THE ROLE OF TECHNOLOGICAL INNOVATION IN MODERATING THE IMPACT OF ECONOMIC GROWTH ON ENVIRONMENTAL QUALITY IN KUWAIT: A LONG-RUN ANALYSIS

The primary purpose of this study is to investigate the impact of economic growth on environmental quality in Kuwait, with a particular emphasis on technological innovation (TI) as a moderating factor from 1997 to 2022. We also incorporated financial development (FD), and trade openness (TOP) as essential indicators in the model to avoid variable bias. The results of unit root tests show that the variables are stationary at first difference. The bound cointegration test confirmed that all the variables are cointegrated. We employed the Fully Modified Ordinary Least Squares (FMOLS) method to estimate the explanatory variable’s long-run effects on environmental quality. Canonical cointegration regression (CCR) is employed to ensure the robustness of the findings. The main findings are: (i) a negative significant interaction between TI and economic growth suggests that technological advancements in Kuwait foster sustainable economic growth by reducing environmental harm and enhancing environmental quality. (ii) Economic growth and FD stimulate carbon dioxide (CO2) emissions. (iii) Trade openness (TOP) has insignificant impact on CO₂ emissions. The findings provide critical insights into how Kuwait can balance economic growth and ecological sustainability through targeted policy measures, particularly by fostering investments in research and development (R&D) and energy-efficient technologies. This study offers actionable recommendations for policymakers and stakeholders, emphasizing the need for a sustainable growth model that integrates technological advancements as a key driver of environmental preservation.