Resources Policy 82 (2023) 103479

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Resources Policy
journal homepage: www.elsevier.com/locate/resourpol

Impact of natural resources and globalization on green economic recovery:

Role of FDI and green innovations in BRICS economies
Weijun She a, *, Fatma Mabrouk b
a
School of Economics &Management, Northwest University, Xi’an, 710127, China
b
Department of Economics, College of Business and Administration, Princess Nourah Bint Abdulrahman University, P.O. Box 84428, Riyadh, 11671, Saudi Arabia

A R T I C L E I N F O A B S T R A C T

Keywords: Considering the green perspective of economic growth, researchers, policymakers, and environmental activists
Natural resources have shown their deep concerns in recent times. However, determining sustainable economic growth is not an
Green economy independent phenomenon. Hence, this study examines the impact of natural resources, globalization, foreign
Foreign direct investment
direct investment, and environmental technologies on the green growth in BRICS countries during 1990–2020.
Green innovation
Globalization
Initial results confirm the presence of cross-sectional dependency and slope; therefore, we employ a cross-
sectionally augmented autoregressive distributed lags (CS-ARDL) estimator. The empirical finding shows that
globalization, environmental technologies, and human capital encourage green growth in the BRICS. In contrast,
the inflow of foreign investment and dependency on natural resources reduces green growth. The results suggest
that the government in BRICS should promote international association through economic, political, and social
globalization along with green technology innovations to achieve sustainable economic growth. Policy sugges­
tions are also provided to control the adverse effect of foreign investment and natural resources toward a green
economic recovery.

1. Introduction
Over the last few decades, globalization (GLO) has transformed the
globe, connecting nations via economic, political, and social di­
mensions. However, these three dimensions of GLO affect the environ­
ment, whereas earlier studies have reasonably discussed the connection
between GLO and environmental footprints (Mahmood Ahmad et al.,
2021; Ibrahiem and Hanafy, 2020). At the same time, a generic concept
of GLO brings many benefits, like exchanging technologies, financial
transactions, trade openness, etc. Although some benefits are linked
with globalization; however, its environmental cost is not something
novel in the literature. Moreover, both theoretical and empirical studies
have created a linkage between GLO and economic growth. The
dissemination of political, social, and economic ideals is facilitated
through GLO, where the flow of capital, technology, and related pollu­
tion may directly influence the individual’s lives and ecological pro­
gression in developed and developing economies. More specifically,
with the rapid progress of economic growth, GLO’s net impact is causing
more ecological damage along with a differential impact on the econ­
omy (Sadiq et al., 2022). However, both positive and negative findings
have been presented in the literature regarding the association between
GLO and economic growth. For example, Ying et al. (2014) have shown
a positive impact of economic globalization on economic growth,
whereas Marques et al. (2017) observe a positive relationship between
social GLO and economic development. Rao and Vadlamannati (2011)
have claimed that the association between GLO and growth is contro­
versial, specifically in poorer developing economies. Although the
traditional growth model is widely discussed as an outcome of the GLO,
the discussion related to the nexus between globalization, and green
economic recovery is still a significant gap in the existing body of
literature. Green growth (GRG) focuses on production and
demand-based emissions, where green technologies play an important
role (Wiebe and Yamano, 2016). Additionally, GRG is considered a
plausible energy-saving strategy and reducing carbon emissions (ling
Guo et al., 2017), which is regarded as a comprehensive environmental
degradation solution (Sandberg et al., 2019). On the other side, the
direct linkage between GLO and green economic recovery is observed on
a bit of note, where researchers have argued that GLO tends to influence
ecological sustainability positively (Majeed et al., 2022), which indeed
leads to sustainable economic growth by the end. Considering this
nexus, current research has aimed to investigate the direct linkage be­
tween GLO and green growth from the context of BRICS economies.

* Corresponding author.
E-mail addresses: xibeihu2022@sina.com (W. She), FMMabrouk@dslupnu.edu.sa (F. Mabrouk).

