Share:


Green investment, energy efficiency, and economic growth: does economic freedom matter? Evidence from BRICS countries

Abstract

Sustainable development goals, particularly number 7, clearly urges economies over the globe to multiple their efforts in order to improve efficiency. Although witnesses stressed out the importance of energy efficiency and claimed that when it is improved drastically, it triggers economic growth, however, the reported evidences to support the claim are mixed. In BRICS scenario, economies are experiencing the change from high-speed growth to high quality growth, due to which it is equally important to look into green investment as it is an essential tool to build high quality economic growth. Although green investment targets energy conservation as well as ecological deficit as it main goal. However, limited literature claims that it affects economic growth as well. Thus, the present study aims to assess green investment, energy efficiency, and economic growth (EG) and their impact on economic freedom index of the BRICS countries. Methods of Moments-Quantile-Regression (MMQR) approach is applied to explore the association between the understudy constructs in the time span of 2001–2020. Interestingly, it is revealed that green investment, energy efficiency and renewable energy are positively related with economic freedom index of the BRICS countries. With the evidences, the study proposes a conclusive remark to spur development across the countries.

Keyword : green investment, energy efficiency, economic growth, sustainable development, economic freedom index

How to Cite
Mu, H. (2024). Green investment, energy efficiency, and economic growth: does economic freedom matter? Evidence from BRICS countries. Technological and Economic Development of Economy, 30(1), 218–237. https://doi.org/10.3846/tede.2024.19442
Published in Issue
Feb 15, 2024
Abstract Views
238
PDF Downloads
299
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Adebayo, T. S., Akadiri, S. S., Adedapo, A. T., & Usman, N. (2022a). Does interaction between technological innovation and natural resource rent impact environmental degradation in newly industrialized countries? New evidence from method of moments quantile regression. Environmental Science and Pollution Research, 29(2), 3162–3169. https://doi.org/10.1007/s11356-021-17631-y

Adebayo, T. S., Rjoub, H., Akadiri, S. S., Oladipupo, S. D., Sharif, A., & Adeshola, I. (2022b). The role of economic complexity in the environmental Kuznets curve of MINT economies: Evidence from method of moments quantile regression. Environmental Science and Pollution Research, 29(16), 24248–24260. https://doi.org/10.1007/s11356-021-17524-0

Adesina, K. S., & Mwamba, J. W. M. (2019). Does economic freedom matter for CO2 emissions? Lessons from Africa. The Journal of Developing Areas, 53(3), 1–21. https://doi.org/10.1353/jda.2019.0044

Ahmed, Z., Ahmad, M., Rjoub, H., Kalugina, O. A., & Hussain, N. (2022). Economic growth, renewable energy consumption, and ecological footprint: Exploring the role of environmental regulations and democracy in sustainable development. Sustainable Development, 30(4), 595–605. https://doi.org/10.1002/sd.2251

Akadırı, S. S., Alola, A. A., & Usman, O. (2021). Energy mix outlook and the EKC hypothesis in BRICS countries: A perspective of economic freedom vs. economic growth. Environmental Science and Pollution Research, 28(7), 8922–8926. https://doi.org/10.1007/s11356-020-11964-w

Al-Gasaymeh, A. (2020). Economic freedom, country risk and cost efficiency in Jordan and the GCC countries. Global Business Review, 21(1), 1–17. https://doi.org/10.1177/0972150917749292

Alola, A. A., Alola, U. V., Akdag, S., & Yildirim, H. (2022). The role of economic freedom and clean energy in environmental sustainability: Implication for the G-20 economies. Environmental Science and Pollution Research, 29(24), 36608–36615. https://doi.org/10.1007/s11356-022-18666-5

Amoah, A., Kwablah, E., Korle, K., & Offei, D. (2020). Renewable energy consumption in Africa: The role of economic well-being and economic freedom. Energy, Sustainability and Society, 10(1), 1–17. https://doi.org/10.1186/s13705-020-00264-3

Assi, A. F., Zhakanova Isiksal, A., & Tursoy, T. (2020). Highlighting the connection between financial development and consumption of energy in countries with the highest economic freedom. Energy Policy, 147, Article 111897. https://doi.org/10.1016/j.enpol.2020.111897

