Abstract
The literature analyzing the ecological impacts of financial development (FD) documents mixed results. In addition, very limited researches consider the role of technological innovation in ecological sustainability even though technological innovation is indispensable to achieve technological advancement, which may help in sustainable development and ecological sustainability. Therefore, this work probes the effects of technological innovation, financial development, and economic growth (GDP) on the ecological footprint (EF) controlling urbanization and employing a STIRPAT framework. The analysis of data from West Asia and Middle East nations from 1990 to 2017 revealed cointegration in the model. The long-run coefficients produced by the continuously updated fully modified technique revealed that a 1% upsurge in technological innovation decreases EF by 0.010%. Interestingly, technological innovation is helpful to decrease EF and enhance economic growth in the West Asia and Middle East (WAME) countries. However, a 1% rise in FD boosts the level of EF by 0.0016% inferring that FD stimulates ecological degradation. Likewise, urbanization in the WAME countries raises EF levels and contributes adversely to ecological quality. In addition to this, the study revealed the environmental Kuznets curve hypothesis in the selected countries accounting for technological innovation, FD, and urbanization in the model. The causal analysis provided evidence of unidirectional causality from FD to EF and bidirectional causality between technological innovation and EF. The study recommends more investment in research and development and strong collaboration between the universities and industries to promote the level of technological innovation for both sustainable development and ecological sustainability. In addition, urban sustainability policies are necessary without decreasing the urbanization level.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data and material availability
Links are provided in the paper to access the data used in the paper free of cost.
Notes
https://stats.oecd.org/# (accessed January 2021)
References
Adams S, Adedoyin F, Olaniran E, Bekun FV (2020) Energy consumption, economic policy uncertainty and carbon emissions; causality evidence from resource rich economies. Econ Anal Policy 68:179–190. https://doi.org/10.1016/j.eap.2020.09.012
Adebayo TS, Udemba EN, Ahmed Z, Kirikkaleli D (2021) Determinants of consumption-based carbon emissions in Chile: an application of non-linear ARDL. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-021-13830-9
Adedoyin FF, Alola AA, Bekun FV (2020) An assessment of environmental sustainability corridor: the role of economic expansion and research and development in EU countries. Sci Total Environ 713:136726. https://doi.org/10.1016/j.scitotenv.2020.136726
Agyekum EB, Adebayo TS, Bekun FV, Kumar NM, Panjwani MK (2021) Effect of two different heat transfer fluids on the performance of solar tower CSP by comparing recompression supercritical CO2 and rankine power cycles, China. Energies, 14(12):3426
Ahmad M, Jiang P, Majeed A, Umar M, Khan Z, Muhammad S (2020) The dynamic impact of natural resources, technological innovations and economic growth on ecological footprint: an advanced panel data estimation. Res Policy 69:101817. https://doi.org/10.1016/j.resourpol.2020.101817
Ahmad M, Ahmed Z, Majeed A, Huang B (2021) An environmental impact assessment of economic complexity and energy consumption : does institutional quality make a difference ? Environ Impact Assess Rev 89:106603. https://doi.org/10.1016/j.eiar.2021.106603
Ahmed Z, Wang Z (2019) Investigating the impact of human capital on the ecological footprint in India: An empirical analysis. Environ Sci Pollut Res 26:26782–26796. https://doi.org/10.1007/s11356-019-05911-7
Ahmed Z, Wang Z, Mahmood F, Hafeez M, Ali N (2019) Does globalization increase the ecological footprint? Empirical evidence from Malaysia. Environ Sci Pollut Res 26:18565–18582. https://doi.org/10.1007/s11356-019-05224-9
