Exploring bidirectional effects of technology innovation, energy consumption, and trade on Ethiopia's Sustainable Development Goals

Recent literature on sustainable development emphasizes the interplay between macro and micro-level dynamics. This study investigates how interactions among various agents in technology innovation, energy consumption, and trade affect the achievement of Sustainable Development Goals (SDGs) in Ethiopia. By integrating the Autoregressive Distributed Lag-Error Correction Model (ARDL-ECM), we identify significant long-run and short-run dynamics influencing sustainable development. Utilizing Markov switching models, we highlight distinct regimes where economic variables such as technology innovation, GDP, technical cooperation grants, and exports have varying impacts on SDGs. Our analysis reveals a bidirectional relationship between technological innovation and energy consumption, where advancements in renewable energy technology drive increased consumption, which then stimulates further innovation, highlighting the need for integrated policies. Additionally, trade dynamics show that imports and exports of technology-intensive goods enhance local capabilities and foster economic growth, creating opportunities for sustainable repositioning. Technical cooperation grants are identified as vital support mechanisms, emphasizing strategic investments in research and development (R&D) to catalyze innovation. Our analysis also addresses the dual role of innovation in job creation and displacement, indicating that targeted skills training interventions are essential for mitigating unemployment challenges. Therefore, these interconnected dynamics contribute to a robust framework for sustainable development in Ethiopia and beyond.