Testing technological Kuznets curve implications on achieving sustainable development goal 10 in seven Asian countries

Abstract

This study investigates the relationship between technological innovations, financial development, and income inequality implications on achieving Sustainable Development Goal 10 (SDG10) in seven Asian economies via testing the inverted U-shaped hypothesis of technological innovation on income inequality in the concept of technological Kuznets curve hypothesis. The significant contribution of this study is introducing the Technological Kuznets Curve (TKC) as an extension to the Kuznets curve (KC) framework to capture the impact of technological innovation on income inequality. The PMG/ARDL was applied to estimate the coefficients to accomplish the study's objective. The panel cointegration tests confirm that all variables are cointegrated with income inequality. The empirical findings validate the KC hypothesis and demonstrate that technological innovations contribute to reducing income inequality within the Kuznets curve framework in the long run. Financial development (money supply) was negatively correlated with income inequality. The study further validates the TKC hypothesis, revealing an inverted U-shaped relationship between technological innovations and income inequality. Financial development, measured by domestic credit to the private sector, also shows a negative correlation with income inequality within the TKC framework. However, the money supply demonstrates a positive link with income inequality. The study recommended the necessity to prioritize policies that support technological innovation through subsidies, encouragement for research and development, and collaborations between the public and private sectors will greatly lower income inequality and support achieving Sustainable Development Goal 10 (SDG10). Financial development significantly facilitates access to financial services and contributes to diminishing income inequality by building an effective and inclusive banking system (mobile banking services for poor communities), easing access to credit for emerging and small and midsize enterprises (SMEs), and money circulation. Governments should strategically allocate resources toward programs and initiatives that directly address income inequality and promote inclusive growth.