Ahmed Z, Asghar MM, Malik MN, Nawaz K (2020a) Moving towards a sustainable environment: the dynamic linkage between natural resources, human capital, urbanization, economic growth, and ecological footprint in China. Res Policy 67:101677. https://doi.org/10.1016/j.resourpol.2020.101677
Ahmed Z, Zafar MW, Ali S, Danish (2020b) Linking urbanization, human capital, and the ecological footprint in G7 countries: an empirical analysis. Sustain Cities Soc 55:102064. https://doi.org/10.1016/j.scs.2020.102064
Ahmed Z, Zafar MW, Mansoor S (2020c) Analyzing the linkage between military spending, economic growth, and ecological footprint in Pakistan: evidence from cointegration and bootstrap causality. Environ Sci Pollut Res 27:41551–41567. https://doi.org/10.1007/s11356-020-10076-9
Ahmed Z, Zhang B, Cary M (2021) Linking economic globalization, economic growth, financial development, and ecological footprint: evidence from symmetric and asymmetric ARDL. Ecol Indic 121:107060. https://doi.org/10.1016/j.ecolind.2020.107060
Al-Mulali U, Ozturk I (2015) The effect of energy consumption, urbanization, trade openness, industrial output, and the political stability on the environmental degradation in the MENA (Middle East and North African) region. Energy 84:382–389. https://doi.org/10.1016/j.energy.2015.03.004
Al-Mulali U, Weng-Wai C, Sheau-Ting L, Mohammed AH (2015) Investigating the environmental Kuznets curve (EKC) hypothesis by utilizing the ecological footprint as an indicator of environmental degradation. Ecol Indic 48:315–323. https://doi.org/10.1016/j.ecolind.2014.08.029
Alola AA, Bekun FV, Sarkodie SA (2019) Dynamic impact of trade policy, economic growth, fertility rate, renewable and non-renewable energy consumption on ecological footprint in Europe. Sci Total Environ 685:702–709. https://doi.org/10.1016/j.scitotenv.2019.05.139
Awosusi AA, Kirikkaleli D, Akinsola GD, Adebayo TS, Mwamba MN (2021) Can CO 2 emissions and energy consumption determine the economic performance of South Korea? A time series analysis. Environ Sci Pollut Res 1–16
Bai J, Kao C, Ng S (2009) Panel cointegration with global stochastic trends. J Econ 149:82–99. https://doi.org/10.1016/j.jeconom.2008.10.012
Baloch MA, Zhang J, Iqbal K, Iqbal Z (2019) The effect of financial development on ecological footprint in BRI countries: evidence from panel data estimation. Environ Sci Pollut Res 26:6199–6208. https://doi.org/10.1007/s11356-018-3992-9
Baloch MA, Ozturk I, Bekun FV, Khan D (2020) Modeling the dynamic linkage between financial development, energy innovation, and environmental quality: does globalization matter? Bus Strateg Environ 30:1–9. https://doi.org/10.1002/bse.2615
Bekun FV, Emir F, Sarkodie SA (2019) Another look at the relationship between energy consumption, carbon dioxide emissions, and economic growth in South Africa. Sci Total Environ 655:759–765. https://doi.org/10.1016/j.scitotenv.2018.11.271
Bekun FV, Adebayo TS, Akinsola GD, Kirikkaleli D, Umarbeyli S, Osemeahon OS (2021) Economic performance of Indonesia amidst CO 2 emissions and agriculture: a time series analysis. Environ Sci Pollut Res 1-15
Bello MO, Solarin SA, Yen YY (2018) The impact of electricity consumption on CO2 emission, carbon footprint, water footprint and ecological footprint: the role of hydropower in an emerging economy. J Environ Manag 219:218–230. https://doi.org/10.1016/j.jenvman.2018.04.101
Charfeddine L (2017) The impact of energy consumption and economic development on ecological footprint and CO2 emissions: evidence from a Markov Switching Equilibrium Correction Model. Energy Econ 65:355–374. https://doi.org/10.1016/j.eneco.2017.05.009
Danish HST, Baloch MA et al (2019) Linking economic growth and ecological footprint through human capital and biocapacity. Sustain Cities Soc 47:101516. https://doi.org/10.1016/j.scs.2019.101516
Deng R, Li M, Linghu S (2021) Research on calculation method of steam absorption in steam injection thermal recovery technology. Fresenius Environ Bull 30:5362–5369
Destek MA, Sarkodie SA (2019) Investigation of environmental Kuznets curve for ecological footprint: the role of energy and financial development. Sci Total Environ 650:2483–2489. https://doi.org/10.1016/j.scitotenv.2018.10.017
