IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i21p9529-d1512362.html
   My bibliography  Save this article

Non-Linear Effects of Economic Policy Uncertainty on Green Innovation: Evidence from BRICS Countries

Author

Listed:
  • Umar Farooq

    (School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, China)

  • Mohammad Mahtab Alam

    (Department of Basic Medical Sciences, College of Applied Medical Science, King Khalid University, Abha 61421, Saudi Arabia)

  • Bilal Haider Subhani

    (School of Economics and Management, Xidian University, Xi’an 710049, China)

  • Mosab I. Tabash

    (Department of Business Administration, College of Business, Al Ain University, Al Ain P.O. Box 64141, United Arab Emirates)

  • Zilola Shamansurova

    (Department of Finance and Financial Technologies, Tashkent State University of Economics, Tashkent 100066, Uzbekistan)

Abstract

This research investigates the influence of economic policy uncertainty (EPU) and its squared term (squared EPU) on the advancement of environmental technologies and the registration of environmental patents in the BRICS nations over the period from 2010 to 2022. Employing the cross-section autoregressive distributed lag (CS-ARDL) technique, the analysis reveals a significant negative relationship liaison between EPU and both environmental innovation and patent registrations, indicating that an increased uncertainty discourages investment in sustainable technologies. Conversely, a positive relationship was found with square EPU, suggesting that elevated levels of uncertainty may stimulate innovative responses as firms seek to differentiate themselves in a competitive market. These findings underscore the necessity for stable and transparent policy frameworks to foster long-term commitments to environmental innovation. This research enriches the literature by illustrating the dual nature of EPU and its differentiated effects on eco-innovation.

