Digitalization and Carbon Emissions: A Panel Data Analysis of ICT Development in Emerging Economies

Abstract

Despite the rapid expansion of digital technologies across emerging economies, the environmental consequences of ICT development remain inconclusive, particularly in regions where economic growth and fossil-fuel dependence continue to drive rising carbon emissions. Existing studies have largely focused on developed countries, leaving limited empirical evidence on how digitalization influences environmental sustainability in emerging markets. Although there is an increasing body of research on the environmental implications of digitalization, the empirical connection between expansion of information and communication technology (ICT) and carbon dioxide (CO₂) emissions is so far not undisputed, especially in emerging economies. Most of the work to-date focuses on developed countries or use cross-country panels that are not homogeneous and mask the unique dynamics of emerging markets where industrialization, fossil fuel dependence, and accelerated digital uptake all play a role at the same time. Furthermore, the potential non-linear income–emissions relation hypothesized by the Environmental Kuznets Curve (EKC) has mostly been studied in conjunction with factors other than ICT, and there is a critical empirical gap in the literature.