Destek MA, Ulucak R, Dogan E (2018) Analyzing the environmental Kuznets curve for the EU countries: the role of ecological footprint. Environ Sci Pollut Res 25:29387–29396. https://doi.org/10.1007/s11356-018-2911-4
Dietz T, Rosa EA (1997) Effects of population and affluence on CO2 emissions. Proceedings of the National Academy of Sciences, In, pp 175–179
Dogan E, Ulucak R, Kocak E, Isik C (2020) The use of ecological footprint in estimating the environmental Kuznets curve hypothesis for BRICST by considering cross-section dependence and heterogeneity. Sci Total Environ 723:138063. https://doi.org/10.1016/j.scitotenv.2020.138063
Dumitrescu EI, Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Econ Model 29:1450–1460. https://doi.org/10.1016/j.econmod.2012.02.014
GFN (2021a) Global footprint network. http://data.footprintnetwork.org
GFN (2021b) Global footprint network data. https://data.footprintnetwork.org/#/countryTrends?cn = 165&type = BCpc,EFCpc (Accessed Januray 17, 2021)
Grossman GM, Krueger AB (1995) Economic growth and the environment. Q J Econ 110:353–377
Hassan ST, Xia E, Khan NH, Shah SMA (2019) Economic growth , natural resources , and ecological footprints : evidence from Pakistan. Environ Sci Pollut Res 26:2929–2938. https://doi.org/10.1007/s11356-018-3803-3
He L, Shen J, Zhang Y (2018) Ecological vulnerability assessment for ecological conservation and environmental management. J Environ Manag 206:1115–1125. https://doi.org/10.1016/j.jenvman.2017.11.059
He X, Zhang T, Xue Q, et al (2021) Enhanced adsorption of Cu (II) and Zn (II) from aqueous solution by polyethyleneimine modified straw hydrochar. Sci Total Environ 778:146116
IMF (2020) International Monetary Fund, Available at https://data.imf.org/?sk = F8032E80-B36C-43B1-AC26-493C5B1CD33B
Jaforullah M, King A (2017) The econometric consequences of an energy consumption variable in a model of CO2 emissions. Energy Econ 63:84–91. https://doi.org/10.1016/j.eneco.2017.01.025
Joshua U, Bekun FV (2020) The path to achieving environmental sustainability in South Africa: the role of coal consumption, economic expansion, pollutant emission, and total natural resources rent. Environ Sci Pollut Res 27:9435–9443. https://doi.org/10.1007/s11356-019-07546-0
Katircioglu S, Gokmenoglu KK, Eren BM (2018) Testing the role of tourism development in ecological footprint quality : evidence from top 10 tourist destinations. Environ Sci Pollut Res 25:33611–33619. https://doi.org/10.1007/s11356-018-3324-0
Khan A, Muhammad F, Chenggang Y, Hussain J, Bano S, Khan MA (2020a) The impression of technological innovations and natural resources in energy-growth-environment nexus: a new look into BRICS economies. Sci Total Environ 727:138265. https://doi.org/10.1016/j.scitotenv.2020.138265
Khan Z, Ali S, Umar M, Kirikkaleli D, Jiao Z (2020b) Consumption-based carbon emissions and international trade in G7 countries: the role of environmental innovation and renewable energy. Sci Total Environ 730:138945. https://doi.org/10.1016/j.scitotenv.2020.138945
Kihombo S, Saud S, Ahmed Z, Chen S (2021) The effects of research and development and financial development on CO 2 emissions : evidence from selected WAME economies. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-021-14288-5
Li J, Hu Z, Shi V, Wang Q (2021) Manufacturer’s encroachment strategy with substitutable green products. Int J Prod Econ 235:108102. https://doi.org/10.1016/j.ijpe.2021.108102
Magazzino C, Cerulli G (2019) The determinants of CO2 emissions in MENA countries: a responsiveness scores approach. Int J Sustain Dev World Ecol 26:522–534. https://doi.org/10.1080/13504509.2019.1606863
Martínez-Zarzoso I, Maruotti A (2011) The impact of urbanization on CO2 emissions: evidence from developing countries. Ecol Econ 70:1344–1353. https://doi.org/10.1016/j.ecolecon.2011.02.009
Mensah CN, Long X, Boamah KB, Bediako IA, Dauda L, Salman M (2018) The effect of innovation on CO2 emissions of OCED countries from 1990 to 2014. Environ Sci Pollut Res 25:29678–29698. https://doi.org/10.1007/s11356-018-2968-0
