Technological Innovation, Trade Openness, Natural Resources, and Environmental Sustainability in Egypt and Turkey: Evidence from Load Capacity Factor and Inverted Load Capacity Factor with Fourier Functions

Zhu Yingjun, Sharmin Jahan and Md. Qamruzzaman ()
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Zhu Yingjun: School of Management, Huazhong University of Science & Technology, Wuhan 430074, China
Sharmin Jahan: School of Management, Huazhong University of Science & Technology, Wuhan 430074, China
Md. Qamruzzaman: School of Business and Economics, United International University, Dhaka 1212, Bangladesh

Sustainability, 2024, vol. 16, issue 19, 1-28

Abstract: The environmental degradation in the Middle East and North Africa (MENA) region leads to significant challenges regarding economic sustainability and the attainment of sustainable development goals (SDGs). The extensive use of fossil fuels in the region, as well as rapid urbanization and economic growth, has led to significant carbon emissions, together with unprecedented ecological footprints compromising environmental sustainability. The study aims to elucidate the influence exerted by technological innovation, trade openness, and natural resources on environmental sustainability in Turkey and Egypt for the period 1990–2022. In assessing the empirical relations, the study employed the Fourier function incorporate estimation techniques, that is, Fourier ADF for unit root test, Fourier ARDL, and Fourier NARDL for long-run and short-run elasticities of technological innovation (TI), trade openness (TO,) and natural resources rent (NRR) on load capacity factor (LCF) and inverted LCF (ILCF); finally, the directional causality evaluate through Fourier TY causality test. The results revealed that both Turkey and Egypt have severe environmental problems due to their high carbon emissions and ecological footprints. Technological change and international trade separately negatively affect environmental sustainability; however, these negative impacts have mixed character. On the one hand, technology can improve efficiency and reduce ecological footprints by obviating the use of high-impact processes or allowing cleaner production systems. In the same vein, trade openness helps transfer green technologies more quickly, but it can also lead to unsustainable resource extraction and pollution. The findings of the paper propose that in order to move forward, Turkey and Egypt need strategic policy shifts to ensure environmental sustainability, including transitioning towards renewable energy from fossil fuels while bolstering their capacity for energy efficiency. Policymakers must balance economic development with environmental conservation to reduce the harmful effects of climate degradation and help safeguard continued economic survival in the face of increasing climatic instability. This research helps to inform policy and investment decisions about how the SDGs can be achieved and how they are relevant for sustainable development in the MENA region.

Keywords: technological innovation; trade openness; natural resources; load capacity factor; inverted load capacity factor (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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