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Examining the relationship between technological innovation, economic growth and carbon dioxide emission: dynamic panel data evidence

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Abstract

Raising economic growth is the primary concern of most of countries especially the developing and emerging economies in order to enhance the living standard of people. However, increase in economic activities increases energy demand which rise carbon dioxide emissions and leads to environmental degradation. Technological innovations might be the remedy to overcome the issue of increased carbon dioxide emission by reducing energy use, raise energy efficiency and also push economic growth activities efficiently. In this regard, this study explores the interrelationship of technological innovation, carbon dioxide emissions, and economic growth from 1985 to 2019 in 35 Belt and Road countries. The study uses ordinary least squares, two-step system generalized method of moments, two-step difference generalized method of moments, seemingly unrelated regression, and three-stage least square models for analysis. The results indicate that technological innovations increase economic growth and enhance environmental quality. Foreign direct investment also increases economic growth while degrading environmental quality. Economic growth increases technological innovation while exerting harmful effects on the quality of the environment. The impact of trade on economic growth is positive, while financial development reduces economic growth. School enrollment has a significant and positive effect and increases technological innovation, while foreign direct investment and research and development reduce it. The results also confirm that research and development expenditures significantly reduce carbon emissions and enhance environmental quality. The findings of this study have considerable policy implications for the sample countries with respect to economic growth, technological innovations, and environmental quality.

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Data availability

Data used in the analysis are available upon reasonable request from the corresponding author.

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Authors and Affiliations

  1. College of Economics, Shenzhen University, Shenzhen, China

    Itbar Khan & Ruoyu Zhong

  2. School of Economics and Management, Zhejiang University of Science and Technology, Hangzhou, China

    Hayat Khan & Ying Dong

  3. Human and Social Sciences Doctoral School, Ştefan cel Mare University of Suceava, Suceava, Romania

    Florian Marcel Nuţă

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  1. Itbar Khan
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  2. Ruoyu Zhong
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  4. Ying Dong
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Correspondence to Hayat Khan.

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Khan, I., Zhong, R., Khan, H. et al. Examining the relationship between technological innovation, economic growth and carbon dioxide emission: dynamic panel data evidence. Environ Dev Sustain (2023). https://doi.org/10.1007/s10668-023-03384-w

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