https://doi.org/10.1016/j.resourpol.2023.103479
Received 28 October 2022; Received in revised form 9 February 2023; Accepted 10 March 2023
Available online 28 March 2023
0301-4207/© 2023 Elsevier Ltd. All rights reserved.
W. She and F. Mabrouk
The impact of foreign direct investment (FDI) on the host country’s
economy is a critical topic for discussion among researchers because of
its direct linkage with economic growth, environment, and resources
(Chien et al., 2021; Nawaz et al., 2021). Such an association of FDI with
macroeconomic dynamics has opened various points for debate. For
example, FDI can significantly stimulate host economies’ economic
growth (Razzaq et al., 2021). At the same time, introducing FDI can
provide capital to the host economies while increasing capital utilization
and upgrading the industrial structure (Zhang, 2018). On the other side,
foreign investment is also regarded as a primary channel for the flow of
modern technologies, where it can significantly increase the total factor
productivity in the host economies. However, another notion is that a
large flow of FDI is not conducive to economic growth. Moreover, there
is competition between FDI and the domestic capital of the host econ­
omies (Wu et al., 2021b). Considering the environmental consequences
of FDI, the “Pollution of Heaven” hypothesis assumes that FDI aggra­
vates the ecological degradation in the host economies and exchanges
green resources for economic growth (Wu et al., 2021b).
The nexus between natural resources and economic progress has also
achieved significant attention in the literature. It is believed that de­
pendency on natural resources (NRR) hurts the national income, leading
to poor economic growth. This is because substantial dependence on
natural resources may cause a severe problem in the green economic
transformation (Cheng et al., 2020; Ni et al., 2022; Wang and Razzaq,
2022). This argument has been observed as quite evident from the
context of the Chinese economy by Cheng et al. (2020). They claim that
the more abundant the provinces with natural resources, the higher their
pollutant emissions and energy intensity. Hence, it is more challenging
to achieve green growth in economic transformation.
Similarly, the factors like capital, labour, and natural resources are
necessary production factors in the region, which, taken together, reflect
a positive marginal contribution to the national income (Allcott and
Keniston, 2018). However, such economic growth is not considered
sustainable because natural resource abundance and resource industry
dependency lower the green total factor productivity, verifying the
resource curse hypothesis (Cheng et al., 2020). A similar argument has
been shared by those who claim that regions with higher levels of nat­
ural resources crowded out some drivers of green growth while under­
mining ecological health (Mao et al., 2021). A similar situation has been
observed in China’s region where those provinces with rich natural re­
sources are facing serious challenges toward green growth
Fig. 1. NRR as % of GDP (1998–2020). Source: Data from world development indicator (WDI).
2
Resources Policy 82 (2023) 103479
transformation (Cheng et al., 2020). At the same time, the current
regional practices further reveal that national accounting system for the
economy which based on the GDP, primarily ignores the depletion of
natural resources. Such practices directly decline the environmental
quality as determined by a range of economic and social activities and
hence do not meet the requirements for the development of green
growth (X. Wang et al., 2023). Fig. 1 provides the layout for the NRR
among the BRICS economies from 1998 to 2020. It shows that the NRR
as % of GDP is highest for Russia, followed by China and South Africa
over the past two decades.
Several reasons can be identified while taking the sample of the
BRICS economy under current research. For instance, these countries are
prominent developing economies due to their impressive growth rates
and efforts to address sustainable development (Zhang et al., 2022).
However, the challenges faced by these economies in addressing sus­
tainable development goals and achieving green growth are immense
including the search for green technologies, higher economic growth,
green energy, global warming, and health-related concerns (Chen et al.,
2023). Although, these economies have abundant natural resources,
reflecting their resource dependency (Li et al., 2022). Moreover, the
BRICS economies specifically, the China and India, have also started
putting their efforts towards moving towards green growth with the
increasing share of renewable energy in their total energy mix. These
findings have provided enough to take the sample from BRICS and
examine the historical green growth trends.
In addition, global economic growth has witnessed resource scarcity
and environmental concerns. Such conditions have created a situation of
diversity from traditional growth models to sustainable ones for which
the role of technological advancement is quite evident. Contrary to
conventional growth models and theoretical foundations, contemporary
economic growth literature has significantly focused on technological
innovations and related changes to attain green economic trans­
formation (Acemoglu et al., 2016; Aghion et al., 2016). Based on the
motivation “can direct technological changes be used to deal with
climate change,” Aghion et al. (2016) underline the significance of
environmental patents and taxes to direct technological innovations to
decrease the traditional energy sources while increasing the renewables
for emission mitigation. As emission reduction is a fundamental step
towards understanding the phenomenon of green growth; therefore
various economies have established their infrastructure for green
development and environmental protection along with green
W. She and F. Mabrouk
technology innovation (Danish and Ulucak, 2020; Razzaq et al., 2023).
The green growth phenomenon indicates that production and de­
mand should be controlled using green and clean technologies. Such
practices help attain green production and supply chains. For achieving
the green growth perspective, governments and policy makers are
concerned with determining those policies through which an agenda of
green growth would be achieved (H. Wang et al., 2023). However, one
of the most attractive benefits, as would be achieved through green
growth, is sustainable development and environmental sustainability.
This is because the traditional growth model is more responsible for
harming nature and the climate.
The current literature reveals some interesting aspects. For example,
more green growth in the form of green technologies, energy invest­
ment, and research and development are linked with reducing carbon
emissions and facilitating a similar agenda. At the same time, under
long-run estimations, green growth significantly depends upon green
technological innovations (X. Wang et al., 2022). Based on the
above-discussed premises, understanding the role of globalization,
foreign investment, natural resources, and climate technologies in green
economic recovery is a broad spectrum in designing strategic policies
and decision-making specifically from the context of BRICS. This is
because most of the earlier studies have investigated the role of glob­
alization, foreign direct investment, natural resources, and climate
technologies towards traditional economic growth or ecological conse­
quences. However, the literature gap has observed the determinantal
effect of the stated explanatory variables toward green economic re­
covery in the BRICS economies. The following research objectives have
been developed and addressed based on the above discussion and
arguments.
• To examine the impact of globalization and foreign investment on
green growth in the BRICS region
• To explore the influence of natural resources and environmental
technologies on green growth
• To discover the effect of human capital on green growth in the BRICS
region.
Several motivations can be highlighted in the present study. Among
the BRICS economies, understanding the need and growth of the econ­
omy on sustainable grounds while securing the ecological environment
is a need of time for which some strategic policies are immediately
required. Moreover, in determining the trends in green growth, the role
of globalization and foreign investment cannot be neglected. Similarly,
another motivation behind conducting this research implies that the
significance of ecological innovations and development in the human
capital of BRICS can also be regarded as major contributors to providing
advanced, low-cost, and sustainable methods of production, which will
further promote the green economic progression and similar national
income. Therefore, this study has discussed valuable contributions to the
literature. Firstly, none of the current studies has investigated the role of
GLO, NRR, FDI, and climate technologies in explaining green growth.
Secondly, earlier studies have employed traditional econometric models
to examine the association between the variables of interest, which may
produce biased, inefficient, and inconsistent results because of the
presence of serial correlation, cross-sectional dependence, endogeneity,
and heterogeneity. Based on the advanced panel models like cross-
sectionally augmented autoregressive distributed lags (CS-ARDL), the
current study has provided relevant policy suggestions for the BRICS
countries to attain sustainable economic growth. The rest of the paper
has been organized in the following manner.
Section 2 provides a compressive discussion of the literature based
on the study variables, regional context, methods being employed, and
empirical outcomes; section 3 covers the discussion about the study
methods and key variables; section 4 provides the results and relevant
discussion based on the existing literature both in supporting and con­
trary perspectives. Lastly, section 5 concludes the study along with
