Macroeconomic Determinants of Energy Consumption in BRICS (Brazil, Russia, India, China, South Africa)
Purpose: The study investigates the determinants of energy consumption in BRICS countries. Design/Methodology/Approach: The study is using panel data analysis methodology (fixed effects, FMOLS, pooled OLS, random effects) with panel data ranging from 1996 to 2018. Findings: Under fixed effects, financial development was found to have a significant positive influence on energy consumption in model 1 and a significant negative effect on energy consumption in model 3. Human capital development, financial development, the interaction between financial and human capital development and economic growth were all found to have had a significant positive influence on energy consumption across all the four models. FDI had a significant positive effect on energy consumption in model 1 and 2 whilst infrastructural development had a significant positive influence on energy consumption in model 1, 3 and 4. Under random effects, financial development influenced energy consumption in a significant positive manner in model 2 and 3. Both human capital development and the interaction term separately had a significant positive impact on energy consumption across all the four models whilst trade openness and infrastructural development’s influence on energy consumption was positive and significant in model 1 and 3. Yet economic growth and FDI were found to have had a significant positive influence on energy consumption in model 1 and 4. Under FMOLS, four variables which had a significant positive effect on energy consumption across all the four models include human capital development, the interaction term, economic growth and infrastructural development. Practical implications: BRICS countries are therefore urged to design and implement policies aimed at enhancing human capital development, the complementarity between financial and human capital development, economic growth, and infrastructural development in order to increase renewable and fossil fuel energy usage (energy usage that preserves the ecosystem and promotes sustainable growth). Originality value: It considers the fact that the relationship between energy consumption and its determinants is not of a linear nature (is non-linear).