Navigating sustainability: understanding the linkages between inclusive economic growth, institutional quality, and environmental degradation in BRICS Plus countries
Abstract
Relevance: Global economic growth has intensified concerns about environmental degradation, particularly in rapidly expanding economies such as the BRICS Plus countries. These countries contribute significantly to global GDP and trade, yet face rising challenges involving carbon emissions, resource scarcity, and socio-economic inequality. Understanding how inclusive growth affects the environment and how institutional quality shapes this relationship is essential for advancing sustainable development goals.
Research Objective: This study examines how inclusive economic growth affects environmental degradation, measured through CO₂ emissions, and assesses how institutional quality, specifically regulatory quality and government effectiveness, moderates this relationship in BRICS Plus countries.
Data and Method: This study uses macro panel data for BRICS countries from 2000 to 2023 and applies a quantitative design using several analytical techniques. Panel Ordinary Least Squares (OLS) provides the baseline estimates, while the Dynamic Generalized Method of Moments (GMM) is used to address endogeneity, with static OLS informing instrument selection. Inclusive growth is measured using the Social Mobility Curve (SMC) and a PCA-constructed index. The Environmental Inclusive-Growth Kuznets Curve (EIKC) framework is applied to examine the relationship between inclusive growth and environmental degradation, focusing on CO₂ emissions.
Results: The findings support the Environmental Inclusive-Growth Kuznets Curve (EIKC) hypothesis. At early development stages, inclusive growth increases CO₂ emissions due to industrial expansion and energy-intensive activity. After reaching a threshold, however, greater inclusiveness leads to environmental improvement. Institutional factors such as government effectiveness and regulatory quality strengthen the link between inclusive growth and environmental outcomes. This suggests that in BRICS Plus countries, institutional efficiency still tends to favor economic gains over environmental protection, which can amplify ecological pressures when incentives are oriented toward growth.
Conclusions: To ensure sustainable development in BRICS Plus countries, it is necessary to align institutional performance with environmental goals. Stronger environmental regulations, integrating sustainability metrics into governance evaluations, and improving policy coherence between social inclusion and environmental management are essential for ensuring that inclusive growth supports sustainability rather than contributing to additional environmental costs. Future work could examine subnational or sectoral patterns, broaden the set of environmental indicators, and analyze how formal and informal institutions differently influence sustainable inclusiveness.
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