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Resources Policy 82 (2023) 103479
policy suggestions and limitations.
2. Literature review
Based on empirical grounds, it is proved that GLO is a source to
create economic growth with the help of total factor productivity in any
economy (Dar and Amirkhalkhali, 2003). On the contrary, few studies
have also argued that GLO harms economic growth by affecting the
climate through greenhouse gas and carbon emissions (Baten and
Fraunholz, 2004). However, the linkage between GLO and green eco­
nomic growth has been observed on a bit of note in the literature. For
example, Zafar et al. (2019b) have considered a sample from OECD
economies for exploring the impact of trade openness, foreign invest­
ment, and research and development on green growth. Data were
collected from the World Bank during 1991–2015, where the results
empirically state that trade openness and foreign investment are
significantly and positively linked with green growth in the long and
short run. On the other side, few studies have also explored the nexus
between GLO and environmental degradation to open further debate
regarding the green economic recovery (Liu et al., 2022). Likewise,
Kirikkaleli et al. (2021) have focused on the GLO to determine the
ecological footprints. The empirical results show that GLO is positively
and significantly linked with environmental footprints; however, trade
openness reduces ecological footprints (EFP). Munir Ahmad and Wu
(2022) also combined the relationship between green factor produc­
tivity growth, ecological innovations, and ecological sustainability for
the OECD economies. The initial findings show that green factor pro­
ductivity helps in reducing the ecological deterioration, whereas GLO
tends to increase ecological protection in all the quantiles for the stated
economies (Razzaq et al., 2022).
In addition, the relationship between natural resources (NRR) and
growth from a sustainability perspective has also been discussed in the
literature (Razzaq et al., 2022a). For instance, Cheng et al. (2020)
analyzed the effect of NRR on GRG with its transformation mechanism.
Data were collected from 30 provinces during 2003–2016; their study
considers the global Malmquist-Luenberger index (MLI) to analyze the
total factor productivity as a measure of GRG. One key benefit of
considering the MLI is that it helps explore the environmental produc­
tivity growth among economies with desirable outputs (Du et al., 2018).
Moreover, the role of abundant NRR and resource industry dependence
on green factor productivity (GFP) has been examined. The results show
that those provinces with significant natural resources experience a
lower level of GFP, confirming the presence of a resource curse.
Furthermore, the analysis for the transformation mechanism shows
that dependence on the resource industry negatively impacts green
growth because of the investment in innovation and technology and
extrusion of human capital (Zheng et al., 2022). Havranek et al. (2016)
have summarized the current literature findings regarding abundant
natural resources from different perspectives. They claim that great
natural resources significantly and negatively impact economic growth.
Such abundance is not beneficial for the economy (Badeeb et al., 2017).
However, resource-intensive industries form a path of dependence for
the entire economy where the reliance on the NRR is also not beneficial
in terms of ecological consequences like more footprints on nature and
inefficient extraction of the resources, hence creating a blockage for
sustainable and GRG. The second argument reflects a significantly pos­
itive association between NRR and economic progress. This is because
NRR can make rapid regional development, which further contributes
towards labor productivity, promoting technological progression, labor
division, and improvements in the industrial layouts. Yang et al. (2021)
have focused on the resource-based cities of China to examine the effect
of the implementation of the new energy demonstration city policy
(NEDC) on the green total factor productivity. The empirical findings
show that NEDC can significantly improve green factor productivity,
specifically in resource-based cities. Moreover, NEDC promotes green
productivity for cities with significant resources through technological
W. She and F. Mabrouk
innovations, structural changes, and fiscal support.
Moreover, the nexus between foreign investment and green eco­
nomic growth has also gotten attention from researchers, policymakers,
and other stakeholders. Y.-Q. Wu et al. (2021a) apply the theoretical
analysis for FDI, innovations in different regions, and green economic
efficiency (GEE) while collecting provincial-level data. The empirical
findings show that FDI is one of the most critical factors promoting GEE
through Data Environment Analysis (DEA) and the system generalized
method of moments (GMM) approach. On the other side, based on the
sub-regional analysis, the authors claim that FDI has a significant het­
erogeneity in promoting GEE. At the same time, the mediating effect of
innovation is found to be as substantial, where international investment
promotes GEE. However, the positive impact of FDI on the green eco­
nomic outcome is not always the same based on regional heterogeneity
(Sun et al. 2022).
Upadhyay et al. (2021) take the sample from the mining industry
while analyzing the barriers and drivers of the circular economy. It is
inferred that urban mining is emerging in recent years, where such a
sector plays a significant role in determining the low carbon economy.
Agrawal et al. (2022) conducted a comprehensive review and
network-based analysis by exploring the nexus between circular econ­
omy and sustainable business performance. The results show that digi­
tization could help in developing sustainable business performance.
Observing the pollution heaven hypothesis, researchers argue that FDI
increases pollution in the host economies (Wu et al., 2021a). Developing
economies reduce environmental regulations to attract international
capital into the local market. Such economic situations resulted in
excessive extraction of natural resources and environmental pollution
(Zhu and Ren, 2017), which lowered green economic growth. S. Asongu
and Odhiambo (2021) have explored whether the threshold effect of
trade and FDI determines the carbon emission for the green economy in
the Sub-Saharan African economies. The empirical findings show that
increasing trade openness has a net positive impact on carbon emissions,
whereas increasing FDI has a net negative impact. Moreover, a mini­
mum threshold level of 100% and 200% of GDP for trade openness is
beneficial for promoting the green economy for 44 and 49 economies
considered sub-samples. Additionally, FDI benefits the green economy
below the critical masses of 28% and 33% of the net FDI inflow for the
first and second samples. It is inferred that FDI is effectively managed to
reduce carbon emissions, which is not the same case for trade openness.
Rafaela Vital Caetano et al. (2022a,b) believe that developed economies
have the resources and technologies to deal with environmental pollu­
tion even at the cost of economic growth. However, developing econo­
mies are in a lesser position. For developed economies, FDI is a tool to
transfer polluting industries, increasing pollution in the host economies.
Their study examines the mediating effect of energy consumption on the
impact of FDI on the pollution and role of FDI in achieving green growth
through the energy transition. In both of the samples (developed and
developing economies), FDI plays a significant and positive role in
promoting green growth, which is further mediated by energy transi­
tion, specifically in the developed economies, whose effect is signifi­
cantly positive (Ren et al., 2022).
Sahoo et al. (2022) focus on corporate green innovations and
knowledge in determining ecological performance through acquiring
green knowledge. Data was collected through 283 Indian firms where
the findings show that green technology innovations help improve
environmental performance with green knowledge practices (Meng
et al., 2022). Mukhuty et al. (2022) also explore the title of sustainable
development for Industry 4.0 with the help of a critical literature review.
They assert that human resource management practices are crucial in
justifying sustainable development practices. Sharma et al. (2022)
analyze low-carbon practices with the help of environmental dynamics
to enhance sustainable performance. Based on the theoretical founda­
tion of the resource-based view (RBV), the results show that low-carbon
practices have a significant and partial mediating effect in determining
the sustainable development performance of manufacturing firms.
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Resources Policy 82 (2023) 103479
Although the direct association between ecological innovations and
green growth has not been reviewed much in the literature to date;
however, various studies have created a link between green innovations
and ecological sustainability that has got widespread attention. This is
because reducing the dependency on traditional technologies and non-
renewable energy reflects sustainable economic progress. In this re­
gard, Shan et al. (2021) have examined the role of green technology
innovations in dealing with carbon neutrality from the context of
Turkey. The empirical findings show that such technological in­
novations help in reducing carbon emissions in the region of Turkey.
Moreover, it is believed that green technologies help to achieve sus­
tainable development goals with their minimum environmental conse­
quences. Danish and Ulucak (2020) have claimed that green growth is
one of the most effective strategies for achieving ecological develop­
ment. Although clean technologies are efficient enough to contribute
towards sustainable growth, further investigation is required to examine
how effective such technologies are in providing green economic prog­
