Demet Beton Kalmaz and Tomiwa Sunday Adebayo
This paper aims to assess the moderating role of foreign direct investment (FDI) on the effect of economic complexity on carbon emissions, considering other drivers of carbon…
Abstract
Purpose
This paper aims to assess the moderating role of foreign direct investment (FDI) on the effect of economic complexity on carbon emissions, considering other drivers of carbon emissions such as renewable energy use and economic growth, using data set spanning between 1990 and 2018 in BRICS nations.
Design/methodology/approach
This research aims to fill the gap in ongoing literature. Cross-sectional IPS and cross-sectional augmented Dickey–Fuller tests, fully modified ordinary least square, dynamic ordinary least square, fixed effect ordinary least square, Westerlund cointegration and method of moments quantile regression (MMQR) econometric approaches are applied.
Findings
The Westerlund cointegration outcomes disclosed long-run interconnectedness between carbon emissions and its drivers. Furthermore, MMQR outcomes disclosed that in each tail (0.1–0.90), economic growth and economic complexity contribute to upsurge in carbon emissions while in each quantile (0.1–0.90) renewable energy abate carbon emissions. Furthermore, we affirmed the pollution-haven and environmental Kuznets curve hypotheses across all quantiles (0.1–0.90). Finally, at all quantiles (0.1–0.90), the joint effect of both FDI inflows and economic complexity reduced carbon emissions. Furthermore, the panel causality outcomes disclosed that all the exogenous variables can predict carbon emissions. Based on the findings, BRICS nation’s policymakers should place a greater emphasis on FDI inflows because it aids in abating environmental degradation.
Originality/value
To the best of the authors’ knowledge, this is the first research to test the moderating role of FDI on the effect of economic complexity on carbon emissions. Hence, this research aims to fill the gap in ongoing literature.
Details
Keywords
Bright Akwasi Gyamfi, Paul Adjei Kwakwa and Tomiwa Sunday Adebayo
The International Energy Agency states that the global energy intensity must reduce by 2.9% yearly before attaining Sustainable Development Goal 7.3 by 2030. However, the European…
Abstract
Purpose
The International Energy Agency states that the global energy intensity must reduce by 2.9% yearly before attaining Sustainable Development Goal 7.3 by 2030. However, the European Union (EU) seeking to attain a climate-neutral EU by 2050 shall require a substantial rate of reducing energy intensity. Consequently, this study aims to investigate how (clean) renewable energy, income, trade openness, technological innovation and nonrenewable energy consumption impact energy intensity for the EU countries.
Design/methodology/approach
The quantile regression, augmented mean group and causality techniques were used for analyses. Panel data for 26 EU nations over the 1990 and 2019 period was used.
Findings
The empirical evidence indicates that the variables have long-run equilibrium relationships. However, the analysis revealed that clean energy and income reduce energy intensity whiles trade, technological innovation and nonrenewable energy consumption increase energy intensity. An interactive term analysis shows that renewable energy and trade interact to reduce further, the negative effect of income on energy intensity. Causality results revealed a feedback connection between energy intensity and clean energy, income, trade liberalization as well as the interaction between income and trade liberalization. A one-way causality was obtained between energy intensity and technological innovation, nonrenewable energy consumption and the interaction between clean energy and income.
Practical implications
The results imply that EU countries stand to gain if more resources are committed to encouraging the production and consumption of cleaner/renewable energy. Advancement in policies that support renewable energy and facilitate green growth will help reduce energy intensity for the region. Trade policies that promote lower energy consumption should be strengthened.
Originality/value
The effect of renewable energy on energy intensity is assessed. The moderating impact of renewable energy and trade openness on the income–energy intensity relationship for the EU countries is examined. Moreover, this study uses the quantile estimation technique to assess the nonlinear effect of the explanatory variables on energy intensity.