The influence of technological innovation and human capital on environmental efficiency among different regions in Asia-Pacific

Abstract

This study employs super-efficiency DEA model with desirable inputs and an undesirable output in calculating environmental efficiency values in different regions in Asia-Pacific from 1990 to 2018. The study compares environmental efficiency index in South East Asia, South Asia and East Asia. The study also evaluates the determinants of environmental efficiency using truncated regression. The mean environmental efficiency score demonstrates that East Asia region is highly efficient whereas South East Asia is the least efficient. Results from the truncated regression established an inverted U-shape relationship between environmental efficiency and Technological Innovation (TI) in the main panel, and the three regions. Also, economic growth shows an inverted “U” shape link with environmental efficiency in the panels except in South East Asia. Human capital promotes environmental efficiency in the main panel and the rest of the regions. Moreover, while FDI promotes environmental efficiency in the main panel and East Asia, it reduces environmental efficiency in both South East and South Asia regions within the Asia-Pacific. In addition, an interaction effect between technological innovation and renewable energy use, advances environmental efficiency within the entire study countries. Based on the findings the study proposes several policy recommendations.