ress. Their study focuses on the BRICS to analyze the impact of green
technologies on green growth while controlling the effect of traditional
and renewable energy sources. Their study applies advanced panel
methods, which show that environmental technologies are positively
linked with green growth. Moreover, renewable energy sources promote
green growth, whereas non-renewable energy negatively impacts green
economic outcomes. As stated earlier, some studies have focused on the
GFP as a measure of green growth. However, it is essential to consider
the environmental constraints and resources while examining green
productivity growth. In this regard, the earlier studies have mainly
focused on either considering the undesirable output as inputs (Ram­
anathan, 2005) or using the data transformation technique (Reinhard
et al., 2000).
Wang et al. (2021) claim that green technologies reasonably help to
control the environmental consequences resulting from the consumption
of fossil fuel energy. Therefore, it is essential for achieving GFP and
sustainable development, specifically in China’s context. The Spatial
Durbin model analyzed green technologies’ impact on GFP from 2000 to
2016. The empirical findings show that for the eastern region of China,
GFP is highest, whereas it is lowest for the western. Moreover, the results
show that green technologies are significant and positively linked with
the GFP. J. Wu et al. (2022) claim that enterprises are constantly
working on green innovations to help improve both environmental and
economic quality. However, the association between green innovations
and GFP is still unclear, specifically at a micro level. Their study has
covered this gap by collecting data for the A-share listed firms in China
from 2004 to 2019. The empirical findings confirm that green in­
novations improve the GFP. However, this impact of green innovation is
heterogenous based on the types of patents and characteristics of the
selected enterprise.
Al-kalouti et al. (2020) explore the service sector’s innovation ca­
pacity and organizational performance. Although it is crucial for busi­
ness organizations to deal with socioeconomic and environmental
challenges; however, the consideration of innovation capacity may
generate some fruitful results. Authors believe that innovation capacity
is largely seen as a vital role player towards green and sustainable
performance (Guo, 2022). Kumar et al. (2019) also claim that the role of
a sustainable supply chain is quite evident in achieving operational
performance. The concept of ecological modernization (EMD) has been
regarded as a well-known thought in the field of social sciences, which
specifies that the economy should always move in the direction of
ecological benefits (Hajer, 1995). EMD is a theory based on the core
assumption of eco-innovation with the main objective of achieving
organizational prosperity and protect the environment through in­
novations that are better for the environment and the economy (Aldunce
et al., 2016). In this regard, a rational self-interest from the govern­
ments, policymakers, environmental activists, economists, and NGOs
have been observed under the theoretical foundation of “environmental
productivity.” The notion of environmental productivity further asserts
W. She and F. Mabrouk
the fruitful utilization of natural resources, including water, air, soil, and
overall eco-system (Pal et al., 2023). Such utilization can also be a
foundation for future growth and labor and capital productivity.
Moreover, the EMD also ascertains that environmental management,
supply chain sustainability, cleaner technology, and replacement of
those materials which are hazardous are among the core components of
productive growth in the economy (Pal et al., 2023). In this way, such
product and process innovation have their core capabilities to change
the shape of industrial metabolism by reducing the amount of resource
turnover and carbon emissions. At the same time, GLO is connected with
producing high-wage, environmentally friendly, and valued added
economic growth based upon ecological modernizing tendencies
(Glenna and Mitev, 2009). As the EMD is directly connected to the
efficient utilization of resources, clean and environmental technologies,
and globalization; therefore, this study has adopted EMD as a theoretical
underpinning to explore the relationship between the variables of in­
terest. Based on the above discussion, the following hypotheses have
been proposed.
H1. Globalization significantly determines the green growth in BRICS.
H2. foreign investment significantly determines the green growth in
BRICS.
H3. Natural resource rent significantly determines the green growth in
BRICS.
H4. environmental technologies significantly determine the green
growth in BRICS.
H5. human capital significantly determines the green growth in
BRICS.
Fig. 2 covers the conceptual farmwork of the study.
3. Methods and variables
The empirical investigation of the current study has started with
cross-sectional dependence. Examining the cross-sectional dependence
before assessing the unit root is quite beneficial. However, if the
investigation for the cross-sectional dependence is overlooked, there is a
possibility for inaccuracy in estimations, leading to wrong policy im­
plications and suggestions (Salim et al., 2017; J Westerlund, 2007).
Therefore, the current study has applied the CSD test suggested by
Pesaran (2015), for which both null and alternative hypothesis has been
discussed in the subsequent section of this research. The investigation of
CSD has been followed by evaluating the unit root or stationarity
properties based on earlier researchers’ theoretical and empirical sug­
gestions (Breitung and Pesaran, 2008; Moon and Perron, 2012). In the
current literature, various tests have been provided to examine the unit
root; however, every test has its pros and cons. These tests can be
Fig. 2. Conceptual Framework. Note: GRG; green growth, GLO; globalization,
FDI; foreign direct investment, NRR; natural resource rent, ETC; environmental
technologies, HCI; human capital index.
5
Resources Policy 82 (2023) 103479
categorized into three generations. For instance, based on the homog­
enous panel, nonstationary can be examined through a test proposed by
Maddala and Wu (1999) and Levin et al. (2002). On the other side, Im
et al. (2003) have suggested the investigation of unit roots based on the
heterogenous panel. However, one core reason to apply the unit root
tests, as suggested by Pesaran (2007) and Bai and Carrion-I-Silvestre
(2009), is that it provides some reliable findings with the presence of
cross-sectional dependence.
After assessing the study variables’ stationarity properties, the slope
coefficient’s heterogeneity is verified through the Pesaran and Yama­
gata (2008) test, a modified version of the Swamy (1970) test. Moreover,
the test of Bai and Carrion-I-Silvestre (2009) has also been applied to
examine the stationarity properties. In addition, for analyzing the
cointegration properties of the data, this study has applied the panel
cointegration test as suggested by J. Westerlund and D. L. Edgerton
(2008b) based on the dependent panels with the structural breaks.
Subsequently, this research applies cross-sectional autoregressive
distributed lags (CS-ARDL) tests to check the long-run and short-run
relationships. Although there are some traditional methods to explore
the relationship between the variables of interest, like simple OLS esti­
mator, fixed effect, and random effect. However, these traditional
methods are not efficient enough in dealing with the data’s
cross-sectional dependency, slope heterogeneity, and stationarity
properties. The application of GMM is more suitable where there is a
presence of endogeneity and the researcher has a larger data set. The
current study has mainly considered CSARDL as it is quite suitable to
consider the cross-sectional dependence, slope heterogeneity, and sta­
tionarity properties of the data while providing both long run and short
run coefficients, which are not possible under other estimators. Besides,
it is believed that the endogeneity problem is well addressed by adding
the lagged cross-sectional averages in the model (Usman et al., 2022).
Therefore, it provides reliable findings.
Equation one provides the association between the variables of in­
terest. More specifically, the notions like GRG, GLO, FDI, NRR, and ETC
cover green growth, globalization, foreign direct investment, natural
resources, and environmental technologies, respectively. Following the
basic growth model of cobb Douglas production function, we considered
labor and capital as among the key input and other explanatory vari­
ables. However, foreign direct investment has been added for the capi­
tal, whereas we have considered the human capital index for domestic
labor. Equation one provides a better layout for the relationships be­
tween the stated variables. The notions like i and t cover the cross-
sectional units of observations and time duration of the study, where f
means the functional relationships.
( )
GRG,i,t = f GLOi,t , FDIi,t , NRRi,t , ETCi,t , HCIi,t (1)
To cover the regression format, Equation two is presented
GRGit = β1it + β2it GLOit + β3it FDIit + β4it NRRit + β4it ETCit + β5it HCIi,t αi
+ δit
(2)
Moreover, GRG, GLO, FDI, NRR, ETC, and HCI reflects green growth,
globalization, foreign direct investment, natural resources, environ­
mental technologies, and human capital. Moreover, B1 to B5 indicate
the coefficients.
Moreover, Equation three covers the ARDL model based on the
heterogenous entities.
pw
∑ pz
∑
Ui,t = φi,t Wi,t− 1 + γi,t Zi,t− 1 + εi,t (3)
i=0 i=0
An extended from of Equation (3) is presented in Equation (4) based
on the cross-sectional averages and interdependency between the stated
units of observations. Moreover, the regressors for the independent and
dependent variables have been shown through Xt− 1 , where pw, pz, and
W. She and F. Mabrouk Resources Policy 82 (2023) 103479

