Analyzing the association between Innovation, Economic Growth, and Environment: Divulging the Importance of FDI and Trade Openness in India

Hashim Zameer, Humaira Yasmeen, Muhammad Wasif Zafar, Abdul Waheed and Avik Sinha

MPRA Paper from University Library of Munich, Germany

Abstract: 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 VECM methods to capture the effects of technological innovation, trade openness, FDI, energy use and economic growth on CO2 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 CO2 emissions. In contrast, technological innovation and FDI negatively reinforce CO2 emissions in the long-run. Further, VECM indicate 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.

Keywords: Innovation; trade; CO2 emissions; growth; environment (search for similar items in EconPapers)
JEL-codes: Q5 Q53 (search for similar items in EconPapers)
Date: 2020, Revised 2020
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

Published in Environmental Science and Pollution Research (2020): pp. 1-15

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