How does energy resource diversification affect economic development? Evidence from BRICS economies

Abstract

This study explores the impact of energy diversification on economic growth in the BRICS (i.e. Brazil, Russia, India, China and South Africa) from 1995 to 2018. The study has used a newly constructed energy diversification index. The results based on the Quantile-on-Quantile (QQR) methodology demonstrate that the impact of energy diversification on the growth of the economy is heterogeneous among nations. It appears that lower and middle quantiles of the energy diversification reduce economic growth, while higher quantile of the energy diversification increases it. It is advised that the BRICS countries should develop crucial steps while transitioning from fossil fuels to renewable energy without hampering economic growth. It is further suggested that the BRICS countries need to ensure energy sustainability through effective energy diversification. Such steps will enhance economic prosperity for BRICS countries in the long run.