The effects of energy poverty on economic growth: a panel data analysis for BRICS countries

Energy consumption is an indispensable element for the purpose of achieving economic growth. Clean energy sources must be put into use to achieve a sustainable environment. The aim of this study is to investigate the relationship among growth, energy consumption, employment, education, and inflation with PVAR, FMOLS, and DOLS analysis in BRICS countries. The study that covers the 2001–2018 observation period included growth as the dependent variable in the equation. The only common result of the three coefficient estimates is that there is no significant relationship between education and growth. However, the increase in income has a decreasing effect on the level of education. The direction of causality between the two variables is from growth to education. Contrary to the PVAR estimate, according to FMOLS and DOLS, energy consumption and employment have a positive contribution towards growth. However, according to PVAR regression results, income growth has a positive effect on employment. Moreover, a unidirectional causal relation from energy consumption to growth and a bidirectional relation between growth and employment have been determined. This one-way relationship between energy consumption and GDP depicts that the growth hypothesis is valid. Furthermore, an energy poverty problem does not exist in BRICS countries. According to FMOLS, DOLS, and PVAR forecasts, the relationship between inflation and growth is complex. In accordance with PVAR estimates, the increase in growth reduces inflation, and the causality from growth to inflation also supports the PVAR results. According to the outcome of the research, energy poverty is not observed in the panel countries. It would be wise for BRICS countries to increase their energy consumption and employment levels in order to increase growth. However, considering the air pollution caused by fossil fuel consumption, it is key that they employ renewable energy sources.