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

Environmental Science and Pollution Research volume 27, pages 29539–29553 (2020)Cite this article

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 vector error correction model (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. 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.

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Funding

This work was received funding from the College of Economics and Management, Nanjing University of Aeronautics and Astronautics, and is supported by the Young Teachers Research Supporting fund Project number (1009-56SYAH19058).

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Affiliations

  1. College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing, China

    Hashim Zameer & Humaira Yasmeen

  2. College of Management, Shenzhen University, Shenzhen, 518060, China

    Muhammad Wasif Zafar

  3. School of Business and Economics, University of Management and Technology, Lahore, Pakistan

    Abdul Waheed

  4. Centre for Sustainable Development, Goa Institute of Management, Goa, India

    Avik Sinha

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  1. Hashim Zameer
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  2. Humaira Yasmeen
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  3. Muhammad Wasif Zafar
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  4. Abdul Waheed
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  5. Avik Sinha
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Correspondence to Muhammad Wasif Zafar.

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Zameer, H., Yasmeen, H., Zafar, M.W. et al. Analyzing the association between innovation, economic growth, and environment: divulging the importance of FDI and trade openness in India. Environ Sci Pollut Res 27, 29539–29553 (2020). https://doi.org/10.1007/s11356-020-09112-5

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Keywords

  • Innovation
  • Trade
  • CO2 emissions
  • Growth
  • Environment