Atkočiūnienė, Z. O., & Siudikienė, D. (2021). Communication management in promoting knowledge and creativity in fostering innovations in the creative organizations. Creativity Studies, 14(2), 549–576. https://doi.org/10.3846/cs.2021.15550

Azam, M. (2019). Relationship between energy, investment, human capital, environment, and economic growth in four BRICS countries. Environmental Science and Pollution Research, 26, 34388–34400. https://doi.org/10.1007/s11356-019-06533-9

BP. (2017). BP statistical review of world energy. 2017–06 (66th ed.) https://www.connaissancedesenergies.org/sites/default/files/pdf-actualites/bp-statistical-review-of-world-energy-2017-full-report.pdf

Brkić, I., Gradojević, N., & Ignjatijević, S. (2020). The impact of economic freedom on economic growth? New European dynamic panel evidence. Journal of Risk and Financial Management, 13(2), 26–39. https://doi.org/10.3390/jrfm13020026

Chaikumbung, M. (2021). Institutions and consumer preferences for renewable energy: A meta-regression analysis. Renewable and Sustainable Energy Reviews, 146, 111–126. https://doi.org/10.1016/j.rser.2021.111143

Cera, G., Khan, K. A., Blahova, A., & Belas, Jr. J. (2022). Do owner-manager demographics in SMEs matter for corporate social responsibility? Equilibrium. Quarterly Journal of Economics and Economic Policy, 17(2), 511–531. https://doi.org/10.24136/eq.2022.018

Chen, Y., Wang, Z., & Zhong, Z. (2019). CO2 emissions, economic growth, renewable and non-renewable energy production and foreign trade in China. Renewable Energy, 131, 208–216. https://doi.org/10.1016/j.renene.2018.07.047

Dat, N. M., Dai, N. Q., & Ngoc, P. B. (2022). The impact of corporate social responsibilities (CSR), entrepreneurship, and financial factors on the financial performance of the banks in ASEAN countries. Contemporary Economics, 16(2), 227–240.

Dean, J., & Geloso, V. (2022). Economic freedom improves income mobility: evidence from Canadian provinces, 1982–2018. Journal of Institutional Economics, 18(5), 807–826. https://doi.org/10.1017/S1744137421000850

Dkhili, H., & Dhiab, L. B. (2018). The relationship between economic freedom and FDI versus economic growth: Evidence from the GCC countries. Journal of Risk and Financial Management, 11(4), 81–95. https://doi.org/10.3390/jrfm11040081

Dodson, J. C., Dérer, P., Cafaro, P., & Götmark, F. (2020). Population growth and climate change: Addressing the overlooked threat multiplier. Science of the Total Environment, 748, Article 141346. https://doi.org/10.1016/j.scitotenv.2020.141346

Duan, C., Zhou, Y., Cai, Y., Gong, W., Zhao, C., & Ai, J. (2022). Investigate the impact of human capital, economic freedom and governance performance on the economic growth of the BRICS. Journal of Enterprise Information Management, 35(4/5), 1323–1347. https://doi.org/10.1108/JEIM-04-2021-0179

Dzwigol, H., Kwilinski, A., Lyulyov, O., & Pimonenko, T. (2023). The role of environmental regulations, renewable energy, and energy efficiency in finding the path to green economic growth. Energies, 16(7), Article 3090. https://doi.org/10.3390/en16073090

Fahimipour, A. K., Hartmann, E. M., Siemens, A., Kline, J., Levin, D. A., Wilson, H., Betancourt-Román, C. M., Brown, G. Z., Fretz, M., Northcutt, D., Siemens, K. N., Huttenhower, C., Green, J. L., & Van Den Wymelenberg, K. (2018). Daylight exposure modulates bacterial communities associated with household dust. Microbiome, 6(1), 1–13. https://doi.org/10.1186/s40168-018-0559-4

Filimonova, I., Nemov, V., Komarova, A., Mishenin, M., & Kozhevin, V. (2021). Relationship of renewable energy consumption to economic, environmental and institutional factors in Europe. Energy Reports, 7(5), 358–365. https://doi.org/10.1016/j.egyr.2021.07.115

Gouider, A. (2022). Impact of economic freedom on youth unemployment in the Gulf Cooperation Council Countries. Montenegrin Journal of Economics, 18(3), 67–75. https://doi.org/10.14254/1800-5845/2022.18-3.5

