Does Renewable Energy Increase Trade Integration? New Evidence from BRICS-T Countries Using Fourier Methods

Abstract

The motivation to reduce global climate change and advance sustainable economic development is leading to a major overhaul of energy and trade policies in emerging markets. This paper examines the dynamic relationship between trade openness (as a measure of trade integration), renewable energy output and carbon dioxide emissions in the BRICS-T countries, for the 1991-2021 period. A key contribution of this study is the use of latest Fourier-based panel methods. Fourier DOLS results provide evidence for the Pollution Haven Hypothesis in China and India, implying that carbon dioxide emissions have been higher as a result of increased trade openness. More importantly, according to the Fourier Toda-Yamamoto causality results, the causal link runs essentially from renewable energy and CO2 emissions to trade openness. This, in essence, suggests that trade openness is grounded on energy systems and carbon intensity rather than trade liberalization in the BRICS-T bloc