Enhancing Environmental Quality in the Extended BRICS Countries through Economic Complexity, and Effective Governance

Abstract

From a broad perspective, the purpose of this research is to study the ecological outcomes of the complexity of the economy of the extended BRICS countries. In this respect, we are going to evaluate the outcomes of the empirical study in three different ways. Primary focus remained on the Driscoll-Kraay standard errors method to the data set of 1991 to 2023. We began by assessing the potential of complexity of the economy and the quality of institutions in affecting the environment and the direct relation to the quality of the environment. Further, we modified the Environmental Kuznets Curve (EKC) and for the purpose of this study we labeled it the Economic Complexity-based Environmental Kuznets Curve (ECX-EKC) and it deals with complexity of the economy and environmental impacts in the short and long run. This study in particular tries to study the marginal impacts on the quality of the environment as a result of the economic complexity and the quality of the institutions. The study outlines that in the given economies of the sample, environmental quality, economic growth, complexity of the economy, foreign direct investment, and the energy consumption, are all interconnected positively. This study is the first of its kind looking into the environmental impacts and degradation as a result of foreign direct investment, complexity of the economy, and economic growth in the countries of BRICS. The introduction of the ECX-EKC theory and the causation standing behind the paradox of complexity of economy to the sustainability were as a result of the quality of institutions and the legal arrangements that were present. Driscoll and Kraay standard errors method ascertains that the countries of BRICS depict an inverted U-shaped Environmental Kuznets Curve and more logical explanations are going to be introduced for the three different rationales to the EKC. This study demonstrated that an economy with strong institutional frameworks positively correlated with environmental outcomes of economic complexity over the long term.