The Impact of Renewable Energy and Economic Complexity on Carbon Emissions in BRICS Countries under the EKC Scheme

Abstract

Economic complexity makes it possible to assess the development of the countries, the relations of innovation, and the differentiation of products. The article considers the links between the hypotheses of the Kuznets environmental curve and economic complexity using panel data for the group of BRICS countries (Brazil, Russia, India, China, and South Africa) from 1990 to 2015. As an econometric strategy, this study considered the panel fully modified least squares (FMOLS), panel dynamic least squares (DOLS), fixed effects (FE), and Panel Quantile Regression. The empirical results showed that economic complexity, income per capita, renewable energy, and carbon dioxide emissions are integrated with the first difference when applying the unit root test. The arguments of Pedroni and Kao cointegration tests were also used. According to these results, the variables used in this research are cointegrated in the long run. The results validated the arguments of the EKC hypothesis, i.e., the income per capita and squared income per capita are positively and negatively correlated with CO2 emissions. Moreover, economic complexity and renewable energy aim to improve environmental damage and climate change.