Does foreign direct investment moderate the effect of economic complexity on carbon emissions? Evidence from BRICS nations
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 26 July 2023
Issue publication date: 21 May 2024
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.
Keywords
Acknowledgements
Funding: This research did not receive any specific grant from funding agencies in the public, commercial or not-for-profit sectors.
Conflict of interest: The authors declare there is no conflicts of interest to disclose.
Citation
Beton Kalmaz, D. and Adebayo, T.S. (2024), "Does foreign direct investment moderate the effect of economic complexity on carbon emissions? Evidence from BRICS nations", International Journal of Energy Sector Management, Vol. 18 No. 4, pp. 834-856. https://doi.org/10.1108/IJESM-01-2023-0014
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited