Evaluating the Dual Impact of Economic Drivers on Environmental Degradation in Developing Countries: A Study of Technology Innovation, Foreign Direct Investment, and Trade Openness

This study investigates the impact of technological innovation, foreign direct investment, trade openness, and globalization on environmental degradation, as indicated by carbon dioxide emissions, in developing nations over the period from 1999 to 2023. Employing the autoregressive distributed lag model, the research examines both the long-term and short-term relationships between CO₂ emissions and these key economic variables. Moreover, Granger causality tests are utilized to determine the direction of causality among the variables, providing further insights into how these factors interact to influence environmental outcomes. The analysis shows that technological innovation and globalization are associated with an exacerbation of environmental degradation. This indicates that increased technological activities and greater global integration may drive up carbon emissions. In contrast, trade openness and FDI appear to significantly mitigate environmental degradation. These factors likely contribute to the reduction in CO₂ emissions through the spread of cleaner technologies and the elevation of environmental standards. The conclusions of this study strongly recommend that developing countries adopt sustainable trade practices by weaving environmental considerations into their trade agreements and national policies.