Revisiting the Energy-Economy-Environment Relationships for Attaining Environmental Sustainability: Evidence from Belt and Road Initiative Countries

Abstract

The Belt and Road Initiative (BRI) is an ambitious development project initiated by the Chinese government to foster economic progress worldwide. This study aims to investigate the dynamics of energy, economy, and environment among 42 BRI developing countries using an annual frequency panel dataset from 1995 to 2019. The major findings from the econometric analysis revealed that higher degrees of energy consumption, economic growth, population growth rate, and FDI inflows exhibit adverse environmental consequences by boosting the CO2 emission figures of the selected developing BRI nations. However, it is interesting to observe that exploiting renewable energy sources, which are relatively cleaner compared to the traditionally-consumed fossil fuels, and fostering agricultural sector development can significantly improve environmental well-being by curbing the emission levels. On the other hand, financial development is found to be ineffective in explaining the variations in CO2 emission figures of the selected BRI member countries. Besides, the causality analysis shows that higher energy consumption, FDI inflows, and agricultural development cause environmental pollution by boosting carbon dioxide emissions. However, economic growth, technology development, financial progress, and renewable energy consumption are evidenced to exhibit bidirectional causal associations with carbon dioxide emissions. In line with these findings, several relevant policies can be recommended.

Keywords: Energy consumption, GDP growth, Agricultural development, Carbon emissions, Renewable energy, Environmental sustainability, Belt and Road Initiative

JEL Classification: O13 O44, Q4, Q5, Q42 Q56