Revisiting the environmental costs of digitalization: evidence from advanced economies

Can digital transformation and foreign direct investment enhance environmental quality? Evidence from selected developing countries

Developing countries are heavily reliant on foreign direct investment (FDI) and digital transformation to sustain economic growth and improve productivity. However, these growth drivers may also intensify environmental pressure when they are supported by fossil-fuel-based energy systems. Consequently, the literature on the FDI-CO2 emissions remain inconclusive which necessitates further evidence. By employing an annual panel of 28 developing countries over the period 2000-2022, this study aims to comprehensively evaluate the main factors driving or mitigating CO2 emissions. Empirical results show that energy consumption is the most consistent driver of CO2 emissions. Meanwhile, FDI and digital transformation show positive but statistically insignificant effects in the baseline model, suggesting that their environmental impacts are contextdependent rather than uniform. Moreover, the robustness analysis indicates that renewable energy is negatively associated with CO2 emissions. Overall, the findings suggest that developing countries should place energy transition at the centre of sustainable development strategies. In particular, policymakers should improve energy efficiency, expand renewable energy, attract cleaner FDI and align digital transformation with low-carbon energy planning.  

UNVEILING THE EFFECT OF DIGITAL FINANCIAL INCLUSION ON ENVIRONMENTAL DEGRADATION IN ASIAN ECONOMIES UNDER LCC HYPOTHESIS

Purpose: Digital financial inclusion (DFI) is a vital element for a country's growth and progress. Access to digital financial services not only enhances individuals' capacity to contribute to economic activities, but it also has the likely to contribute to environmental degradation. The main aim of this study is to scrutinise the role of DFI in environmental degradation in selected Asian nations within the framework of the LCC hypothesis. Design/Methodology: The research study used annual secondary data collected from various sources, including the WDI website from 2017–2023. The dependent variable is environmental degradation, which is proxied by consumer-based carbon dioxide emissions. Likewise, for the independent variable, DFI, the study used the availability dimension (automated teller machines (ATMs) per 100,000 adults) and usage dimensions (number of depositors with financial institutions per 1000 adults and number of mobile money transactions per 1,000 adults), respectively. The study applied panel quantile regression along with some pre-requisite diagnostic tests. Findings: The findings of the study showed that there is a significant relationship between DFI and environmental degradation. Likewise, the study also confirms the presence of the Load Capacity Curve (LCC) hypothesis for selected Asian economies. Implications: The study holds significant implications for countries, encouraging them to enhance their inclusive energy efficiency, boost economic activity, and devise strategies to mitigate environmental degradation. Therefore, it is suggested that countries may use advanced technologies in order to improve environmental practices, which will later in the long run help them to mitigate GHG emissions and increases environmental sustainability.

The Impact of Institutional Quality on 𝑪𝑶₂ Emissions in Developing Economies

Navigating G20 's Green Transition: The Triple Interplay of Digitalization, Fintech, and Trade on Resource Sustainability

As the core platform for global economic governance, the green transformation of the G‐20 countries is of vital importance to global sustainable development. This study, based on panel data from 1990 to 2023 and using a second‐generation econometric method, examines the impact of five factors—digitalization, fintech, trade openness, industrial growth, and per capita income—on the sustainability of natural resources. The findings are as follows: (1) Digitalization intensifies resource dependence, resulting in a “digital rebound effect”, with the transmission channel being the stimulation of consumer demand; (2) Fintech has the potential for “resource conservation” but the effect varies by country, with the transmission channel being green investment promotion; (3) Trade openness and industrial growth inhibit resource rents, verifying the environmental Kuznets curve from the resource perspective; (4) The interaction between digitalization and fintech, and between digitalization and trade openness generates a “doubled rebound effect”; (5) The impact of each factor varies systematically between developed and developing countries, as well as between emerging markets and non‐emerging markets. It is recommended that the G‐20 implement a comprehensive strategy integrating green digitalization, sustainable fintech, and clean industrial upgrading.

Smart economies and climate outcomes: assessing the impact of digital transformation, economic resilience, and renewable energy on CO2 emissions

In recent years, the rapid evolution of information and communication technology (ICT) has profoundly influenced various sectors of the economy. Nevertheless, it is crucial to underscore the environmental ramifications of the rapid expansion of information and communication technology. This research aims to examine the asymmetric effects of information and communication technology, renewable energy consumption, foreign direct investment, and economic growth on CO 2 emissions in G-20 countries from 2000 to 2022. The study used Dynamic Ordinary Least Squares (DOLS) and Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) techniques. The preliminary step was to determine the normality of the data series using the second-generation unit-root tests (CIPS and CADF), which are known for their high efficiency and accuracy compared to the first-generation tests. The Pedroni and Westerlund cointegration test confirms a long-run relationship among foreign direct investment (FDI), economic growth (EG), information and communication technology (ICT), renewable energy (RE), and CO 2 emissions, as supported by the error correction term. The PMG-ARDL and DOLS analytical techniques confirm a positive contribution of FDI, EG, and ICT to CO 2 emissions, and declare that the G-20 countries face environmental sustainability challenges, even though they account for the largest share of global GDP and international trade. The appropriate policy implications and keenly observed practices of these sectors can help achieve a zero-carbon-emission environment without compromising economic growth, international trade, and global technological competition.

The Moderating Effect of Urbanization on the Link Between Digitalization and Carbon Emissions

Over the past two decades, Asia's economic transformation has driven by digitalization and urbanization, and yet its environmental impact remains insufficiently understood. Using panel data from 22 Asian countries between 2000 and 2021, this study investigates whether internet usage influences carbon emissions and whether urbanization (urban population) amplifies this effect. The results reveal that urbanization intensifies the environmental impact of internet usage (digitalization). Testing for endogeneity concerns using a quasi-natural experiment, the results confirm that the moderating effect persists under stable economic conditions; however, the impact is not prominent during crises such as COVID-19. The discoveries emphasize the growing challenge of integrating digital expansion, rapid urban development, and environmental sustainability. More importantly, the study highlights the need for synchronization between environmental engineering strategies and urban planning methods that align with digital infrastructure. This evidence contributes to the debate on sustainable urban transitions in emerging economies and offers insights into how environmental engineering and urban planning can reduce the environmental pressure of digitalization.