Catalyzing digital and environmental transformations by institutions in a diverse socio-economic world

• Digital transformation is intrinsically linked to a country’s level of development. • Human capital is a key prerequisite for digital and environmental transitions. • State capacity and education together have a synergistic effect on digitalization. • Regulatory powers are needed for relevant policies in digital and ecological transformations. • High-income and low-income countries are in different stages of transition. In a world that urgently needs to tackle the environmental crisis, many policymakers claimed that digitalization and smart technologies have the potential to catalyze green evolution. Given that there is little discussion on the readiness of a country to unlock the opportunity of green transformation via digitalization, we propose to put into question how this aspect is reflected within a sample of heterogeneous nations. The study seeks to spot the preconditions of this widespread concern related to digital and environmental advancements and to explore how institutional and economic features moderate them. To test if, on a broad scale, the dynamics of digital and environmental facets are robustly anchored in the institutional architecture of different categories of states and if, at the global level, their effects and divides evolve under the direct influence of socio-economic circumstances, we constructed a large macro panel data (1996–2021) on over 160 countries, integrating various statistics. Results from our econometric models suggest that the investigated countries are in diverse stages of digital and environmental transitions, with strong asymmetries as regards the Internet access, greenhouse gas emissions per capita, black carbon emissions, recycling, and state capacity. The findings also illustrate that the development is rather tied to digitalization and the human capital is a prerequisite of digitalization. However, a strong state capacity is required to implement relevant policies to expedite digitalization and green transformations.