Unveiling the liaison between human capital, trade openness, and environmental sustainability for BRICS economies: Robust panel‐data estimation

Abstract

AbstractGlobal warming and greenhouse gas emissions pose severe threats to environmental sustainability. A sustainable environment is a prerequisite for long‐term socioeconomic growth and human survival. Green technology is brought about by a country's economic and financial openness, and education provides knowledge to the public and labor, contributing to environmental sustainability. Thus, this research aims to unveil the liaison between human capital, trade openness, and environmental quality for Russia, Brazil, India, China, and South Africa (BRICS) countries from 1998 to 2018. Several econometric methods, including the Driscoll–Kraay standard errors and the Dumitrescu–Hurlin causality approaches, reveal long‐run and causal relationships among the modelled indicators. The Driscoll–Kraay standard error results show that human capital is negatively related to carbon dioxide emissions (CO2 emissions). Imposing high tariffs and excise duties, changing tax structures, discouraging the inflow of polluted commodities, and encouraging green trade can help BRICS combat high environmental pollution. The results show that a one‐point increase in human capital in models 1 and 2 can reduce CO2 emissions by 1.5279 and 0.1538 points, respectively. In contrast, a 1% growth in trade can lead to a rise in CO2 emissions of 0.3731% and 0.2384%, respectively. Similarly, financial development and energy consumption result in high CO2 emissions in the long run. Moreover, a feedback effect of the human capital index on CO2 emissions is discovered. As a result of the findings, the government and responsible authorities should provide financial support and encourage investments in the region's energy‐resourceful and sustainable green projects.