px signify the lag for each factor. Additionally, U indicates the main Table 2
dependent variable of interest, and W means the explanatory variables CSD results.
stated above. Variable Test Statistics
pw
∑ pz
∑ px
∑ GRG 26.301***
Uit = φi,t Wi,t− 1 + γi,t Zi,t− 1 + αi X t− 1 + εi,t (4) GLO 18.077***
i=0 i=0 i=0 FDI 37.918***
NRR 39.637***
Moreover, long-term coefficients are estimates through short-run
ETC 19.182***
coefficients under CS-ARDL estimation strategy for which following HCI 22.639***
equations have been considered.
Note GRG; green growth, GLO; globalization, FDI;
pz
∑ foreign direct investment, NRR; natural resource
̂γ Ii
rent, ETC; environmental technologies, HCI;
π CD−
̂ ARDL,i = I=0
φ
̂ I,t (5) human capital index. ***,***,* indicates p-values
1 = Σ I=0
are significant at 1, 5, and 10%, accordingly.
The mean group is as follows: Source: Author Estimations.

1 ∑
N
̂
π MG = πi
̂ (6) data, whereas H1 rejects it. The findings for the stated variables show
N i=1
that test statistics for green growth, globalization, foreign direct in­
For estimating the short-run coefficients, following equations have vestment, natural resources, and environmental technologies are highly
been taken into observations. significant at 1%. Therefore, H1 is supported by the presence of CSD.
The testing of the stationarity properties of the study variables is
] pw−
∑1 based on the Pesaran (2007) and Bai and Carrion-I-Silvestre (2009) unit
pz
∑ px
∑
[
ΔWit = ϑi Wi,t− 1 − πi Zi,t− 1 − φi,t Δi Wi,t− 1 + γi,t Δi Zi,t− 1 + αi X t + εi,t
i=0 i=0 i=0 root test, for which findings have been covered in Table 3 of the study.
(7) Based on the empirical findings through both of the stated tests, the
results show that the null hypothesis failed to reject and was accepted
Δi = t − (t − 1) accordingly while showing the absence of stationarity at the level.
( ) However, the data has become stationarity, per Pesaran (2007). The
pw
∑ first-order difference was taken based on such results, and Bai and
̂τ i = − 1− φ
̂ i,t (8) Carrion-I-Silvestre (2009) test were applied. The findings have rejected
i=0
the null and accepted, which means that all the study variables are
pz
∑ stationarity.
̂γ i,t After checking for the data’s CSD and stationarity properties, the
π i = i=0
̂ (9) next step is the slope heterogeneity analysis. For this purpose, the null
̂τ i
hypothesis assumes no slope heterogeneity, whereas H1 assumes it ex­
1 ∑
N ists. Table 4 confirms that test statistics are highly significant at 1% in
̂
π MG = πi
̂ (10) terms of delta tilde and delta tilde adjusted. Moreover, the findings in
N i=1
Table 5 cover the panel cointegration analysis, as suggested by West­
Table 1 covers the variable title, nature, description, and data erlund and Edgerton (2008a). The null hypothesis assumes no cointe­
sources for describing the variables. gration exists in the data, and the alternative assumes otherwise. The
findings in Table 5 help to reject H0 at all three levels for the key
4. Results and discussion dependent variable: green growth.
The cross-sectional dependence, slope heterogeneity, stationarity
This research investigates the cross-sectional dependence for stated properties, and panel cointegration testing have provided enough evi­
variables, for which findings are reported in Table 2. The null hypothesis dence to conduct the CS-ARDL long-run estimations. The findings show
assumes that there is no presence of cross-sectional dependence in the that GLO tends to positively influence green growth, where the coeffi­
cient is 0.310 with a standard error of 0.114. This means that GLO is
causing a positive change of 31.1% in the green economic growth among
Table 1 the BRICS economies. The nexus between green growth and GLO has
Description of the variables. also been investigated in the current literature. For example, Zafar et al.
Variable Title Nature Description Data source (2019a) took a sample from OECD economies to explore the relationship
Green Economic Dependent Adjusted net savings, World between green growth and globalization. The empirical findings show
recovery via green including particulate. Development that over the past two decades, there has been a significant and positive
growth (GRG) emission damage (% of Indicator (WDI) impact of GLO on the green growth dynamic of OCED economies. The
GNI) results also reflect that trade openness causes an upward shift in carbon
Globalization Independent KOF index of KOF Swiss
globalization covering Economic
emission, which subsequently affects the targeted region’s green
economic, social, and Institute growth. At the same time, such globalization also gives birth to the
political dimensions phenomenon of industrialization, which further leads to more de­
Foreign direct Independent Foreign direct WDI pendency on fossil fuels for energy generation, hence an adverse
investment (FDI) investment, net
outcome for the green economic output. Anser et al. (2021) have also
inflows (BoP, current
US$) investigated the impact of globalization on the green economy and
Natural resource Independent % of GDP WDI environment. The empirical results show that the GLO index and
rent (NRR) non-renewable energy consumption significantly influence environ­
Environmental Independent Ecological patents OECD official mental quality. Asongu and Nnanna (2021) have focused on the
technologies database
(ETC)
Sub-Saharan African economies to check the relationship between
Labor Control Human capital index Penn world table globalization, green economy, and governance. The results show that
(HCI) 10 the minimum 45% level of FDI is required to interact with political

