Does investment in energy matter for economic growth? Evidence from BRICS countries

Abstract

Purpose This study aims to explore the impact of energy investment on economic growth. Specifically, the study investigates the impact of energy consumption, foreign investment, infrastructure development, tax revenue, human capital, international tourism revenue and trade volume on economic growth. Design/methodology/approach To achieve the aim, the authors sample the 24-years (1996–2019) financial statistics of BRICS countries. Given the econometric recommendations supplemented by the Johnsen cointegration test, the current study uses the fully modified ordinary least square model for regression analysis and checks the robustness through robust least square model. Findings The statistical analysis shows a direct impact of energy investment on economic growth. In addition, the statistical results indicate a positive impact of energy consumption, foreign investment, infrastructure development, tax revenue, human capital and trade volume on economic growth. Research limitations/implications The results present practical implications for policymakers regarding the adequate investment in energy production that can further promote the economic growth in BRICS countries. Policy officials should enhance the volume of renewable energy production, foreign investment and tax revenue. Additionally, it is equally suggested to policymakers regarding the development of infrastructure and human capital to ensure economic growth. Originality/value This study supplements the novel and robust evidence on investment in energy-leading economic growth.