The Belt and Road Initiative (BRI) is a connector that encompasses 68 countries, representing 65 percent of the total world population. The initiative helps countries share technologies, resources, and skilled labor, causing modernization of the industrial infrastructure, which increases economic growth [1
]. The BRI was first launched by the president of China, Xi Jinping, to enhance its markets in Asia, Africa, and Europe. This will lead to stronger industrial infrastructure, technological advancement, and convenience in the transportation of goods in the region. According to inferences made by the International Energy Agency [2
], the funds associated with BRI projects range from US$
4–8 trillion. The greater portion of BRI funds is dedicated to developing countries to reinforce their development pace. According to [3
], the BRI has initiated more than 7000 projects, which include the extension of many industries, electricity generation plants, road and rail infrastructures, poverty reduction, etc. During BRI projects, the connected countries have the opportunity to strengthen their economic growth through the expansion of exports and trade, entry into new markets, sharing skills and technologies, and the diversification of investment portfolios, etc. [4
In the current era of technology, sustainable economic growth depends to a great extent on energy consumption [6
]. The Solow growth model has highlighted the importance of labor and capital for economic growth, Later, [10
] augmented the Solow growth model by incorporating energy variables, reporting that energy is one of the main ingredients for industries and sustainable economic growth. According to [6
], this confirmed the bi-directional relationship between economic growth and energy consumption. The authors in [7
] examined the causal relationship between economic growth and energy consumption. The findings reported that energy consumption has a direct impact on economic growth in Western Europe, Asia, and Latin America, whereas there is no causality reported in the Middle East. The authors in [8
] confirmed the relationship between energy consumption and economic growth. The findings in [9
] showed a relationship between energy consumption and economic growth.
The BRI initiative has had multidimensional impacts on human endeavors either directly or indirectly. It is important to note that this will have positive effects on economies through globalization, while on the other hand, it may have negative outcomes such as environmental degradation in the form of higher energy consumption and electricity generation, transportation, industrialization, urbanization, clearing of forests for roads and railway lines, etc. [3
]. The relationship between economic growth and environmental degradation varies across economies, industrial infrastructure, the energy mix, and transportation means. Even though China is the second largest and fastest growing economy of the world, it is also the biggest energy consumer and emitter of CO2
, with around 30 percent of CO2
emission globally [13
]. Likewise, such is the magnitude of CO2
emissions in the Chinese economy that it is a significant producer of greenhouse gases (GHGs). Ozturk et al. (2016) contended that climate change and global warming produces greenhouse gases (GHGs), which releases carbon dioxide (CO2
) into the atmosphere. The authors in [14
] stated that economic growth and industrialization are mainly responsible for carbon emissions in China. Due to this, China is relying on renewable power technologies for its energy production and swift progress is being made, creating immense sources of green energy compared to other national economies. Meanwhile, through the BRI initiative, some polluted industrial sectors and ecologically detrimental power production units are moving abroad, where hosting economies are being paid for taking on the ecological challenges. In BRI projects, 65 percent of the total energy generation funds are invested in coal-based power plants and 1 percent of total investment is spent on wind-based energy. China was responsible for around 40% of general public investment in coal-based projects globally between 2007 and 2013. Indeed, it is worth noting that China is building 240 coal-based power plants in 25 BRI countries, which contains an installed capacity of 251 Gigawatts. Furthermore, Chinese firms have the stated aim of activating up to 92 supplementary coal-based power projects in 27 economies [16
]. Figure 1
presents the comparison of carbon emissions for selected BRI countries and the world, indicating that the sum of carbon emissions has increased over the last few years. The upward trend for carbon emissions in BRI economies, as well as in the world, may massively threaten future ecological quality. In 1980, the scale of CO2
emissions on the world level experienced a small decline, but then surged until 2012. BRI economies have the same intensity trend in CO2
emissions. If only counting China, the respective level of global CO2
emissions in BRI nations has reached approximately 61.4% [17
]. Furthermore, the proportion of energy-intensive CO2
emissions in BRI economies is about 80%, indicating the crucial contributions of the energy sector to environmental degradation. On this basis, it is hard to escape the conclusion that BRI projects are going to harm the environment, as well as being beneficial for economic growth. In addition, a few researchers have also asserted that the “global shifting wave” of BRI projects would produce severe undesirable influences on indigenous resources and ecosystems [18
]. As such, it has become one of the major issues affecting the success of BRI projects in bounded economies.
