Energy consumption, technological innovation, and economic growth in BRICS: A GMM panel VAR framework analysis

Energy consumption, technological innovation, and economic growth in BRICS: A GMM panel VAR framework analysis
Authors: Muhammad Khalid Anser, Sajid Ali, Muhammad Umair, Rubab Javid, Sanjar Mirzaliev
Journal: Energy Strategy Reviews
Volume & Issue: Volume 56
Published: November 2024

This study examines the complex interactions between energy consumption, technological innovation, economic growth, and environmental resources in BRICS countries—Brazil, Russia, India, China, and South Africa—over the period 1990–2023 using a GMM panel VAR framework.

The analysis reveals that environmental rents positively contribute to financial growth, challenging the conventional “resource curse” hypothesis. In contrast, technological innovation shows a negative correlation with both economic growth and environmental sustainability, indicating that advancements in technology do not automatically translate into immediate economic or ecological benefits. Energy consumption is strongly associated with economic expansion, while its impact on the environment is negligible, highlighting the heavy reliance of BRICS economies on energy use for growth.

The study also identifies bidirectional causality between energy consumption and technological innovation, alongside unidirectional effects from natural resources to financial and technological development. Policy implications stress the need for integrated energy and technology strategies that encourage sustainable practices, including investments in renewable energy, R&D, and green technologies. Additionally, effective resource management, regional cooperation, and education initiatives are recommended to foster technological innovation aligned with sustainable development. By implementing these measures, BRICS nations can balance economic growth with environmental protection, supporting long-term sustainability and serving as a model for emerging economies worldwide.