EFFECTS OF EMERGING TECHNOLOGICAL INNOVATION ON CARBON DIOXIDE EMISSIONS: EXAMINING THE MODERATING ROLE OF FOREIGN DIRECT INVESTMENT

Abstract

The objective of this research is to examine the role of foreign direct investment (FDI) in influencing the association between emerging technological innovations (TEI) and carbon dioxide emissions in the energy sectors of Saudi Arabia and Malaysia. Our analysis is based on panel data obtained from the World Development Indicators, covering the period from 2000 to 2022. The study utilised a longitudinal research design and adopted a quantitative research approach. The analysis was conducted using STATA-14 software, incorporating techniques such as cross-sectional dependence, co-integration, and regression analysis. These methods were employed to evaluate the impact of exogenous and moderating variables on carbon dioxide emissions. The results indicate that the implementation of technology-enabled innovation (TEI) has a substantial adverse impact on the levels of carbon dioxide emissions. This is supported by the outcomes obtained from the application of both the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Least Squares (DLOS) models. On the contrary, it can be argued that foreign direct investment has a discernible and noteworthy impact on the levels of carbon dioxide emissions. Furthermore, our analysis reveals that foreign direct investment (FDI) serves as a vital moderating factor, substantially amplifying the association between technological innovation and carbon dioxide emissions. This study makes a valuable contribution to the current body of literature by introducing an expanded model that examines the moderating influence of foreign direct investment, with a specific focus on the countries of Saudi Arabia and Malaysia. The implications of these findings are of practical significance for policymakers and investment institutions, as they provide valuable insights into the significance of investing in technological innovation as a means to reduce carbon dioxide emissions. Furthermore, this study sheds light on the significance of foreign direct investment in promoting technological advancements, which may result in a rise in carbon dioxide emissions, particularly in developing countries. This groundbreaking research contributes to our comprehension of the complex relationships among technological advancements, foreign direct investment, and carbon dioxide emissions. It provides valuable insights into how these factors interact within the specific contexts of Saudi Arabia and Malaysia.