Do structural transformation and ICT development reduce the ecological footprints of nations?

In this study, we analyze the effects of economic structural transformation, Information and Communication Technology (ICT) development, and the interaction between the two on the consumption ecological footprint and production ecological footprint of nations. The study uses the “Stochastic Impact by Regression on Population, Affluence and Technology (STIRPAT) model” as a theoretical model applied to a sample of 104 countries in the period 2002–2019. We employ a dynamic panel autoregressive distributed lag (ARDL) methodology and conduct the analysis within the full sample, as well as stratifying the full sample based on income levels. The main results suggest that while in the short run Internet use tends to harm the environment, in the long run, its effect is environment-preserving. The transition out of agriculture into either industry, especially to services, can harm the environment in the long run. The transformation from industry to services seems to have an environment-preserving effect only in upper-middle-income countries in the long run, while the transformation from industry to services seems to harm the environment through consumption in high-income economies. The interaction between the Internet and the structural change factors reveals a mitigating effect of Internet use on the environmentally harmful effects of the transition out of agriculture and into the modern economy. The key findings of the study point out the need for a carefully designed ICT expansion policy to allow for benefiting from the advantages of digitalization in the modern way of life without threatening or harming the living nature. • In the long run, the effect of Internet use is environment-preserving • A shift from agriculture to either industry or services harms the environment in the long run • Shift from industry to services reduces both EFs in upper-middle-income countries in the long run • Shift from industry to services increases the production EF in high-income countries in the long run • Internet use mitigates the negative effects of sectoral transformation on the environment