Impact of energy efficiency, technology innovation, institutional quality, and trade openness on greenhouse gas emissions in ten Asian economies

Despite the fact that Asian economies have experienced robust economic growth in recent decades, rising pollution emissions have raised worries among policymakers about the long-term stability of this output growth. Knowing this fact, the present study attempts to empirically analyze the impact of some important factors, e.g., energy efficiency, technology innovations, trade openness, and institutional quality, on environment in 10 Asian economies over the period 1995-2018. Taking into account the slope heterogeneity and cross-sectional dependence present in the data, Westerlund and Edgerton (2008) and Banerjee and Carrion-i-Silvestre (2017) cointegration techniques and cross-sectionally augmented autoregressive distributed lag model (CS-ARDL) estimation are applied. For robust analysis, augmented mean group (AMG) and common correlated effects mean group (CCEMG) are also employed in the study. The empirical findings provided by selected variables reveal that both trade openness and institutional quality have detrimental impact, whereas energy efficiency and technology innovations have favorable impact on environmental quality in the selected economies. Empirical findings are robust to various policy recommendations. To create a sustainable future environment, Asian economies should focus on the improvement of their institutions quality and increase investments in technology innovations. The Asian countries must encourage trade-related environmental regulations and energy efficiency policies for better and sustainable environmental quality.

Automated summary

Despite the robust economic growth in Asian economies, rising pollution emissions have raised concerns. This study empirically analyzes the impact of factors such as energy efficiency, technology innovations, trade openness, and institutional quality on the environment in 10 Asian economies. The findings reveal that trade openness and institutional quality have a negative impact, while energy efficiency and technology innovations have a positive impact on environmental quality. Improving institutional quality and investing in technology innovations are important for creating a sustainable future environment in Asian economies. Trade-related environmental regulations and energy efficiency policies should also be encouraged.