Technological innovation and environmental quality nexus in India: Does inward remittance matter?

• Published date: 01 February 2022
• Author: Muhammed Ashiq Villanthenkodath,Mantu Kumar Mahalik
• Date: 01 February 2022
• DOI: http://doi.org/10.1002/pa.2291

ACADEMIC PAPER

Technological innovation and environmental quality nexus in

India: Does inward remittance matter?

Muhammed Ashiq Villanthenkodath | Mantu Kumar Mahalik

Department of Humanities and Social

Sciences, Indian Institute of Technology

Kharagpur, India

Correspondence

Mantu Kumar Mahalik, Department of

Humanities and Social Sciences, Indian

Institute of Technology Kharagpur, West

Bengal, India.

Email: mkm@hss.iitkgp.ac.in

This article examines the relationships between technological innovation and environ-

mental quality in India relying on the availability of annual data from 1980 to 2018.

Both inwardremittances and economicgrowth are also consideredas key determinants

in CO

2

emissions andtechnological innovation functions.The result from utilizing auto-

regressive distributed lag (ARDL) bounds testing cointegration approach indicates the

existence of long-run relationship between the series. The combined cointegration test

is also used as a result robust checking and validating the long-run relationship. While

considering the carbon dioxide emissions function, the findings document that techno-

logical innovation and economic growth degrade environmental quality in India via pro-

moting atmospheric emissions in the long-run, whereas U-shaped relationship between

inward remittances and carbon dioxide emissions is established. Further considering

the technological innovation function, findings clearlyindicate that both carbon dioxide

emissions andeconomic growth promote the new technologicalinnovation in the long-

run and also fails to confirm the inverted U-shaped relationship between remittances

inflows and technological innovation. On the policy front, we suggestthat technological

innovation should be made eco-friendly and heavy utilization of inward remittances on

pollution-driving households’appliances need to be discouraged in India for mitigating

both climatechange and global warming in the long-run.

1|INTRODUCTION

Economic growth plays an essential role mainly for developing econo-

mies grappling with the problems of poverty, unemployment, and

infrastructure bottlenecks. The quality of natural environment is also

important for an economy because it is a public good providing the

source of livelihood for human, animals, and other species living in the

planet. Keeping this importance in mind, the nexus between economic

growth and environment quality has always been a source of exten-

sive debate among economists, ecologists, and policymakers for many

years. In one hand, it is believed that more economic activity degrades

the natural environment and leads to an ecological collapse. The eco-

logical collapse is a sign of environmental injustice created by humans

in the name of economic activities. This shows larger consequences of

environmental injustice in the long-run as it increases income inequal-

ity, climate injustice, and also lowers life expectancy of the people and

other species. On the other hand, it is also argued that environmental

issues will be mitigated automatically with rising economic growth in

the long-run. This again shows the merit of economic growth as one

of the potential determinants in solving the environmental issues in

the long-run. Subsequently, it has invited the emergence of environ-

mental Kuznets curve (EKC) hypothesis indicating the non-linear rela-

tionship between economic growth and environmental degradation.

1

Though many studies based on the seminal work of Grossman and

Krueger (1991), have empirically explored the EKC hypothesis in the

field of energy economics and energy policy (Esteve & Tamarit, 2012;

Apergis, 2016; Wang, Zhou, Zhou, & Wang, 2011; Pal & Mitra, 2017;

Pablo-Romero & Sánchez-Braza, 2017; Sapkota & Bastola, 2017;

Zambrano-Monserrate, Silva-Zambrano, Davalos-Penafiel, Zambrano-

Monserrate, & Ruano, 2018; Asumadu-Sarkodie & Yadav, 2019;

Rana & Sharma, 2019; Rasool, Malik, & Tarique, 2020; Rasool

et al., 2020), but still environmental issues are aggravated in the form

of climate change and global warming, often giving numerous chal-

lenges to the safety and security of the people and animals living in

Received: 3 April 2020 Revised: 11 June 2020 Accepted: 14 July 2020

DOI: 10.1002/pa.2291

J Public Affairs. 2022;22:e2291. wileyonlinelibrary.com/journal/pa © 2020 John Wiley & Sons Ltd 1of17

https://doi.org/10.1002/pa.2291

the planet. Such circumstance clearly shows that environmental issues

for developing countries may not be solved automatically with

increased economic growth in the long-run and also concludes that

environmental health protection is not in the safe hand.

However, the failure to protect the health of ecosystem lends the

EKC hypothesis under the window of criticism by the governments of

several advanced countries. The reason is that developing economies

continue to grow at the cost of environmental quality. The profound loss

of environmental quality in developing economies on account of rising

economic activities has become a question of global phenomenon. This

may be possible due to the extent of globalization where every country

is highly connected with each other and allowing them to go for trade

and financial flows. This has partially benefited developing economies in

terms of attracting foreign firms which has not only expanded economic

activities but also polluted the natural environment. This shows ineffi-

ciency of domestic environmental regulatory framework which not only

created “pollution haven hypothesis”but also prompted developing

economies to accept the window of criticism from advanced countries.