Mrabet Z, Alsamara M (2017) Testing the Kuznets curve hypothesis for Qatar: a comparison between carbon dioxide and ecological footprint. Renew Sust Energ Rev 70:1366–1375. https://doi.org/10.1016/j.rser.2016.12.039
Mrabet Z, AlSamara M, Hezam Jarallah S (2017) The impact of economic development on environmental degradation in Qatar. Environ Ecol Stat 24:7–38. https://doi.org/10.1007/s10651-016-0359-6
Nathaniel SP (2020) Ecological footprint, energy use, trade, and urbanization linkage in Indonesia. GeoJournal 7. https://doi.org/10.1007/s10708-020-10175-7
Nathaniel SP, Bekun FV (2020) Environmental management amidst energy use, urbanization, trade openness, and deforestation: The Nigerian experience. J Public Aff 20. https://doi.org/10.1002/pa.2037
Nathaniel S, Nwodo O, Adediran A, Sharma G, Shah M, Adeleye N (2019) Ecological footprint, urbanization, and energy consumption in South Africa: including the excluded. Environ Sci Pollut Res 26:27168–27179. https://doi.org/10.1007/s11356-019-05924-2
Nathaniel SP, Barua S, Ahmed Z (2021) What drives ecological footprint in top ten tourist destinations ? Evidence from advanced panel techniques. Environ Sci Pollut Res:1–10. https://doi.org/10.1007/s11356-021-13389-5
Ozcan B, Apergis N, Shahbaz M (2018) A revisit of the environmental Kuznets curve hypothesis for Turkey: new evidence from bootstrap rolling window causality. Environ Sci Pollut Res 25:32381–32394. https://doi.org/10.1007/s11356-018-3165-x
Ozturk I, Al-Mulali U, Saboori B (2016) Investigating the environmental Kuznets curve hypothesis: the role of tourism and ecological footprint. Environ Sci Pollut Res 23:1916–1928. https://doi.org/10.1007/s11356-015-5447-x
Pata UK, Caglar AE (2020) Investigating the EKC hypothesis with renewable energy consumption, human capital, globalization and trade openness for China: evidence from augmented ARDL approach with a structural break. Energy:119220. https://doi.org/10.1016/j.energy.2020.119220
Pedroni P (1999) Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxf Bull Econ Stat 61:653–670. https://doi.org/10.1111/1468-0084.61.s1.14
Pesaran MH (2007) A simple panel unit root test in the presence of cross section dependence. J Appl Econ 47:265–312. https://doi.org/10.1002/jae
Quan Q, Gao S, Shang Y, Wang B (2021) Assessment of the sustainability of Gymnocypris eckloni habitat under river damming in the source region of the Yellow River. Sci Total Environ 778:146312. https://doi.org/10.1016/j.scitotenv.2021.146312
Rafique MZ, Li Y, Larik AR, Monaheng MP (2020) The effects of FDI, technological innovation, and financial development on CO2 emissions: evidence from the BRICS countries. Environ Sci Pollut Res 27:23899–23913. https://doi.org/10.1007/s11356-020-08715-2
Saint AS, Bekun FV, Sarkodie SA (2019) Contemporaneous interaction between energy consumption, economic growth and environmental sustainability in South Africa: what drives what? Sci Total Environ 686:468–475. https://doi.org/10.1016/j.scitotenv.2019.05.421
Santra S (2017) The effect of technological innovation on production-based energy and CO 2 emission productivity: Evidence from BRICS countries. Afr J Sci Technol Innov Dev 9:503–512. https://doi.org/10.1080/20421338.2017.1308069
Sarkodie SA (2018) The invisible hand and EKC hypothesis: what are the drivers of environmental degradation and pollution in Africa? Environ Sci Pollut Res 25:21993–22022. https://doi.org/10.1007/s11356-018-2347-x
Saud S, Chen S, Haseeb A et al (2019a) The nexus between financial development, income level, and environment in Central and Eastern European Countries: a perspective on Belt and Road Initiative. Environ Sci Pollut Res 26:2253–2269. https://doi.org/10.1007/s11356-018-3688-1
Saud S, Chen S, Haseeb A, Khan K, Imran M (2019b) The nexus between financial development, income level, and environment in Central and Eastern European countries: a perspective on Belt and Road Initiative. Environ Sci Pollut Res 26:16053–16075. https://doi.org/10.1007/s11356-019-05004-5
