Technological changes, financial development and ecological consequences: A comparative study of developed and developing economies

The existing studies have widely investigated the nexus between technological changes and environmental concerns. A large extent of literature estimates the influences of technological changes on ecological consequences using overall technologies or climate technologies. However, the moderating impacts of financial development have gained little attention, altering the technology-climate nexus in distinct samples. Therefore, this study analyzed developed and developing economies by integrating different technologies and financial development attributes from 1990 to 2019. In doing so, advanced panel estimations are employed, such as Bai and Carrion-I-Silvestre unit root, Banerjee and Carrion-i-Silvestre cointegration test, Westerlund and Edgerton cointegration to integrate structural changes, hidden cointegration, and multiple breaks in panel data. Our preliminary findings confirm the presence of cross-sectional dependency and slope heterogeneity. Therefore, we have applied a cross-sectional augmented autoregressive distributed lags model (CS-ARDL). The long-run results demonstrate a significant role of climate technologies and economic freedom in reducing the ecological footprints (EFP); however, their marginal effects significantly varied for both samples. In contrast, financial development leads to higher (lower) EFP in developing (developed) countries. Moreover, the negative influence of financial development is neutralized in developing countries through the integration of innovative technologies. Likewise, economic freedom facilitates innovative technologies and reduces EFP in both samples. These findings imply that integrating innovative technologies and financial development is imperative to ensure long-term sustainable growth.