Harnessing digital and ICT trade for environmental sustainability in emerging economies

Digital and ICT trade is increasingly seen as a contributor to environmental sustainability through green innovation and resource-efficient utilization in the present global scenario. This paper examines the influence of digital trade and ICT trade on environmental sustainability in emerging economies through a newly constructed Composite Environmental Sustainability Index (CESI). The study uses the Panel ARDL-PMG methodology to examine both short-run and long-run dynamics using panel data from 2000 to 2021. The strength of the model is also secured by the underlying consideration of the possible endogeneity issues and the verification of the findings by further estimations utilizing panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS). The CESI incorporates the most important environmental indicators, such as CO2 emission, renewable energy, renting of natural resources, biodiversity, air pollution, forest cover and energy intensity, using principal component analysis. Empirical evidence indicates that digital and ICT trade play a key role in improving environmental sustainability by stimulating green innovation, efficient use of resources, and reduction of emissions. Although ICT and digital trade have positive impacts while economic growth and government spending have negative effects on the sustainability outcomes. The study found a robust and strong association of digital trade exports and ICT trade with environmental sustainability in emerging countries. Moreover, FDI exhibits the possibility of promoting environmental goals in the long run if regulated effectively. The study makes novel contribution by introducing CESI which presents multi-cultural health of ecology, and provide most affecting determinants (natural resource rent, CO2 emissions, ecological footprint, and renewable energy) of environmental sustainability, which further implies that resource availability, utilization and climate action policies are key aligned with ecological health, and offers evidence-based policy to bridge the gap between digital-ICT trade and environmental governance towards meeting the United Nation Sustainable Development Goals.