Graafland, J. (2019). Economic freedom and corporate environmental responsibility: The role of small government and freedom from government regulation. Journal of Cleaner Production, 218, 250–258. https://doi.org/10.1016/j.jclepro.2019.01.308

Gu, J., Renwick, N., & Xue, L. (2018). The BRICS and Africa’s search for green growth, clean energy and sustainable development. Energy Policy, 120, 675–683. https://doi.org/10.1016/j.enpol.2018.05.028

Hailiang, Z., Iqbal, W., Chau, K. Y., Raza Shah, S. A., Ahmad, W., & Hua, H. (2023). Green finance, renewable energy investment, and environmental protection: Empirical evidence from BRICS countries. Economic Research-Ekonomska Istraživanja, 36(2), 1–23. https://doi.org/10.1080/1331677X.2022.2125032

Hartani, N. H., Haron, N., & Tajuddin, N. I. I. (2021). The impact of strategic alignment on the sustainable competitive advantages: Mediating role of it implementation success and it managerial resource. International Journal of eBusiness and eGovernment Studies, 13(1), 78–96.

Hussain, H. I., Kamarudin, F., Anwar, N. A. M., Sufian, F., Ali, A., & Saudi, M. H. (2022). Social globalisation and efficiency of microfinance institutions nexus: Empirical evidence on financial and social efficiency. Engineering Economics, 33(1), 27–46. https://doi.org/10.5755/j01.ee.33.1.29130

Ike, G. N., Usman, O., & Sarkodie, S. A. (2020). Testing the role of oil production in the environmental Kuznets curve of oil producing countries: New insights from Method of Moments Quantile Regression. Science of the Total Environment, 711, 1–13. https://doi.org/10.1016/j.scitotenv.2019.135208

Jermsittiparsert, K. (2021). Linkage between energy consumption, natural environment pollution, and public health dynamics in ASEAN. International Journal of Economics and Finance Studies, 13(2), 1–21.

Law, C.-H., & Soon, S.-V. (2020). The impact of inflation on income inequality: The role of institutional quality. Applied Economics Letters, 27(21), 1735–1738. https://doi.org/10.1080/13504851.2020.1717425

Leitão, N. C., Balsalobre-Lorente, D., & Cantos-Cantos, J. M. (2021). The impact of renewable energy and economic complexity on carbon emissions in BRICS countries under the EKC scheme. Energies, 14(16), Article 4908. https://doi.org/10.3390/en14164908

Leitão, N. C., Dos Santos Parente, C. C., Balsalobre-Lorente, D., & Cantos Cantos, J. M. (2023). Revisiting the effects of energy, population, foreign direct investment, and economic growth in Visegrad countries under the EKC scheme. Environmental Science and Pollution Research, 30(6), 15102–15114. https://doi.org/10.1007/s11356-022-23188-1

Liao, X., & Shi, X. (2018). Public appeal, environmental regulation and green investment: Evidence from China. Energy Policy, 119, 554–562. https://doi.org/10.1016/j.enpol.2018.05.020

Liu, H., Wang, Y., Jiang, J., & Wu, P. (2020). How green is the “Belt and Road Initiative”? – Evidence from Chinese OFDI in the energy sector. Energy Policy, 145, 111–126. https://doi.org/10.1016/j.enpol.2020.111709

Machado, J. A., & Silva, J. S. (2019). Quantiles via moments. Journal of Econometrics, 213(1), 145–173. https://doi.org/10.1016/j.jeconom.2019.04.009

Mahmood, M. T., Shahab, S., & Shahbaz, M. (2022). The relevance of economic freedom for energy, environment, and economic growth in Asia-Pacific region. Environmental Science and Pollution Research, 29(4), 5396–5405. https://doi.org/10.1007/s11356-021-15991-z

Malanski, L. K., & Póvoa, A. C. S. (2021). Economic growth and corruption in emerging markets: Does economic freedom matter? International Economics, 166, 58–70. https://doi.org/10.1016/j.inteco.2021.02.001

Marin-Garcia, A., Gil-Saura, I., & Ruiz-Molina, M. E. (2022). Do innovation and sustainability influence customer satisfaction in retail? A question of gender. Economic Research-Ekonomska Istraživanja, 35(1), 546–563. https://doi.org/10.1080/1331677X.2021.1924217

Matuszewska-Pierzynka, A. (2021). Relationship between corporate sustainability performance and corporate financial performance: Evidence from US companies. Equilibrium. Quarterly Journal of Economics and Economic Policy, 16(4), 885–906. https://doi.org/10.24136/eq.2021.033

Mushtaq, S., Ejaz, R., & Khan, A. (2018). Economic freedom and sustainable development: A Panel Data Analysis. The Pakistan Journal of Social Issues (Special Issue), 89–97.

