How does energy resource diversification affect economic development? Evidence from BRICS economies

How does energy resource diversification affect economic development? Evidence from BRICS economies
Authors: Qiong Chen, Giray Gozgor, Hemachandra Padhan, Weibai Liu, Mantu Kumar Mahalik, Henri Njangang, Sujit Kumar Pruseth
Journal: Resources Policy
Volume & Issue: Volume 98
Published: November 2024

This study investigates the impact of energy diversification on economic growth in BRICS countries—Brazil, Russia, India, China, and South Africa—over the period 1995–2018. Using a newly constructed energy diversification index and the Quantile-on-Quantile Regression (QQR) methodology, the research examines how shifts in the mix of energy sources influence economic performance.

The findings reveal heterogeneous effects: lower and middle quantiles of energy diversification reduce economic growth, whereas higher levels of diversification positively contribute to economic performance. This suggests that only advanced stages of energy diversification, likely combining renewable and conventional sources efficiently, yield tangible economic benefits.

The study recommends that BRICS nations carefully manage the transition from fossil fuels to renewable energy, ensuring that economic growth is not disrupted. Policies supporting energy sustainability through effective diversification strategies can enhance long-term economic prosperity. By fostering a balanced and diverse energy portfolio, BRICS countries can strengthen their resilience, reduce dependency on specific energy sources, and promote sustainable development outcomes.