Impacts of the digital economy on industrial employment and CO2 emissions: a comparison between developed and developing countries

This article assesses the impact of the digital economy on industry and the environment by comparing 15 countries (7 developed and 8 developing) over the period 2000–2021. Using the System Generalized Method of Moments (SYS-GMM), the analysis reveals contrasting results between country groups. For developed countries, a 1% increase in ICT imports is associated with a 0.159% reduction in CO₂ emissions (p-value < 0.01) and a marginal 0.038% decrease in industrial employment (p-value < 0.10), consistent with automation-driven labor reallocation toward high-value-added sectors. In developing countries, the same 1% increase in ICT imports yields an insignificant effect on CO₂ emissions (− 0.008, p-value = 0.676) and industrial employment (− 0.016, p-value = 0.113), reflecting structural constraints including outdated energy infrastructure and limited absorptive capacity for green technologies. Industrial value-added positively influences employment in both groups, though the elasticity is higher in developed economies (0.048 vs. 0.031). The results underscore the need for developed countries to sustain investments in advanced digital infrastructure and innovation policies that accelerate the green digital transition. For developing countries, priorities should include strengthening green digital infrastructure, fostering international technology-transfer partnerships, and implementing targeted workforce retraining programs to maximize the employment and environmental co-benefits of digitalization.