How do environmental innovations and energy productivity affect the environment? Analyzing the role of economic globalization

After the Paris Climate Conference (COP21), countries worldwide are making progress toward carbon neutrality targets. However, despite flourishing economically, emerging countries fail to ensure environmental sustainability. Hence, it is crucial for these countries to identify the macroeconomic factor that could address the ecological concerns. Therefore, this paper examines the linkage between environmental innovations, energy productivity, economic globalization, and economic growth on environmental degradation in emerging countries. Based on the data from 1990 to 2017, the study applies the advanced panel data estimation tool cross-sectional autoregressive distributed lags (CS-ARDL) for the long-run and short-run empirical estimation that allows cross-sectional dependence and heterogeneity in slope parameters. The empirical results unveil that environmental innovations and energy productivity significantly improve environmental quality by reducing the ecological footprint. Moreover, the results unfold that economic globalization worsens the environmental quality by exacerbating the ecological footprint, while an inverted U-shaped relationship between environmental degradation and economic growth confirms the validity of the environment Kuznets curve in emerging countries. Results suggest that the government should develop such strategies that encourage environmental innovations and energy productivity to balance the speed of economic globalization and economic growth.