Niaz, M. U. (2021). Socio-Economic development and sustainable development goals: A roadmap from vulnerability to sustainability through financial inclusion. Economic Research-Ekonomska Istraživanja, 1–33. https://doi.org/10.1080/1331677X.2021.1989319

Özcan, K. M., & Özkan, A. U. (2018). The relationship between energy efficiency and economic performance in G20 countries. Topics in Middle Eastern and African Economies, Proceedings of Middle East Economic Association, 20(1), 1–20.

Ojogiwa, O. T. (2021). The crux of strategic leadership for a transformed public sector management in Nigeria. International Journal of Business and Management Studies, 13(1), 83–96.

Paraschiv, D. M., Manea, D. I., Țițan, E., & Mihai, M. (2021). Development of an aggregated social inclusion indicator. Disparities in the European Union on inclusion/exclusion social determined with social inclusion index. Technological and Economic Development of Economy, 27(6), 1301–1324. https://doi.org/10.3846/tede.2021.15103

Pathak, L., & Shah, K. (2019). Renewable energy resources, policies and gaps in BRICS countries and the global impact. Frontiers in Energy, 13, 506–521. https://doi.org/10.1007/s11708-018-0601-z

Pavlyk, V. (2020). Assessment of green investment impact on the energy efficiency gap of the national economy. Financial Markets, Institutions and Risks, 4(1), 117–123. https://doi.org/10.21272/fmir.4(1).117-123.2020

Rapsikevicius, J., Bruneckiene, J., Lukauskas, M., & Mikalonis, S. J. S. (2021). The impact of economic freedom on economic and environmental performance: evidence from European countries. Sustainability, 13(4), 23–39. https://doi.org/10.3390/su13042380

Ren, S., Hao, Y., & Wu, H. (2022). How does green investment affect environmental pollution? Evidence from China. Environmental and Resource Economics, 81(1), 25–51. https://doi.org/10.1007/s10640-021-00615-4

Sandberg, M., Klockars, K., & Wilén, K. (2019). Green growth or degrowth? Assessing the normative justifications for environmental sustainability and economic growth through critical social theory. Journal of Cleaner Production, 206, 133–141. https://doi.org/10.1016/j.jclepro.2018.09.175

Santiago, R., Fuinhas, J. A., & Marques, A. C. (2020). The impact of globalization and economic freedom on economic growth: The case of the Latin America and Caribbean countries. Economic Change and Restructuring, 53(1), 61–85. https://doi.org/10.1007/s10644-018-9239-4

Sart, G., Bayar, Y., Danilina, M., & Sezgin, F. H. (2022). Economic freedom, education and CO2 emissions: A causality analysis for EU member states. International Journal of Environmental Research and Public Health, 19(13), Article 8061. https://doi.org/10.3390/ijerph19138061

Şenalp, B. (2019). FDI and economic growth: The role of economic freedom. Journal of Economic Policy Researches, 6(1), 54-73.

Shafi, M., Szopik-Depczyńska, K., Cheba, K., Ciliberto, C., Depczyński, R., & Ioppolo, G. (2022). Innovation in traditional handicraft companies towards sustainable development. A systematic literature review. Technological and Economic Development of Economy, 28(6), 1589–1621. https://doi.org/10.3846/tede.2022.17085

Shahzad, M., Qu, Y., Rehman, S. U., & Zafar, A. U. (2022). Adoption of green innovation technology to accelerate sustainable development among manufacturing industry. Journal of Innovation & Knowledge, 7(4), Article 100231. https://doi.org/10.1016/j.jik.2022.100231

Shahnazi, R., & Dehghan Shabani, Z. (2021). The effects of renewable energy, spatial spillover of CO2 emissions and economic freedom on CO2 emissions in the EU. Renewable Energy, 169, 293–307. https://doi.org/10.1016/j.renene.2021.01.016

Shibli, R., Saifan, S., Ab Yajid, M. S., Khatibi, A., & Mohd Shukri, S. (2021). Mediating role of entrepreneurial marketing between green marketing and green management in predicting sustainable performance in Malaysia’s organic agriculture sector. AgBioForum, 23(2), 37–49.

