes over time. Our empirical results are of great significance for policy implications in BRICS countries to maintain a safe and stable economic system.

The effect of biomass energy consumption on economic growth in BRICS countries: A country-specific panel data analysis

In this study, the relationship between economic growth and biomass energy consumption has been examined within the framework of the production function for Brazil, Russia, India, China, and South Africa—the BRICS countries from 1992 to 2013 using the cross-sectionally augmented Im, Pesaran and Shin (CIPS) panel unit root test, the Westerlund and Edgerton bootstrap LM panel cointegration test, and the bootstrap panel causality test that allow cross-sectional dependence. The results show that the growth hypothesis is valid in Brazil and India; however, the conservation hypothesis is valid in China and South Africa. The hypothesis that applies to Russia is the feedback hypothesis. The main finding is that BRICS countries should increase the use of biomass energy consumption to sustainable environment, promoting economic growth and reducing energy dependency.

Economic Growth, Financial Development, and Income Inequality in BRICS Countries: Does Kuznets’ Inverted U-Shaped Curve Exist?

This paper aims to examine the causal relationships between economic growth, financial development, and income inequality in BRICS countries, namely, Brazil, Russia, India, China, and South Africa, using annual panel data covering the period 1990–2015. We construct the financial development index for each country by applying the principal component method on the main four proxies of financial development, i.e., domestic credit provided by banking sector, domestic credit provided to private sector, broad money supply, and stock market capitalization. Our empirical findings provide evidence supporting Kuznets’ inverted U-shaped hypothesis on economic growth and income inequality linkage. We find that the linear term of per capita GDP growth has positive sign and squared term has negative sign and statistically significant at the 1% significance level in all specifications. Moreover, our findings lend support for Kuznets’ inverted U-shaped relationship between financial development and income inequality. We find that the linear terms of all financial development proxies have positive signs and squared terms have negative signs and statistically significant at the 5% significance level in all specifications. Further, the Granger causality test results confirm a unidirectional causality running from all financial development proxies to income inequality and a bidirectional causal relationship between inflation and income inequality is found, while a unidirectional causality running from income inequality to economic growth is found, indicating that income inequality negatively affects economic growth in BRICS countries.