The effect of ICT on CO2 emissions in emerging economies: does the level of income matters?

Abstract

In the modern era of globalization, the rapid increase in information and telecommunication technologies (ICTs) contributes in various sectors of an economy; however, the environmental consequences of ICTs cannot be ignored. Therefore, the study investigates the nexus between ICTs, economic growth, financial development, and environmental quality in emerging economies. The novel feature of the study is that the interaction term of ICT is introduced with economic growth and financial development. The empirical findings of the study are based on panel mean group (MG) and augmented mean group (AMG) estimation methods from 1990 to 2015. The following empirical results are established: first the ICTs significantly affect CO₂ emissions. Second, the moderating effect of ICT and financial development stimulate the level of CO₂ emissions. Third, economic growth contributes CO₂ emission; however, the interaction between ICT and GDP mitigates the level of pollution. Policy thresholds with the R&D in ICT sector are required to mitigate the level of CO₂ emission. Introduction of green ICTs projects in the financial sector is a better choice to improve the energy efficiency.

Keywords: CO2 emission; Emerging economies; Internet use; MG and AMG; Moderating effect.