Digitalization and CO2 emissions: Dynamics under R&D and technology innovation regimes

Artjom Saia

Technology in Society, 2023, vol. 74, issue C

Abstract: New digital technologies help to curtail those that are carbon intensive but are accompanied by CO2 emissions due to their own energy demand. Whether digitalization relates to increased or decreased carbon emissions may depend on the sophistication of an economy's research and development (R&D) output. This study explores the R&D-induced regime transition that governs the relationship between digitalization and CO2 emissions. The study seeks evidence of the environmental Kuznets curve hypothesis and tests it with a panel smooth transition regression (PSTR). Employing this estimator with two R&D output regimes makes it possible to account for year- and country-varying effects of digitalization, human capital, and country income level on CO2 emission. The research covers 55 high- and middle-income economies from 1996 to 2019. The paper finds that the transition process is driven by R&D output level – measured in technology patents per country inhabitants. The findings support the environmental Kuznets curve hypothesis and confirm that CO2 emissions have an inverted U-shaped relationship with digitalization and income level. This nonlinear relationship transitions smoothly in the exogenous R&D output level. The digitalization indicator in the lower R&D regime has a significant point estimate of 0.07; in the higher regime, the estimate is −0.14. The R&D output threshold at which the transition function switches between the two regimes corresponds to a level of 39.9 technology patents per million inhabitants.

Keywords: Digitalization; Carbon dioxide emissions; R&D regimes; Environmental Kuznets curve; Panel smooth transition regression (PSTR) (search for similar items in EconPapers)
JEL-codes: C34 L86 O3 O44 Q55 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:teinso:v:74:y:2023:i:c:s0160791x23001288

DOI: 10.1016/j.techsoc.2023.102323

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