Song, M., Du, J., & Tan, K. H. (2018). Impact of fiscal decentralization on green total factor productivity. International Journal of Production Economics, 205, 359–367. https://doi.org/10.1016/j.ijpe.2018.09.019

Streimikiene, D., & Akberdina, V. (2021). Public views of the economy of the renewable energy sources: Evidence from Russia. Contemporary Economics, 15(3), 256–267.

Sworobowicz, L., Mamos, T., Grabowski, M., & Wysocka, A. (2020). Lasting through the ice age: The role of the proglacial refugia in the maintenance of genetic diversity, population growth, and high dispersal rate in a widespread freshwater crustacean. Freshwater Biology, 65(6), 1028–1046. https://doi.org/10.1111/fwb.13487

Tiberius, V., Schwarzer, H., & Roig-Dobón, S. (2021). Radical innovations: Between established knowledge and future research opportunities. Journal of Innovation & Knowledge, 6(3), 145–153. https://doi.org/10.1016/j.jik.2020.09.001

Wirsbinna, A., & Grega, L. (2021). Assessment of economic benefits of smart city initiatives. Cuadernos de Economía, 126(44), 45–56.

Xie, F., & Zhang, B. (2021). Impact of China’s outward foreign direct investment on green total factor productivity in “Belt and Road” participating countries: A perspective of institutional distance. Environmental Science and Pollution Research, 28(4), 4704–4715. https://doi.org/10.1007/s11356-020-10849-2

Yevdokimov, Y., Melnyk, L., Lyulyov, O., Panchenko, O., & Kubatko, V. (2018). Economic freedom and democracy: Determinant factors in increasing macroeconomic stability. Problems and Perspectives in Management, 16(2), 279–290. https://doi.org/10.21511/ppm.16(2).2018.26

Yıldırım, D. Ç., Yıldırım, S., & Demirtas, I. (2019). Investigating energy consumption and economic growth for BRICS-T countries. World Journal of Science, Technology and Sustainable Development, 16(4), 184–195. https://doi.org/10.1108/WJSTSD-12-2018-0063

Yodchai, N., Ly, P. T. M., & Tran, L. T. T. (2022). Co-creating creative self-efficacy to build creative performance and innovation capability for business success: A meta-analysis. Creativity Studies, 15(1), 74–88. https://doi.org/10.3846/cs.2022.13852

Yousaf, Z., Radulescu, M., Nassani, A., Aldakhil, A. M., & Jianu, E. (2021). Environmental management system towards environmental performance of hotel industry: Does corporate social responsibility authenticity really matter? Engineering Economics, 32(5), 484–498. https://doi.org/10.5755/j01.ee.32.5.28619

Zaman, K., bin Abdullah, A., Khan, A., bin Mohd Nasir, M. R., Hamzah, T. A. A. T., & Hussain, S. (2016). Dynamic linkages among energy consumption, environment, health and wealth in BRICS countries: Green growth key to sustainable development. Renewable and Sustainable Energy Reviews, 56, 1263–1271. https://doi.org/10.1016/j.rser.2015.12.010

Zeraibi, A., Jahanger, A., Adebayo, T. S., Ramzan, M., & Yu, Y. (2023). Greenfield investments, economic complexity, and financial inclusion-environmental quality nexus in BRICS countries: Does renewable energy transition matter? Gondwana Research, 117, 139–154. https://doi.org/10.1016/j.gr.2022.12.020

Zhang, L., Godil, D. I., Bibi, M., Khan, M. K., Sarwat, S., & Anser, M. K. (2021). Caring for the environment: How human capital, natural resources, and economic growth interact with environmental degradation in Pakistan? A dynamic ARDL approach. Science of the Total Environment, 774, 1455–1467. https://doi.org/10.1016/j.scitotenv.2021.145553

Zhang, M., Liu, X., Sun, X., & Wang, W. (2020). The influence of multiple environmental regulations on haze pollution: Evidence from China. Atmospheric Pollution Research, 11(6), 170–179. https://doi.org/10.1016/j.apr.2020.03.008