Saud S, Chen S, Haseeb A, Sumayya (2020) The role of financial development and globalization in the environment: accounting ecological footprint indicators for selected one-belt-one-road initiative countries. J Clean Prod 250:119518. https://doi.org/10.1016/j.jclepro.2019.119518
Sinha A, Sengupta T, Alvarado R (2020) Interplay between technological innovation and environmental quality: formulating the SDG policies for next 11 economies. J Clean Prod 242:118549. https://doi.org/10.1016/j.jclepro.2019.118549
Soylu ÖB, Adebayo TS, Kirikkaleli D (2021) The imperativeness of environmental quality in China amidst renewable energy consumption and trade openness. Sustainability 13(9):5054
Tufail M, Song L, Adebayo TS, Kirikkaleli D, Khan S (2021) Do fiscal decentralization and natural resources rent curb carbon emissions? Evidence from developed countries. Environ Sci Pollut Res 1–12
Uddin GA, Salahuddin M, Alam K, Gow J (2017) Ecological footprint and real income: panel data evidence from the 27 highest emitting countries. Ecol Indic 77:166–175. https://doi.org/10.1016/j.ecolind.2017.01.003
Ulucak R, Bilgili F (2018) A reinvestigation of EKC model by ecological footprint measurement for high, middle and low income countries. J Clean Prod 188:144–157. https://doi.org/10.1016/j.jclepro.2018.03.191
Ulucak R, Lin D (2017) Persistence of policy shocks to ecological footprint of the USA. Ecol Indic 80:337–343. https://doi.org/10.1016/j.ecolind.2017.05.020
Wang Y, Kang L, Wu X, Xiao Y (2013) Estimating the environmental Kuznets curve for ecological footprint at the global level: a spatial econometric approach. Ecol Indic 34:15–21. https://doi.org/10.1016/j.ecolind.2013.03.021
Wang Z, Ahmed Z, Zhang B, Wang B (2019) The nexus between urbanization, road infrastructure, and transport energy demand: empirical evidence from Pakistan. Environ Sci Pollut Res 26:34884–34895. https://doi.org/10.1007/s11356-019-06542-8
Westerlund J (2007) Testing for error correction in panel data. Oxf Bull Econ Stat 69:709–748. https://doi.org/10.1111/j.1468-0084.2007.00477.x
Yuan H, Wang Z, Shi Y, Hao J (2021) A dissipative structure theory-based investigation of a construction and demolition waste minimization system in China. J Environ Plan Manag 1:–27. https://doi.org/10.1080/09640568.2021.1889484
Zafar MW, Shahbaz M, Hou F, Sinha A (2019) From nonrenewable to renewable energy and its impact on economic growth: the role of research & development expenditures in Asia-Pacific Economic Cooperation countries. J Clean Prod 212:1166–1178. https://doi.org/10.1016/j.jclepro.2018.12.081
Zhao X, Gu B, Gao F, Chen S (2020) Matching model of energy supply and demand of the integrated energy system in coastal areas. J Coast Res 103:983–989. https://doi.org/10.2112/SI103-205.1
Funding
Innovative Research Group Project of the National Natural Science Foundation of China (NSFC-71972011,71672009) under the supervision of the corresponding author Professor Dr. Songsheng Chen.
Author information
Authors and Affiliations
Contributions
Shauku Kihombo (SK): writing the original manuscript, writing review and editing, and conceptualization. Zahoor Ahmed (ZA): data collection, writing original manuscript, formal analysis, and methodology. Songsheng Chen: reviewed the paper, supervision, made corrections, funding provision. Tomiwa Sunday Adebayo (TA): writing review and editing, validation. Dervis Kirikkaleli (DK): writing review and editing, administration. All authors approved the final manuscript.
Corresponding authors
Ethics declarations
Ethics approval and consent to participate
NA
Consent for publication
NA
Competing interests
The authors declare no competing interests.
Additional information
Responsible Editor: Nicholas Apergis
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Kihombo, S., Ahmed, Z., Chen, S. et al. Linking financial development, economic growth, and ecological footprint: what is the role of technological innovation?. Environ Sci Pollut Res 28, 61235–61245 (2021). https://doi.org/10.1007/s11356-021-14993-1
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-021-14993-1