Do Corruption and Income Inequality Play Spoilsport in The Energy Efficiency-Growth Relationship in BRICS Countries?

The main aim of this paper is to study and assess the impact of corruption and income inequality on energy efficiency-growth relationship in Brazil-Russia-India-China-South Africa (BRICS) countries during 1996-2015 in a panel framework. The (Westerlund and Edgerton, Oxford Bulletin of Economics and Statistics 70:665-703, 2008) co-integration test reveal that long term co-integrating relationship exists between energy efficiency, income inequality, economic growth, and corruption in BRICS countries. The results of Augmented Mean Group (AMG), Mean Group (MG), and Common Correlated Effects Mean Group Estimator (CCEMG) support the claim that lower level of corruption leads to higher energy efficiency and higher income gap yields in lower energy efficiency. Additionally, renewable energy found to be an alternative strategy to boost energy efficiency without paying the environmental cost. The panel Granger causality test also highlights the importance of renewable energy by suggesting bi-directional causality between renewable energy and energy efficiency.

Automated summary

The study found a long-term cointegrating relationship between energy efficiency, income inequality, economic growth, and corruption in BRICS countries. Lower levels of corruption were associated with higher energy efficiency, while greater income inequality led to lower energy efficiency. Additionally, renewable energy was identified as an alternative strategy to improve energy efficiency without environmental costs.