The Impact of the Digital Economy on CO2 Emissions: Evidence from BRI Countries

Abstract

This study investigates the impact of the digital economy on CO2 emissions using a panel dataset of 140 Belt and Road Initiative (BRI) countries over the period 2001–2023. The analysis employs a comprehensive panel data framework to examine both the direct and nonlinear effects of digital development on environmental degradation. The digital economy is measured using both a composite index and individual indicators,  including internet usage,  fixed broadband subscriptions,  mobile cellular subscriptions,  and secure internet servers. The empirical results show that the digital economy has a significant and nonlinear relationship with CO2 emissions. At early stages of development,  digitalization tends to increase emissions due to higher energy consumption associated with ICT infrastructure expansion. However,  at more advanced stages,  digital development contributes to emissions reduction,  indicating the presence of a “digital Kuznets curve” effect. Among control variables,  GDP,  population,  and energy consumption consistently increase CO2 emissions,  while trade openness shows a mitigating effect in some specifications. Foreign direct investment is found to exert a positive impact on emissions in dynamic models,  suggesting a pollution-intensive composition of capital inflows in BRI economies. Overall,  the findings highlight that the environmental impact of the digital economy is heterogeneous and depends on the level of digital development. The results suggest that policy efforts should focus on promoting energy-efficient digital infrastructure and supporting green digital transformation to ensure that digitalization contributes to sustainable environmental outcomes.