Suggested Citation

  • Umar Farooq & Mohammad Mahtab Alam & Bilal Haider Subhani & Mosab I. Tabash & Zilola Shamansurova, 2024. "Non-Linear Effects of Economic Policy Uncertainty on Green Innovation: Evidence from BRICS Countries," Sustainability, MDPI, vol. 16(21), pages 1-21, November.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:21:p:9529-:d:1512362
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/21/9529/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/21/9529/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    2. Yu, Wanqing & Gan, Yufei & Zhou, Bingjun & Dai, Jiapeng, 2024. "Revisiting the economic policy uncertainty and resource rents nexus: Moderating impact of financial sector development in BRICS," International Review of Financial Analysis, Elsevier, vol. 94(C).
    3. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1593-1636.
    4. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    5. Zhou, Xiaoxiao & Dai, Mengsi & Ma, Xiaowei & Charles, Vincent & Shahzad, Umer & Zhao, Xin, 2024. "Economic policy uncertainty and the inhibitory effect of firms' green technology innovation," Global Finance Journal, Elsevier, vol. 60(C).
    6. Geng, Yini & Zheng, Zhiqiang & Ma, Yongjian, 2023. "Digitization, perception of policy uncertainty, and corporate green innovation: A study from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 544-557.
    7. Hanhua Shao & Xinpeng Huang & Huwei Wen, 2024. "Foreign direct investment, development strategy, and green innovation," Energy & Environment, , vol. 35(6), pages 3116-3143, September.
    8. Maxwell Chukwudi Udeagha & Edwin Muchapondwa, 2023. "Environmental sustainability in South Africa: Understanding the criticality of economic policy uncertainty, fiscal decentralization, and green innovation," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1638-1651, June.
    9. Qinqin Zhuang & Weijie Luo & Yupeng Li, 2023. "How Does COVID-19 Affect Corporate Research and Development? Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(9), pages 3011-3023, July.
    10. Cui, Xin & Wang, Chunfeng & Sensoy, Ahmet & Liao, Jing & Xie, Xiaochen, 2023. "Economic policy uncertainty and green innovation: Evidence from China," Economic Modelling, Elsevier, vol. 118(C).
    11. Ren, Xiaohang & Xia, Xixia & Taghizadeh-Hesary, Farhad, 2023. "Uncertainty of uncertainty and corporate green innovation—Evidence from China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 634-647.
    12. Ruiqian Li & Guanghua Xu & Ramakrishnan Ramanathan, 2022. "The impact of environmental investments on green innovation: An integration of factors that increase or decrease uncertainty," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3388-3405, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jie Dou & Junyi Dou & Meng Qin & Chi-Wei Su, 2025. "Towards Sustainable Development: Assessing the Significance of World Uncertainty in Green Technology Innovation," Sustainability, MDPI, vol. 17(3), pages 1-20, February.
    2. Goktug Sahin & Mustafa Naimoglu & Ismail Kavaz & Afsin Sahin, 2025. "Examining the Environmental Phillips Curve Hypothesis in the Ten Most Polluting Emerging Economies: Economic Dynamics and Sustainability," Sustainability, MDPI, vol. 17(3), pages 1-19, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Liyuan & Luo, Zhenqing & Yu, Xiaoyuan & Yang, Qiming & Wang, Jiancong, 2025. "Economic policy uncertainty and corporate green innovation," International Review of Financial Analysis, Elsevier, vol. 97(C).
    2. Muhammad Arif Khan & Bin Meng & Irfan Ullah, 2025. "Uncertainty and Green Innovation Nexus: The Moderating Influence of Ownership Structure and Product Market Competition," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3262-3277, May.
    3. Alharbi, Samar S. & Tabash, Mosab I. & Farooq, Umar & Issa, Suzan Sameer, 2025. "How does climate policy uncertainty determine green innovation adoption? New perspectives from the BRICS," The Journal of Economic Asymmetries, Elsevier, vol. 31(C).
    4. Simona-Vasilica Oprea & Irina Alexandra Georgescu & Adela Bâra, 2024. "Charting the BRIC countries’ connection of political stability, economic growth, demographics, renewables and CO2 emissions," Economic Change and Restructuring, Springer, vol. 57(5), pages 1-35, October.
    5. Mo Chen & Xuhua Hu & Jijian Zhang & Zhe Xu & Guang Yang & Zenan Sun, 2023. "Are Firms More Willing to Seek Green Technology Innovation in the Context of Economic Policy Uncertainty? —Evidence from China," Sustainability, MDPI, vol. 15(19), pages 1-24, September.
    6. Wang, Jianling & Ma, Jia & Li, Xiuling & Wang, Chen, 2025. "Nonlinear impact of economic policy uncertainty on corporate ESG performance: Regional, industrial and managerial perspectives," International Review of Financial Analysis, Elsevier, vol. 97(C).
    7. Zou, Siqi & Long, Yang, 2025. "The nonlinear impact of economic policy uncertainty on corporate green total factor productivity," Finance Research Letters, Elsevier, vol. 77(C).
    8. Qiu Zhao & Chenxi Tang, 2024. "The Impact of Economic Policy Uncertainty on Green Technology Innovation of New Energy Vehicle Enterprises in China," Sustainability, MDPI, vol. 16(10), pages 1-21, May.
    9. Geng, Yini & Zheng, Zhiqiang & Ma, Yongjian, 2023. "Digitization, perception of policy uncertainty, and corporate green innovation: A study from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 544-557.
    10. Jie Dou & Junyi Dou & Meng Qin & Chi-Wei Su, 2025. "Towards Sustainable Development: Assessing the Significance of World Uncertainty in Green Technology Innovation," Sustainability, MDPI, vol. 17(3), pages 1-20, February.
    11. Yiran Song & Ying Wang & Yuting Zhang & Nan Lu & Chunbao Ge, 2025. "Economic Policy Uncertainty and Corporate Green Technology Innovation—Evidence from Privately Listed Companies in China," Sustainability, MDPI, vol. 17(2), pages 1-17, January.
    12. Chen, Xiaoqian & Liu, Zhigang, 2024. "Fintech and sustainable resources management: Role of trade openness and globalization in BRICS countries," Resources Policy, Elsevier, vol. 90(C).
    13. Halldén, Filip & Hultberg, Anna & Ahmed, Ali & Uddin, Gazi Salah & Yahya, Muhammad & Troster, Victor, 2025. "The role of institutional quality on public renewable energy investments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 215(C).
    14. Yiping Sun & Xiangyi Li & Tengyuan Zhang & Jiawei Fu, 2022. "Does Trade Policy Uncertainty Exacerbate Environmental Pollution?—Evidence from Chinese Cities," IJERPH, MDPI, vol. 19(4), pages 1-21, February.
    15. van Eyden, Reneé & Gupta, Rangan & Nielsen, Joshua & Bouri, Elie, 2023. "Investor sentiment and multi-scale positive and negative stock market bubbles in a panel of G7 countries," Journal of Behavioral and Experimental Finance, Elsevier, vol. 38(C).
    16. Basarab Gogoneaţă, 2010. "The Long-Run Relationship Between Commerce And Sustainable Development In Baltic And Central And Eastern European Countries," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 12(27), pages 36-51, February.
    17. Maranzano, Paolo & Cerdeira Bento, Joao Paulo & Manera, Matteo, "undated". "The Role of Education and Income Inequality on Environmental Quality. A Panel Data Analysis of the EKC Hypothesis on OECD," FEEM Working Papers 310225, Fondazione Eni Enrico Mattei (FEEM).
    18. Chien, Fengsheng & Anwar, Ahsan & Hsu, Ching-Chi & Sharif, Arshian & Razzaq, Asif & Sinha, Avik, 2021. "The role of information and communication technology in encountering environmental degradation: Proposing an SDG framework for the BRICS countries," Technology in Society, Elsevier, vol. 65(C).
    19. Nguyen Phuc Canh & Nguyen Thanh Binh & Su Dinh Thanh & Christophe Schinckus, 2020. "Determinants of foreign direct investment inflows: The role of economic policy uncertainty," International Economics, CEPII research center, issue 161, pages 159-172.
    20. Luzzati, T. & Orsini, M., 2009. "Investigating the energy-environmental Kuznets curve," Energy, Elsevier, vol. 34(3), pages 291-300.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:21:p:9529-:d:1512362. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.