Macroeconomic Determinants of Energy Consumption in BRICS+ Countries: Evidence from a Pooled Mean Group Autoregressive Distributed Lag Panel Approach

Abstract

Against the backdrop of shifting global energy balances, this study analyzes energy consumption within the BRICS+ countries, using a panel of eight countries that combines the founding members (Brazil, Russia, India, China, and South Africa) with three newly admitted members (Egypt, Iran, and Saudi Arabia). The objective is to quantify the impacts of financial development, economic growth, trade openness, and urbanization on energy demand. Covering the 1990–2021 period, the empirical analysis leverages data from the World Bank and the IMF. Following unit root and cointegration testing, the Pooled Mean Group (PMG-ARDL) model is employed to simultaneously estimate homogeneous long-run relationships and heterogeneous short-run dynamics. The analysis is further enriched by the Dumitrescu-Hurlin panel causality tests. The empirical findings reveal that, in the long run, financial development, economic growth, and trade openness significantly stimulate energy consumption, with economic growth emerging as the most influential driver. Conversely, urbanization exerts a positive but statistically insignificant effect. In the short run, only economic growth and financial development actively influence energy demand. These results underscore the critical importance of fostering green finance, achieving energy-growth decoupling, promoting sustainable trade policies, and implementing efficient urban planning to effectively reconcile economic expansion with energy sustainability.