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

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 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. Further, VECM indicate that the relationship among innovation, trade openness, and energy use is bidirectional in the long-run.

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