Balancing growth and sustainability: The long‐run impact of financial and technological innovations on India's ecological footprint

Abstract

AbstractThis study examines the effects of financial and technological innovations on India's ecological footprint—a comprehensive indicator of environmental degradation. Although previous research has addressed the individual impacts of these innovations, their collective influence has not been thoroughly investigated. Using data from 1973 to 2018 and employing ARDL Bounds and Bayer‐Hanck cointegration tests, we find a long‐run relationship between innovations, economic growth, energy consumption, and the ecological footprint. Notably, while the short‐term impact of innovations appears detrimental, both financial and technological innovations demonstrate a long‐term beneficial effect on the environment, which suggests that initial investments in innovation may have short‐term environmental costs, but ultimately contribute to environmental improvement. Additionally, this study confirms the harmful long‐term effects of energy consumption and economic growth on the environment. These findings underscore the importance of transitioning to cleaner energy sources, improving energy efficiency, and implementing robust environmental policies to foster sustainable development in India.