6
W. She and F. Mabrouk Resources Policy 82 (2023) 103479

Table 3
Testing for unit root/stationarity.
Level I(0) First Difference I(1)

Variables CIPS M-CIPS CIPS M-CIPS

GRG − 3.636** − 4.617*** – –
GLO − 2.628*** − 5.150*** – –
FDI − 6.152*** − 5.108*** – –
NRR − 3.018*** − 4.152*** – –
ETC − 5.626*** − 5.663*** – –
HCI − 3.082*** − 6.192*** – –

Bai and Carrion-I-Silvestre (2009) test Results

Z Pm P Z Pm P
GRG 0.125 0.736 21.039 − 4.106*** − 3.152*** 62.385***
GLO 0.153 0.661 19.258 − 3.527*** − 7.629*** 73.618***
FDI 0.202 0.791 24.052 − 3.326*** − 11.236*** 68.205***
NRR 0.321 0.639 18.152 − 4.528*** − 6.152*** 82.102***
ETC 0.318 0.617 19.158 − 3.628*** − 7.828*** 59.582***
HCI 0.118 0.526 16.082 − 5.269*** − 4.155*** 48.138***

Note: GRG; green growth, GLO; globalization, FDI; foreign direct investment, NRR; natural resource rent, ETC, environmental technologies, HCI; human capital index,
***,***,* indicates p-values are significant at 1, 5, and 10%, Source: Author Estimations.

Table 4 Table 7
Slope heterogeneity analysis. CS-ARDL (short-run).
Statistics Test value Titles Coefficients t-values Sig.

