Nexus between Energy Consumption, Economic Growth and Quality of Environment in BRICS and Next 11 Countries: A Panel Dynamic Study

Abstract This study sets out to explore the nexus between energy consumption, economic growth, and quality of the environment within the separate contexts of BRICS and the Next 11 Countries. The empirical analysis is carried out using the Feasible Generalized Least Squares (FGLS) modeling approach, which considers cross-sectional dependency analysis, cross-sectional heterogeneity, and cointegration analysis. The empirical results show that BRICS countries support the EKC hypothesis, but the Next-11 countries have a U-shaped path between economic growth and environmental degradation, which is contrary to the conventional EKC hypothesis. Moreover, the nexus between economic growth share in the quality of the environment and energy consumption is also seen to exhibit nonlinearity. Besides, unidirectional causations are confirmed between CO2 emissions and energy consumption for BRICS countries. However, a unidirectional causal linkage moves from CO2 emissions to energy consumption for the Next 11 countries. Thus, these findings have profoundly important policy consequences for the achievement of the BRICS and the Next 11 countries' energy stability and environmental protection, mainly by reducing the higher energy usage of these countries.JEL Classification: C51, F64, O13, O44, P18