Technological innovation, financialization, and ecological footprint: evidence from BEM economies

Despite the growing interest in researches on the impact of technological development on carbon emissions, the effect of technological innovation on the other indicators of environmental degradation is of little interest. In order to close this gap, the aim of this study is to determine the effects of technological innovation on both carbon emission and ecological footprint for big emerging markets (BEM) countries. In doing so, the environmental impacts of the financialization process are also explored, in line with the fact that these countries face constraints in financing technological developments. In this context, the effects of technological development, financialization, renewable energy consumption, and non-renewable energy consumption on environmental degradation are examined through the second-generation panel data methods for the period 1995-2016. The findings indicate that technological innovation is effective in reducing carbon emissions, but does not have a significant impact on the ecological footprint, namely a 1% increase in technological innovations reduces carbon emission by 0.082-0.088%. Moreover, it is found that financialization harms environmental quality for both indicators of the environment because a 1% increase in financialization increases carbon emissions by 0.203-0.222% and increases ecological footprint by 0.069-0.071%.