Previous studies have reported a significant relationship between economic growth, financial development, and carbon emissions. Grossman and Krueger [20
] presented the well-known environmental Kuznets curve (EKC), which is an inverted U shape. It states that during the initial stage of economic growth, policymakers mostly focus on growth rather than environmental degradation. The second stage of economic growth reduces the pace of pollutant emissions. In the third stage, policymakers introduce environmentally friendly policies such as industrial treatment plants, renewable energy consumption, energy-efficient technologies, etc., which lower GHG emissions. Previous studies can be divided into two categories. Some support the EKC hypothesis [9
]. The authors in [24
] analyzed panel data from 40 Asian countries, and their estimations confirmed the inverted U-shaped curve. Likewise, [21
] confirmed evidence of the EKC hypothesis in the case of 36 high-income countries. By contrast, some researchers report the nonexistence of the EKC hypothesis. The authors in [25
] attempted to examine the EKC hypothesis and reported conflicting results. In the same vein, [25
] used the panel data approach and confirmed weak evidence of the EKC hypothesis. Later, the findings in [27
] also negated the EKC hypothesis. There are several key reasons for these conflicting pieces of evidence, such as there being no fundamental environmental theory, but most of the research is based on Kuznets’ seminal work examining the inverted U-shaped curve [29
]. Other significant reasons for a variation in the EKC results are the use of different datasets, and the utilization of various econometric techniques and conditions. However, [10
] suggested that the ideal way to examine the existence of the EKC hypothesis across the world is to remove cross-sectional independence, normalize the responses for each country and the use the same econometric techniques to analyze the short-run and long-run relationships.
Recent literature has extended the EKC model by incorporating different factors such as technological innovation, financial development, industrialization, urbanization, etc. The authors in [15
] found a significant and positive relationship between urbanization and energy consumption, which further leads to higher carbon emissions. The findings show that more than 50 percent of the population of the world is living in urban areas that are responsible for around 70 percent of GHGs. Some researchers have reported similar results [31
]. Reference [34
] reported that an increase in family income and family size has led to an increase in carbon emissions in selected regions of China. The authors in [43
] documented that higher urbanization is one of the main causes of carbon emissions. The authors in [34
] investigated urban- and rural-based household carbon emissions and confirmed that urban-based carbon emissions are higher than rural-based carbon emissions, with 0.50 tCO2
and 0.22 tCO2
, for urban- and rural-based emissions, respectively. References [44
] suggested that the government should increase forest investment, implement sound policies and adequately audit resources to control the environmental degradation process. Reference [5
] used three-data envelopment analysis to examine the total factor energy efficiency of 35 BRI countries. The findings showed that countries with low energy efficiency have higher emissions. The authors in [46
] investigated the empirical relationship between energy consumption, income, carbon emissions, capital formation and labor. In the context of low carbon (CO2
) endorsement, it is necessary to place sufficient significance on efficient progress to attain harmonized and ecological sustainability in various segments, namely energy usage, trade, technological investment, urbanization, labor and capital speculation (financial development and gross fixed capital formation, etc.).
The previous literature misses the impact of BRI projects on economic growth, energy consumption patterns and their harmful effects on the environment. This is a gap in the existing literature, which implies that no novel research has been proposed to consider a panel investigation based on 47 BRI economies with a cross-country analysis. The noteworthy objective of the present fact-finding study is to validate the links between economic growth, energy consumption, urbanization, gross fixed capital formation, trade openness, financial development and carbon emissions (ecological degradation) across a panel of 47 BRI economies, using a time span from 1980 to 2016. Various panel unit root tests have been undertaken to identify the level of stationarity among the variables, and subsequently the stationary level of panel cointegration tests required to gauge the level of integration among them. Hence, the cointegration patterns of dynamic panel estimations (dynamic ordinary least square (DOLS) and fully modified ordinary least square (FMOLS)) were suggested to examine the long-run linkages among the subjected variables. Furthermore, pairwise panel Granger causative tests were employed to assess the pattern of the directional links from all regressors towards CO2 emissions. In cross-country, long-run assessments, some mixed interactions have been determined from regressors towards CO2. Based on retrieved estimations, there could be some policy implications for the full panel and individual countries, to address the energy, economy and ecological potentials and future encounters. Subsequently, the estimations have led to solid strategic recommendations and inferences for governments and policy-makers in terms of sound governance, waste management plans, renewable energy dependency and the undertaking of necessary decisions to sanitize the environment.
comprises research methodologies, data collection, and details; Section 3
contains the results and discussion. Section 4
deals with conclusions, policy implications and recommendations.
4. Conclusions, Recommendations and Future Implications
The main purpose of the present study was to discover the relationship between economic growth, trade openness, financial development, energy consumption, urbanization and environmental degradation in the 47 BRI economies from 1980 to 2016. First, various four-unit root tests (LLC, IPS, ADF and PP) were implemented to gauge the stationarity of the dataset, and then three cointegration tests were engaged to sketch the cointegration links between the subjected variables. The cointegration valuations recommended the use of the DOLS and FMOLS tests in the full panel of 47 BRI economies; similarly, robustness was measured using pooled regression, random effect and fixed effect. Furthermore, a pairwise Granger causality test ensured the stability of the results in the causative mode, where bi-directional links were observed for energy consumption, economic growth, financial development, urbanization and gross fixed capital formation towards CO2 emissions (ecological quality), except for trade openness, which had unidirectional ties with environmental quality. Moreover, the cross-country scrutiny portrayed multidimensional estimators, suggesting corresponding diversified policy implications at the regional and countywide levels.
