Achieving ecological sustainability through technological innovations, financial development, foreign direct investment, and energy consumption in developing European countries

Abstract

Economic progress has tended to influence the procedures of industrialization, which has augmented the assessment of exploited renewable energy-intensive resources through the appliance of technology. Exhaustive deployment of these renewable energy-intensive resources through technological innovation, financial development, foreign direct investment (FDI), and non-renewable and alternative energy can have a significant influence on the environment. In view of this concern, this research scrutinizes the effect of technological innovations, financial development, renewable and non-renewable energy, and FDI inflows, on ecological footprint in the case of 14 developing European Union economies. To do this, panel data for these countries from 1995 to 2020 are used. Due to the presence of cross-sectional dependency and slope heterogeneity, this research utilizes a battery of second-generation panel econometric tests, namely the Augmented Mean Group (AMG), and Common Correlated Effects Mean Group (CCEMG) estimators to discover the emphasized association. From the estimated evidence, renewable energy and technological innovation both mitigate the level of environmental degradation while financial development, non-renewable energy use and FDI contribute to the increase of environmental degradation in the long-run. Based on estimated evidences, these emerging European nations are enjoined to practice clean technology development without concession for ecological eminence in the selected countries. Finally, several vital policy/strategies suggestions are proposed from the bases of empirical evidence to promote financial development, green technological innovations, resources of renewable energy use, and foreign direct investment.