ICT diffusion, energy consumption, institutional quality, and environmental sustainability in 20 emerging economies during 2005–2019

Abstract

Although developing market economies have expanded substantially over the past three decades, rising pollution has prompted policymakers to question whether this growth is sustainable over the long term. The issue with these markets is that they have prioritized economic growth over environmental protection, even though the former is indispensable to the latter. Nevertheless, the expansion of the Internet, the energy industry, and the unregulated financial sector all contributed to environmental degradation. In light of this, the present study investigates the environmental sustainability of twenty emerging economies for the period 2005–2019, focusing on the impact of ICT diffusion, energy consumption, trade openness, and institutional quality on CO2 emissions. Using economic methodologies robust to CSD, such as Westerlund cointegration and system GMM, the findings confirm the pollution haven theory due to the leakage phenomena. A unit increase in ICT reduces CO2 emissions by 0.007, but its inability to improve energy efficiency raises environmental concerns. The findings indicate that the advantages of renewable sources are insufficient to offset the ecological harm produced by conventional energy production. The efficient use of renewable energy sources is contingent on the quality of institutional regulatory frameworks and the efficacy of regulation enforcement. As a result, if developing economies want to assure a sustainable economic future, they should focus on enhancing the quality of their institutions and investing more in ICTs. To enhance and maintain environmental quality, emerging economies must advocate for the adoption of trade-related ecological standards and energy efficiency measures.