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What drives energy consumption in BRICS countries? Evidence from ARDL bounds testing approach

What drives energy consumption in BRICS countries? Evidence from ARDL bounds testing approach
What drives energy consumption in BRICS countries? Evidence from ARDL bounds testing approach

Rapid urbanization, openness and growth in human development index are some of the leading determinants of energy consumption in developing countries, particularly in BRICS economies (Brazil, Russia, India, China and South Africa). Thanks to their innate tendency to converge to the growth path of developed nations, BRICS countries are under increasing pressure to limit high energy consumption-triggered by outsourcing from developed nations. This paper attempts to weigh the relative importance of various determinants of energy consumption in BRICS countries between 1980 and 2016, studying in-depth the long-run co-movement pattern of energy consumption with demographic characteristics (depicting demand pressure) and macroeconomic aggregates (depicting cheap production cost). By leveraging on the trade-off between domestic and foreign demand and by employing the autoregressive distributed lag bounds testing approach, we establish differential effects of various predictors: Whilst an increase in population growth rate, gross domestic product and capital account openness exert a positive and significant impact on energy consumption in Brazil, China and South Africa, foreign direct investment (FDI) and human development appear to enhance energy consumption in India, China and South Africa. The growth in external demand and the FDI inflows appear to have pushed urbanization, leading to greater energy consumption during the study period. Keeping in mind the sustainability goal, stronger green energy practices and sustainable urbanization patterns are needed to curb excessive energy sources.

BRICS countries, Energy consumption, FDI, HDI, trade openness, urbanization
0217-5908
Behera, Smruti Ranjan
a34cd079-b16b-41ea-b64d-adc36c754f5e
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
Dash, Devi Prasad
1c185f2f-29da-46b7-a448-b060570f8748
Mallick, Lingaraj
1f11a84e-3438-4734-9519-4c9e1b036825
Behera, Smruti Ranjan
a34cd079-b16b-41ea-b64d-adc36c754f5e
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
Dash, Devi Prasad
1c185f2f-29da-46b7-a448-b060570f8748
Mallick, Lingaraj
1f11a84e-3438-4734-9519-4c9e1b036825

Behera, Smruti Ranjan, Mishra, Tapas, Dash, Devi Prasad and Mallick, Lingaraj (2021) What drives energy consumption in BRICS countries? Evidence from ARDL bounds testing approach. Singapore Economic Review, [2150053]. (doi:10.1142/S0217590821500533).

Record type: Article

Abstract

Rapid urbanization, openness and growth in human development index are some of the leading determinants of energy consumption in developing countries, particularly in BRICS economies (Brazil, Russia, India, China and South Africa). Thanks to their innate tendency to converge to the growth path of developed nations, BRICS countries are under increasing pressure to limit high energy consumption-triggered by outsourcing from developed nations. This paper attempts to weigh the relative importance of various determinants of energy consumption in BRICS countries between 1980 and 2016, studying in-depth the long-run co-movement pattern of energy consumption with demographic characteristics (depicting demand pressure) and macroeconomic aggregates (depicting cheap production cost). By leveraging on the trade-off between domestic and foreign demand and by employing the autoregressive distributed lag bounds testing approach, we establish differential effects of various predictors: Whilst an increase in population growth rate, gross domestic product and capital account openness exert a positive and significant impact on energy consumption in Brazil, China and South Africa, foreign direct investment (FDI) and human development appear to enhance energy consumption in India, China and South Africa. The growth in external demand and the FDI inflows appear to have pushed urbanization, leading to greater energy consumption during the study period. Keeping in mind the sustainability goal, stronger green energy practices and sustainable urbanization patterns are needed to curb excessive energy sources.

Text
SER-D-19-00225 SRB_TM_Rev_23.03.2021 - Accepted Manuscript
Restricted to Repository staff only until 28 August 2022.
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More information

Accepted/In Press date: 28 June 2021
e-pub ahead of print date: 28 August 2021
Additional Information: Publisher Copyright: © 2021 World Scientific Publishing Company. Copyright: Copyright 2021 Elsevier B.V., All rights reserved.
Keywords: BRICS countries, Energy consumption, FDI, HDI, trade openness, urbanization

Identifiers

Local EPrints ID: 452166
URI: http://eprints.soton.ac.uk/id/eprint/452166
ISSN: 0217-5908
PURE UUID: f12f4508-7e18-49bb-b52e-bea3c53ac573
ORCID for Tapas Mishra: ORCID iD orcid.org/0000-0002-6902-2326

Catalogue record

Date deposited: 26 Nov 2021 17:33
Last modified: 28 Apr 2022 02:12

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Contributors

Author: Smruti Ranjan Behera
Author: Tapas Mishra ORCID iD
Author: Devi Prasad Dash
Author: Lingaraj Mallick

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