Green economy design in BRICS: dynamic relationship between financial inflow, renewable energy consumption, and environmental quality

Foreign direct investment (FDI) and remittances are a source of financing that allows the environment to be clean by promoting green innovation. This study empirically examines the impact of financial inflow on renewable energy consumption and environmental quality in BRICS over the period of 1991-2019. The basic results emanate from the NARDL-PMG but robustness observed through FMOLS and DOLS. A positive change in FDI has a positive effect on CO2 emissions, whereas a negative change in FDI significantly reduces CO2 emissions in the long run, while positive and negative shocks to remittance increase the renewable energy consumption in the long run. A positive shock in remittance has no significant impact on CO2 emissions, while a negative shock in remittance leads to an increase in CO2 emissions in the long run. Our results are robust to different econometric methods. The findings of the study have some implications for devising renewable energy consumption and CO2 emission reduction policies in BRICS.

Automated summary

The study found that foreign direct investment has a positive impact on CO2 emissions, while negative changes in FDI significantly reduce CO2 emissions in the long run. Positive and negative shocks to remittances increase renewable energy consumption in the long term.