In the above discussion, the dynamic panel modeling (DOLS and FMOLS, fixed effects and random effects), and panel causative heterogenous test showed that all the regressors positively and significantly impacted environmental quality, except for trade openness, which had a negative impact on CO2 emissions. Therefore, it was inferred that solid governance, and individual country-specific policy decisions should be proposed, so that they can benefit through BRI success. Likewise, the cross-country, long-run analysis concluded that economic growth in all 47 economies increasing environmental degradation in all countries, whereas the evidence for energy consumption was mixed. The negative coefficient was due to the small number of developed economies encompassed in the 47 BRI full panel; developed economies are more heavily dependent on renewable energy sources and consequently their ecological challenges are diminishing or there is even no ecological degradation. However, most BRI economies are in developing, emerging and less-developed nations, which need more time and resources to make acute investments in protecting their environment and self-sufficiently producing renewable energy sources (hydro-power, wind power, biomass power, solar power, waste-based renewable energy, etc.). Hence, the Chinese government, in collaboration with other BRI economies, should be diverting the pattern of investments from coal-based plants to renewable energy sources (wind, hydropower plants, solar energy plants and biomass-based energy, etc.). The trade cooperation among the BRI economies could spread ecological sustainability by trading green-energy-based appliances and technologies. Governance of cross-country urbanization should be carried out by implementing opportunities that will also reduce the environmental degradation. Furthermore, the study provides harmonious policy implications for the full panel and specific countries.
The nature of the estimations reveals that most of the economies in the BRI are emerging, developing and less-developed countries who are currently trying to improve their economic growth, mutual trade cooperation, infrastructure development and much more, but have not yet approached the idea of achieving this growth without leaving a deteriorative impression on the environment. Hence, BRI economies should make strong policies for solid governance as a whole, planning to mitigate demand and supply of energy, address ecological challenges and prospects, and prepare industrial production for mutual trade. Moreover, polices for renewable energy dependency, industrial waste and water treatment plants and many others could be an additional weapon for the accomplishment of the BRI dream and may provide enough energy resources to ensure the smooth operation of the BRI projects. Therefore, the Chinese government has initiated the “Vision and Action of Energy Cooperation for Jointly Building the Silk Road Economic Belt and 21st-Century Maritime Silk Road” [75
] to acutely address the demand for energy of the BRI projects. The initiation of more action plans to cater for the forthcoming energy and ecological challenges at the country level or overall across the BRI panel should also be demanded. Wide-ranging estimates from recent studies may aid economies and groups of economies to measure natural hazards, GHG emissions, and to develop energy conserving opportunities and fulfill energy demand, to smooth project operations, to fruitfully accomplish the overall BRI projects.
Overall, the BRI project requires a stable economy, sufficient energy sources, and prudent environment management, presenting big concerns for BRI contender economies. For the authorities and policymakers of BRI countries, the current study suggests directions for them to execute proposed measures for ecological sustainability, i.e., the demand mitigation of energy should be reliant on renewable sources, economic sustainability should be focused more acutely on eco-friendly investments, and the general public should be made familiar with green investment plans. Moreover, green coal energy sources have a very large potential to play a role in energy and ecological developments in BRI economies. Also, households should be motivated to buy energy-efficient products and green technologies for daily use, such as electric means of transportation, energy-efficient lighting, etc. It is crucial to construct water-, waste- and carbon-treatment plants near industrial areas. The study results further allowed us to make policy suggestions for environmental academics and specialists, who need to assign financial resources based on the studied factors to ensure the greatest yield. The exaggerated growing trend of GHGs suggests that economies should be forced to make an effort to commit to promoting economic and ecological sustainability.
This novel study had a small number of limitations. For instance, new BRI projects challenge related investigations, which do not mirror the EKC when examining the sum of predicted variables and regressors. In future, investigators may also extend their cross-section sample size and time span. Furthermore, researchers may modify the variables to include other variables that could produce more interesting inferences. Moreover, forthcoming research may measure the links of the selected variables with numerous other environmental pointers, for example, natural catastrophes, global warming, sulfur oxide (SO2), carbon monoxide (CO), nitrogen oxide (NO2), industrial pollution and health influences, with the intention of obtaining a comprehensive environmental impression owing to the previously stated functioned variables.