How investment and technological innovation interact with resource rents to affect environmental sustainability in MENA countries?

Abstract

Countries need to explore novel strategies that support environmental sustainability while preserving economic stability, even as they struggle with the effects of climate change and the depletion of natural resources. This study aims to analyze how investment and technological innovation interact with oil and natural resource rents to affect environmental sustainability in MENA countries. Fully Modified Ordinary Least Squares (FMOLS) was adopted in the study because it offers unbiased, accurate, and efficient estimators of long-term connections by taking endogeneity bias and serial correlation into account. The panel cointegration tests confirm the long-term cointegration relationship among the variables. According FMOLS estimate approach, globalization, investment, oil revenue, natural resource rents, and technological innovations all contribute to a decline in environmental sustainability through an increase in carbon dioxide (CO₂) emissions. Economic growth has a favorable effect on environmental sustainability (lowering CO2 emissions). In addition, the interaction of oil and natural resource rents with investment improves environmental sustainability by reducing CO₂ emissions. On the other hand, there was a negative impact on environmental sustainability when technological advancements and oil rents interacted. To achieve environmental sustainability in the MENA area, a comprehensive policy approach is needed, including encouraging clean investment, reinvesting oil returns in green innovation, and reorganizing the economy to focus on environmentally friendly industries. By utilizing innovative technology to improve resource extraction and consumption efficiency, the adverse environmental impacts of natural resource exploitation can be mitigated.