The Impact of the Digital Economy on CO2 Emissions: A Theoretical and Empirical Analysis

Abstract

Since the Industrial Revolution, human activities have led to the emission of a lot of greenhouse gases, such as carbon dioxide, sharply increasing the concentration of greenhouse gases in the atmosphere and resulting in serious global warming. With the rapid development of computer technology, the digital economy is gradually becoming the engine of economic growth. As a new economic mode, how the digital economy affects the environment is worth studying. In this paper, we introduced the digital economy into the Solow growth model as technological progress and conducted fixed-effects regressions based on the global panel data of 190 countries from 2005 to 2016. We found an inverted U-shaped, non-linear relationship between CO2 emissions and the digital economy, which supports the environmental Kuznets curve (EKC) hypothesis. We suggest that governments need to not only adopt hedging policies to reduce CO2 emissions caused by the digital economy in the early stage but also promote the development of the digital economy to achieve the goal of global collaborative environmental protection.