The role of GHG emissions on capital accumulation in emerging countries. A dynamic analysis on BICS economies

Luca Esposito and Marco Tedeschi

International Review of Financial Analysis, 2025, vol. 105, issue C

Abstract: This study examines the dynamic relationship between GreenHouse Gas (GHG) emissions, energy intensity, and Gross Fixed Capital Formation (GFCF, as capital accumulation proxy) in Brazil, India, China, and South Africa (BICS). Using annual data from 1990 to 2022, we analyze the long- and short-term effects on GFCF using a simple Autoregressive Distributed Lags (ADL) model. The paper also simulates two GHG tax policy scenarios — a ‘soft’ and an ‘aggressive’ policy based on the OECD report — to explore their potential impact on investment accumulation. Our findings reveal significant heterogeneity across countries: while capital accumulation is a persistent phenomenon, energy intensity and GHG emissions have different roles. We provide valuable insights for policymakers designing climate strategies and economic policies.

Keywords: GHG emissions; Capital Accumulation; Environmental Policy; Emerging Economies (search for similar items in EconPapers)
JEL-codes: C23 H23 O44 Q56 Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:105:y:2025:i:c:s1057521925005034

DOI: 10.1016/j.irfa.2025.104416

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