Towards achieving eco-efficiency in top 10 polluted countries: The role of green technology and natural resource rents

Abstract

Eco-efficiency has received much attention due to fast economic development and substantial environmental pollution. Eco-efficiency analysis can be beneficial for benchmarking commodities and industries for sustainability and measuring and monitoring their environmental and economic performance. Natural resources and green technologies are important influencing elements that substantially influence eco-efficiency. This article studies the influence of green technology and natural resource rents on eco-efficiency using panel data from the top 10 polluted nations from 1990 to 2019. Multiple econometric approaches were used to assess the empirical data, including the Westerlund cointegration test and the cross-sectional autoregressive distributive lag model, the fully modified ordinary least square method and the Granger causality test. The long-run results indicate that green technology, natural resource rents, squared term of economic complexity, and the interaction term of green technology with financial development positively influence eco-efficiency. However, eco-efficiency in these countries is negatively influenced by financial development. The Dumitrescu and Hurlin causality test results show that financial development has a bidirectional causal relationship with eco-efficiency. However, natural resource rents, green technology and the interaction term of green technology with financial development show a unidirectional causal relationship with eco-efficiency. In line with these findings, governments should focus on improving the environmental quality to promote eco-efficiency. Furthermore, such economies should convert all their investment programmes toward green strategies. Environmental concerns will be addressed as eco-efficiency is improved through green technology regulations.