Delta tilde 21.647*** GLO 0.118 3.628 ***

Delta tilde Adjusted 24.150*** FDI − 0.139 − 5.321 ***
NRR − 0.137 − 2.087 **
ETC 0.172 3.356 ***
HCI 0.169 2.012 **
Table 5 ECM(-1) − 0.269 − 6.150 ***
Results of Westerlund and Edgerton’s (2008) panel cointegration analysis.
Note GRG; green growth, GLO; globalization, FDI; foreign direct investment,
Test No break Mean shift Regime shift NRR; natural resource rent, ETC, environmental technologies. Source: Author
Zφ(N) − 6.215 − 8.158 − 3.262 Estimations, ** and *** represent a level of significance at 5% and 1%.
Pvalue *** *** ***
Zτ(N) − 5.108 − 6.638 − 3.537
enhancing trade openness has not had a net positive impact on carbon
P-value *** *** ***
emissions, whereas increasing FDI has its net negative impact. However,
Source: Author Estimation, Zφ(N) indicates the test statistics under No break, FDI is a beneficial factor for the green economy below 28.571 net FDI
mean shift and regime shift, P-value reflects the level of significance through *, inflows (% of GDP). The negative impact of FDI on carbon emission is
**,*** at 10%, 5%, and 1%, respectively.
that more inflow of international investment causes to boost the various
manufacturing sectors, which primarily depend upon traditional energy
stability and contribute towards green economy. These findings suggest sources. In this way, energy consumption from non-renewable sources
that GLO tend to cause a significant positive shift in green economic for production and operational purposes causes an upward shift in car­
growth. bon emissions; therefore, the sustainable economic outcome declines
Moreover, Table 6 reports that FDI is hurting the GRG where the (see Table 7).
coefficient is − 0.672 with a standard error of 0.152. This shows that Contrary to our findings, Y.-Q. Wu et al. (2021a) have conducted a
more inflow of international investment in the BRICS is causing a theoretical mechanism analysis for China’s foreign investment, GEE,
downward shift in sustainable economic growth. Moreover, the coeffi­ and regional innovations. The results show that FDI has significant
cient is highly significant at 1% (t-stat = − 4.420, p-value = 0.000). regional heterogeneity in promoting green economy efficiency through
Asongu et al. (2021) have investigated the Sub-Saharan African region regional innovations. Based on such findings, authors suggest that the
to check carbon emissions’ trade and FDI thresholds for a green econ­ Chinese economy needs to allocate FDI more rationally. Chai et al.
omy. An overall sample of 49 economies from the selected region was (2021) have claimed that the outbreak of COVID-19 has provided a new
collected during 2000–2018 and further divided into sub-samples. pathway for green economic development in China, where the role of
Through generalized methods of moments, the results show that FDI is significantly important. Their empirical findings also support the
argument that the overall level of FDI significantly inhibits the
improvement in the form of green total factor productivity. However, in
Table 6
China’s western and central region, FDI negatively impacts the GTFP.
CS-ARDL analysis (Long run).
Rafaela V. Caetano et al. (2022a,b) claim that developed economies
Variables Coefficients Standard Error t Stat Sig. have the resources to deal with pollution at the expense of economic
GLO 0.310 0.114 2.711 ** growth. Consequently, FDI can be a tool for the developed economies to
FDI − 0.672 0.152 − 4.420 *** transfer the polluting industries, further increasing the pollution in the
NRR − 0.268 0.046 − 5.858 ***
host economies. Their empirical findings claim that FDI impacts over
ETC 0.500 0.105 4.786 ***
HCI 0.103 0.027 3.814 ***
pollution through energy consumption, where through mediating role of
energy transition, FDI can significantly help to achieve green economic
Note GRG; green growth, GLO; globalization, FDI; foreign direct investment, growth.
NRR; natural resource rent, ETC, environmental technologies. HCI; human
In addition, the results show that NRR is negatively and significantly
capital index, ***,***,* indicates p-values are significant at 1, 5, and 10%,
linked with the green growth in the BRICS, where the coefficient is 0.268
Source: Author Estimations.

