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Natural resources, technological innovation, and eco-efficiency: striking a balance between sustainability and growth in Egypt

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Abstract

Striking a balance between economic growth and environmental protection remains a crucial component of the sustainable development agenda. This study defines economic efficiency using an ecological efficiency approach, which measures the overall economic output generated per global hectare of ecological productive resources utilized. Examining the Egyptian economy from 1980 to 2018, the study investigates two prominent trends: the decreasing reliance on natural resource rents and the increasing growth of technological innovation. By employing the autoregressive distributed lag (ARDL) bounds test, the presence of cointegration is confirmed in all models, indicating that the variables converge in the long run. Additionally, the Spectral Granger-causality test is used to determine the causality direction across the permanent, intermediate, and temporary frequency domains. The results indicate that oil, coal, and natural gas impede eco-efficiency in Egypt, and the causality is unidirectional in the medium and long term, running from economic dependence on their extraction to eco-efficiency. As for the impact of technological innovation, the long-term analysis demonstrates that both domestically created and foreign (transferred) innovations significantly enhance eco-efficiency. The causality is unidirectional as well, with innovation leading to improvements in the eco-efficiency indicator. The study concludes that technological innovation offers essential economic and environmental benefits necessary for building an eco-efficient economy in Egypt. As a result, the study puts forth several policy recommendations aimed at facilitating well-informed decision-making.

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Data availability

The datasets used and/or analysed can be accessed online: 2022 National Footprint and Biocapacity Accounts, Global Footprint Network. Available online: https://data.footprintnetwork.org/; WDI available at https://databank.worldbank.org/source/worlddevelopment indicators.

Notes

  1. Based on the GDP estimates from the World Development Indicators and the ecological footprint of consumption from the 2022 National Footprint and Biocapacity Accounts compiled by the Global Footprint Network.

Abbreviations

UN:

United Nations

SDGs:

Sustainable development goals

Eco-efficiency:

Economic efficiency

ESCAP:

Economic and social commission for Asia and the pacific

GDP:

Gross domestic product

WDI:

World development indicators

GFN:

Global footprint network

COP27:

27Th United Nations climate change conference

CO2 :

Carbon dioxide emissions

MENA countries:

Middle east and north Africa countries

EF:

Ecological footprint

ARDL:

Autoregressive distributed lag model

ADF:

Augmented Dickey–Fuller test

AO:

Additive outlier test

IO:

Innovative outlier test

ECM:

Error correction model

CUSUM:

Cumulative sum test

CUSUMSQ:

Cumulative sum of square

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Authors and Affiliations

  1. Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike, Ebonyi State, Nigeria

    Chinazaekpere Nwani

  2. School of Economics & Management, Hainan Normal University, Haikou, China

    Assad Ullah

  3. Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria

    Titus Ayobami Ojeyinka

  4. Department of Economics, Nile University of Nigeria, Abuja, Nigeria

    Paul Terhemba Iorember

  5. Faculty of Economics Administrative and Social Sciences, Istanbul Gelisim University, Istanbul, Turkey

    Festus Victor Bekun

  6. Adnan Kassar School of Business, Department of Economics, Lebanese American University, Beirut, Lebanon

    Festus Victor Bekun

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  1. Chinazaekpere Nwani
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  4. Paul Terhemba Iorember
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Contributions

All authors contributed to this study. The initiation of the research project, initial draft of the manuscript, and econometric analysis were performed by CN; Review of related literature was by AU; Econometric methodology was designed by PTI; TAO interpreted and discussed the results, while FVB wrote the conclusion and policy remarks and provided general supervision.

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Correspondence to Chinazaekpere Nwani.

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Nwani, C., Ullah, A., Ojeyinka, T.A. et al. Natural resources, technological innovation, and eco-efficiency: striking a balance between sustainability and growth in Egypt. Environ Dev Sustain (2023). https://doi.org/10.1007/s10668-023-03920-8

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