Technological Innovation and Financial Liberalization in Shrinking Ecological Footprints: Mediating Role of Green Growth

ABSTRACT Environmental sustainability has emerged as a pressing concern, capturing researchers' interest and driving an expansion of empirical studies in the field. Accordingly, this study explores the relationship between financial liberalization, renewable energy consumption, technological innovation, and ecological footprints, with green growth as a mediating factor. The data for this study are from the WDI, and the Chinn‐Ito index from 2001 to 2021, covering 160 countries. The study used the Generalized Method of Moments estimation technique to address endogeneity and ensure robust analysis. The findings reveal that financial liberalization positively affects the ecological footprint. Renewable energy use reduces the ecological footprint, underscoring its role in mitigating environmental degradation. Technological innovation also has a negative and significant relationship with the ecological footprint, showing its potential to lower ecological impact. Surprisingly, green growth has a positive and significant impact on ecological footprints, suggesting that while it drives economic expansion, it may also lead to increased environmental pressures. This counterintuitive result underscores the complexity of achieving sustainable development, underscoring the need for targeted green growth strategies that align economic activities with ecological sustainability. The study provides valuable insights for policymakers seeking to reconcile economic and environmental objectives in pursuit of long‐term sustainability, emphasizing green growth as a way forward.