Dynamic relationship between technological innovations, financial development, renewable energy, and ecological footprint: fresh insights based on the STIRPAT model for Asia Pacific Economic Cooperation countries.

Abstract

This article seeks to analyze the impact of technological innovations, financial development, renewable energy consumption, economic growth, and population on the ecological footprint in Asia Pacific Economic Cooperation (APEC) countries by utilizing the balanced longitudinal data set during the period from 1990 to 2017. This study creates a new technological innovation index through principle component analysis including three important indicators that represent the technology and employs a consistent environmental framework identified as Stochastic Impacts by Regression on Population, Affluence and Technology (STIRPAT) model. The second generation panel estimation technique is employed to calculate robust and reliable outcomes. After confirming the cross-sectional dependency among series, panel unit root tests confirm that all variables are stationary at their first integrated order. Furthermore, Westerlund cointegration test confirms the presence of long-run association among variables. The outcomes explore that financial development and renewable energy utilization significantly accelerate the environmental quality by 0.0927% and 0.4274%, respectively. While, the increase in technological innovation activities, economic growth, and population size has a detrimental effect on environmental quality in the long run by 0.099%, 0.517%, and 0.458%, respectively. Moreover, the results of panel Dumitrescu and Hurlin (D-H) non-causality test discovered the bidirectional causality relationship between financial development, technological innovations, renewable energy consumption, economic growth, and population size with the ecological footprint. These empirical findings provide some vital policy implications for central authority and policymakers to overcome the detrimental impact on environmental quality in the APEC region.