7
W. She and F. Mabrouk
and the standard error of 0.046. It means that more dependency on the
natural resources rent tends to adversely impact the green economic
growth in the selected economies. This effect is highly significant at 1%,
where the p-value is 0.000. The nexus between NRR and green growth
has also gotten the attention of the current literature, for which mixed
findings have been observed. For example, Cheng et al. (2020) investi­
gated the effect of natural resources on green economic growth in China
while taking the data for the 30 provinces during 2003–2016. The re­
sults show that the more dependence on the NRR, the lower the green
economic growth as measured through total factor productivity. The
mechanism analysis covers that resource industry dependence has a
significant and negative impact on economic growth. Islam and Managi
(2019) have also focused on the natural capital in the Indian economy
and claim that its management is an essential pathway for sustainable
economic development. Moreover, it is claimed that renewables and
non-renewables are continuously degraded due to economic develop­
ment. At the same time, the authors further suggest that a correlation
exists between sustainable resources management and
pro-environmental behavior, which further leads to green economic
growth. Besides, Dinda (2016) has also investigated the trends in green
economic growth as a sustainable development strategy. It is suggested
that the regeneration and preservation of natural resources must focus
on sustaining the economy’s livelihood.
Finally, the long-run estimations show that environmental technol­
ogies tend to cause a positive and significant change in green growth
where the coefficient is 0.500, at 1%. It shows that a 1% change in ETC
causes an upward shift in green growth by 50.% in the BRICS. Engel­
mann and Al-Saidi (2019) claim that eco-innovations are the de­
velopments of new and optimized technology or processes that lead to
economic and environmental benefits. At the same time, such in­
novations are closely linked with green growth and sustainability. Guo
et al. (2017) have examined the role of technological innovations,
environmental regulations, and their interaction term in determining
green growth in China. The empirical findings confirm that technolog­
ical innovations are positively and significantly linked with regional
green growth performance through the structural equation modeling
technique. Hu et al. (2019) also determine whether the regional inno­
vation capacity affects the green growth performance in China. The
findings show that regional innovation is significantly linked with the
GRG. The mechanism behind ecological innovations in promoting green
growth is that such technologies are environmentally-friendly in nature
with their minimum adverse influence on nature. Moreover, most
ecological innovations provide a sustainable solution to the changing
climate because of low dependency on traditional energy sources. Such
determinantal effect of climate technologies subsequently generates
green economic growth. Besides, the results show that HCI is signifi­
cantly and positively linked with green growth, confirming that it con­
tributes to sustainable growth among BRICS as an input factor. Human
capital is believed to be crucial in promoting sustainable and green
economic growth in the long run. The pathway for the association be­
tween HCI and green growth confirms that investment in human capital
tends to increase knowledge, skills, and education which will further
optimize the utilization of natural resources and hence become more
accustomed to contemporary technologies. Such an interlinkage leads to
cleaner production at the macro level (Lee et al., 2022).
Likewise, the findings through CS-ARDL under the short run show
that GLO tends to cause a positive change in the green growth where the
coefficient is 0.310 and a t-score of 2.711. This would confirm that more
GLO tends to increase the sustainable economic output when considered
through all three dimensions (i.e., economic, political, and social).
Similarly, the results show that foreign investment and natural resource
dependency would reduce the green economic output. In contrast,
ecological innovations and human capital promote green national in­
come, specifically in the BRICS. These findings are consistent with the
earlier discussion in the long run, however, with the different magnitude
of the relative coefficients. Besides, the ECM(-1) results also reflect
8
Resources Policy 82 (2023) 103479
negatively significant outcomes.
Finally, for robustness, this study applies Augmented Mean Group
(AMG) and Common Correlated Effects Mean Group (CCEMG) data
analysis methods for which findings are reported in Table 8. The results
show that under AMG, there is a significant and positive impact of
globalization and environmental technologies on green growth among
the BRICS. In contrast, the impact of foreign investment and natural
resources is negatively significant at 1%. These findings confirm the
earlier empirical outcomes under the CS-ARDL approach, where it is
discussed that more GLO, ETC, and HCI are observed as significant role
players in promoting sustainable economic growth. However, as per the
given findings, there is a solid need to reconsider the current profile of
international investment and resource dependency in the BRICS as they
adversely impact the green nation. Similar results have been observed
under CCEMG, where GLO and ETC tend to increase green growth;
however, FDI and NRR do the opposite.
5. Conclusion and policy implications
This study explores the impact of globalization, NRR, foreign in­
vestment, and environmental technologies on the GRG of BRICS econ­
omies from 1998 to 2020. Moreover, it examines the unit root of the
data, slope heterogeneity, CSD, and panel cointegration. The initial re­
sults show cross-sectional dependence, slope coefficient heterogeneity,
stationarity trends, and panel cointegration in the variables. Based on
these data characteristics, this study applies a cross-sectional auto-
regressive distributed lag model to investigate the association between
the variables. The results show a significant and positive impact of
globalization and environmental technologies in promoting green
growth among the BRICS both in the long and short run. These findings
infer that GLO, and ecological technologies are good sources for creating
a sustainable and green national income, specifically in the BRICS
economies. Conversely, the results show that foreign investment and
natural resources significantly decrease green growth among the
selected economies. It confirms that the current inflow of international
investment should be redesigned, for which the investment in
manufacturing industries with a high dependency on non-renewable
energy is quite evident. At the same time, the negative coefficients for
the impact of NRR on green growth also reveal that BRICS economies
should reduce their reliance on such resource-based industries. Such an
adverse impact of resource dependency supports the resource-curse
hypothesis as it ultimately causes a decline in economic growth. Based
on the above discussion, the following policy implications have been
provided.
BRICS economies should optimize their current green growth and
prioritize and promote a coordinated strategy specifically from the
context of economic, political, and social globalization with the rest of
the economies at a world glance. Meanwhile, the BRICS should revise
and improve its green and sustainable growth structure based on sus­
tainable development goals and a green economic horizon. One possible
solution to promote the green growth structure is to facilitate those in­
dustries with minimum or low environmental impacts, which will create
an upward shift in the green growth phenomenon. Moreover, BRICS
should improve their relative economic policies concerning strict envi­
ronmental regulations and laws. Such efforts will create a macro-
environment for promoting green growth and related activities in the
targeted region.
BRICS should also consider the significance of ecological technolo­
gies as such advancements have been observed as a direct source of
green economic growth over the past two decades. In this regard,
administrative and governmental officials are directed to create and
implement those strategic policies through which such technological
innovations may achieve a consistent growth structure. This is because
environmental technologies rescue the total production-based carbon
emissions, an indicator of green economic growth. Therefore, this
research urges more development in climate technologies in the BRICS
W. She and F. Mabrouk
Table 8
Results of AMG & CCEMG for robustness check.
Dependent Variables
(AMG)
Coefficients t-statistics
GLO 0.159 2.397
FDI − 0.218 − 3.628
NRR − 0.363 − 5.379
ETC 0.269 4.639
HCI 0.118 3.152
Wald test – 21.008
Note GRG; green growth, GLO; globalization, FDI; foreign direct investment, NRR; natural resource rent, ETC, environmental technologies. Source: Author Estimations,
** and *** represent a level of significance at 5% and 1%.
through spending on research and development in the clean and green
innovation industries. This is expected to reduce climate pollution and
promote sustainable economic growth. BRICS economies are also sug­
gested to create a long-run coloration for expanding climate technolo­
gies to address global climate change and regional pollution.
Consequently, green or clean technologies should be adopted over the
long run for the production of goods and services along with the
extraction and utilization of natural resources, further encouraging
green growth. Besides, it is worthwhile that some green innovations
depend upon the patent’s rights and intellectual properties; therefore,
their diffusion would be restricted. Overall, green technology in­
novations are vital in promoting green competitiveness among the
BRICS and other neighboring economies.
As FDI is considered an older driver of economic growth with its
adverse impact on the green national income; therefore, it is recom­
mended that BRICS should improve the investment pattern from inter­
national investors, specifically in those industries with positive
environmental consequences. The targeted economies are highly sug­
gested to integrate the international investment pattern with industries
with their significant share in clean and green technology innovations.
In this way, the adverse impact of current FDI on green growth will be
transformed into sustainable economic growth. Additionally, it is sug­
gested that the government in BRICS should discourage investment in
traditional manufacturing industries dependent on non-renewable en­
ergy to fulfill their production and operational needs. However, it is
essential to disclose that policymakers should not attempt to prevent
polluting foreign investment by applying strict environmental regula­
tion, as such steps could inhibit all types of international investments.
One possible solution is attracting investment in clean energy infra­
structure, which could be a key to opening the paths for green economic
growth (Shao and Razzaq, 2022).
In its final step, BRICS should also reduce their dependency on the
earnings from natural resources as it hurts green economic growth. One
possible solution is to use advanced and latest technologies to extract
and utilize natural resources so that adverse environmental influences
would be controlled on reasonable grounds. Besides, efficient utilization
of human capital and skilled labor may also be regarded as another
possible solution to reduce the negative impact of natural resources on
green economic growth.
Finally, various limitations are also linked to this study. For example,
the present study’s sample only consists of the BRICS economy and
limited explanatory green growth variables. It also ignores the signifi­
cance of energy transition and other macroeconomic dynamics in
contributing towards green economic growth. Moreover, cross-regional
comparisons are also missing in this study, for which expanded time
duration is also suggested in future studies.
CRediT authorship contribution statement
Weijun She: Conceptualization, writing, Writing – original draft.
Fatma Mabrouk: Empirical results, discussion, Writing – review &
9
Resources Policy 82 (2023) 103479
(CCEMG)
p-values Coefficients t-statistics p-values
** 0.138 2.175 **
*** − 0.262 − 5.107 ***
*** − 0.397 − 4.136 ***
*** 0.196 6.638 ***
*** 0.186 2.618 **
*** – 24.139 ***
editing.
Acknowledgment
Princess Nourah bint Abdulrahman University Researchers Sup­
porting Project number (PNURSP2023R260), Princess Nourah bint
Abdulrahman University, Riyadh, Saudi Arabia.
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