Digital economy and carbon dioxide emissions: Examining the role of threshold variables

Abstract

Considering that previous literature has mainly focused on the impact of the digital economy (DE) on environmental degradation, ignoring the role of natural resources, this study uses two key factors (natural resource rent and anticorruption regulation) as threshold variables to reveal the effect of natural resources on the association between DE and carbon dioxide (CO2) emissions. In doing so, the study covers 97 countries, uses annual data between 2003 and 2019, and applies a panel threshold model. The outcomes present that the influence of the DE on CO2 emissions has a single-threshold effect (i.e., there is an inverted U-shaped link between the DE and CO2 emissions) when natural resource rent is the threshold variable. Specifically, the DE significantly increases CO2 emissions when the natural resource rent is at a low-to-medium level, but the DE suppresses CO2 emissions growth when natural resource rent exceeds the threshold. Moreover, the DE drives overall CO2 emissions growth when anticorruption regulation is the threshold variable and there are double thresholds for its impact on CO2 emissions. Specifically, a rise in anticorruption regulation initially exacerbates the contribution of DE impact on CO2 emissions and then weakens it over time. Based on the results, the study proposes various implications, such as formulating a DE development strategy, considering natural resources in the development of the DE, and strengthening anti-corruption efforts in the field of environmental protection.

Keywords

• Digital economy
• Natural resource rent
• Anticorruption regulation
• CO2 emissions
• Threshold regression