Analyzing the association between innovation, economic growth, and environment: divulging the importance of FDI and trade openness in India

• Published in: Environmental science and pollution research international 2020-08, Vol.27 (23), p.29539-29553
• Main Authors: Zameer, Hashim, Yasmeen, Humaira, Zafar, Muhammad Wasif, Waheed, Abdul, Sinha, Avik
• Format: Article
• Language: English
• Subjects: Aquatic Pollution; Atmospheric Protection/Air Quality Control/Air Pollution; Carbon; Carbon dioxide; Carbon dioxide emissions; Earth and Environmental Science; Economic analysis; Economic development; Economic growth; Economics; Ecotoxicology; Emissions; Empirical analysis; Energy; Energy consumption; Environment; Environmental Chemistry; Environmental degradation; Environmental Health; Environmental science; Error correction; Innovations; Research Article; Technological change; Waste Water Technology; Water Management; Water Pollution Control
• ISSN: 0944-1344; 1614-7499
• DOI: 10.1007/s11356-020-09112-5

The objective of this paper is to explore the nexus of innovation–environment and economic growth in the context of the Indian economy. To achieve the study objective, we explored the role of technological innovation, FDI, trade openness, energy use, and economic growth toward carbon emissions. Using the data of 1985–2017, the study employed ARDL bound testing and vector error correction model (VECM) methods to capture the effects of technological innovation, trade openness, FDI, energy use, and economic growth on CO 2 emissions. Empirical estimation has confirmed the existence of long-run cointegration. Similarly, in the long run, it is found that trade openness, energy use, and economic growth positively reinforce CO 2 emissions. In contrast, technological innovation and FDI negatively reinforce CO 2 emissions in the long run. Furthermore, VECM indicates that the relationship among innovation, trade openness, and energy use is bidirectional in the long run. Whereas, unidirectional relation has been found that is coming from GDP to carbon emissions, FDI, innovation, trade, and energy use. In the short run, unidirectional link found which is coming from FDI, innovation, and energy use to carbon emission. However, the association between emissions and trade openness is bidirectional. The conclusions put forward policy implications that innovation is a way to reduce environmental degradation.