There is a way-out for emerging economies benefitting themselves from

an extended globalization in the form of importing energy-saving and

pollution-internalizing technologies from the advanced countries. The

energy-saving and pollution-internalizing technologies enable developing

economies to improve their environmental quality in the long-run by

enhancing energy efficiency and minimizing negative externality

(i.e., pollution level). Overall, it shows that the types of technological

innovation may be helpful for developing economies as far as their

energy efficiency and health of natural environment are concerned in

the long-run. In such context, Nentjes and Wiersma (1988) argue that

environmental resources and human knowledge are the two necessary

aspects on which human welfare is based and environmental quality may

be protected in emerging economies. It is true that human ethical behav-

ior and knowledge toward protection of the natural resources in devel-

oping economies may be necessary to guarantee ecosystem

sustainability in the long-run. Human ethical behavior and knowledge are

the by-product of environmental education and technological innovation.

Moreover, it is argued in the literature that technological innova-

tion is one of the most effective methods to reduce CO

2

emissions,

save natural resources, and improve economic growth (Ahmad, Khan,

Rahman, Khattak, & Khan, 2019; Ahmed, Khattak, Khan, &

Rahman, 2020; Cinnirella & Streb, 2017; Fan, Yan, & Sha, 2017; Mar-

adana et al., 2017; Khan, Umar, Kirikkaleli & Jiao, 2020). Though few

studies have already explored the role of education and technological

innovation on environmental quality in developed and developing

countries (Gangadharan & Valenzuela, 2001; Hill & Magnani, 2002;

Dasgupta, Laplante, Wang, & Wheeler, 2002; Pablo-Romero &

Sánchez-Braza,2015; Kwon, 2009; Costa-Campi et al., 2015; Shayegh,

Sanchez, & Caldeira, 2017; Mensahet al., 2018; Yu & Du, 2019), but an

empirical testingon such issue is not yet explored in the Indiancontext.

The reason is to pressIndia as our choice of empirical analysis because

India is not only lowand middle income economies but alsoone of the

emerging market economies sharing 17.7% (i.e., 1.353 billion)

2

of total

world population and contributing 3.5% (i.e., 2.842 trillion)

3

of total

world's grossdomestic product (GDP).

4

As far as India is concerned, there is a more significant improve-

ment in the GlobalInnovation Index (GII) publishedby UN World Intel-

lectual Property Organization (WIPO) where India's rank in 2015 was

81, but it is 57 in 2018, and followed by 52 in 2019. Despite India's

progress in technological progress in the recentyears, the International

Energy Agency (IEA) estimates that India had also emitted 2299 million

tons of carbon dioxide per capita in the year 2017 which is 4.8%more

than the previous year.This shows that India is the third largest carbon

emitting countriesin the world after China and USA.

5

In such scenario,

one can raise a research question of whether technological innovation

helps India to reduceenvironmental degradation or environmental deg-

radation enablesIndia to promote the researchand development (R&D)

investments on making new technology. The World Bank (2018)

recently argues that remittances inflows not only have significant wel-

fare implicationsbut also finance trade deficitin developing economies.

Both low and middle income economies receive US$466 billion as

inward remittances. India is still lower-middle income countries which

has topped the list of remittances recipient country with receiving

US$69 billion as inward remittances (Reserve Bank of

India, 2017).

6

This shows that the Indian economy has been smiled

with receiving more inflows of remittances from other countries

that may help India's financial capacity and thereby enhancing

greater R&D investments on technological innovation and also

helping people to buy energy-saving home appliances. Another

question may be raised of whether remittances inflows benefit the

Indian economy as long as environmental quality and technological

innovation are concerned. The research gap outlined above and

questions addressed here motivate us to make an empirical explo-

ration on the nexus between technological innovation and environ-

mental quality in India by considering economic growth and inward

remittances as important control variables in both the carbon emis-

sions and technological innovations functions. This is the novelty

of our study considering the single structural break test of Zivot

and Andrews (1992) and utilizing the recent technique of Bayer

and Hanck (2013) into the estimation strategy. In doing this, we

expect that our results may expand the literature and also bring

the important policy implications for India which are discussed at

the end of concluding remarks.

The subsequent sections of this study are mentioned in the fol-

lowing way. The related studies are critically reviewed in Section 2;

theoretical frameworks, data descriptions, and estimation strategy are

discussed in Section 3; empirical results and discussion are also

highlighted in Section 4, and followed by the concluding remarks and

policy implications in Section 5.

2|RELATED STUDIES

In this section, we have critically reviewed the existing studies on the

relationships between environmental quality, technological innovation,

and remittances inflows. The following sections decompose the current

literature into two sub-sections linking the nexus between environmen-

tal quality, technological innovation, and remittances inflows. The

2of17 VILLANTHENKODATH AND MAHALIK