Transformation of ecological footprint through financial development and technological innovation

The role of financial development and technological innovation on environmental quality is insufficiently examined by researchers for emerging Asian nations. Thus, this paper scrutinizes the impact of financial progress and technological innovation on the ecological footprint (EF) in the context of emerging Asian countries considering data for the period 1985-2018. The results obtained from Cross-Sectionally Augmented Autoregressive Distributed Lag approach confirm that financial development related to EF is positive, while technological innovation concerning EF is significantly negative. The Dumitrescu-Hurlin (D-H) granger causality test identified a statistically significant unidirectional relationship between financial development and EF in which technological innovation has a bidirectional association with EF. The policy implications of this paper suggest that Asian nations should undertake a proactive green investment policy to direct investment toward green projects rather than environmentally harmful ones. Further, appropriate policy and incentives must be pursued to enhance technological innovation to attain sustainable environmental and social development.