The dynamic role of green technological innovation, financial development and trade openness on urban environmental degradation in China: Fresh insights from carbon efficiency

Abstract

Research has established that green technological innovation, financial development, and trade openness are factors that contribute to environmental degradation in China. The current study endeavoured to move the efforts in the direction of enhancing the understanding of the use of carbon efficiency as an indicator of environmental degradation instead of traditional CO2 emissions or ecological footprint. The recently developed dynamic Autoregressive Distributed Lag simulations (DARDLS) approach is employed for the annual time series data from 1990 to 2018 to perform the empirical investigation. Results from the DARDLS indicated that both green technological innovation and financial development positively affected carbon efficiency in the long term in China. On the other hand, trade openness exacerbated the environmental problem in both short and long run. While the public is increasingly attending to controlling environmental degradation, these findings suggest that it would be essential for policymakers to develop more initiatives to increase green technological innovation and financial development to mitigate environmental degradation in China. Finally, the use of carbon efficiency as an indicator of environmental degradation in the current study will contribute new ideas to the existing body of knowledge in examining the factors affecting environmental degradation.