Investigating the role of economic integration and financial development: Rebound effect and green ICT in BRICS

Abstract

The increasing trend of information and communication technology (ICT) forced researchers and policymakers to check the direct and indirect effects of information and communication technology on environmental quality. This study explores the relationship between information and Communication Technology and ecological quality by including the ICT and the interaction term of ICT with financial development indicators. The study uses the data for the BRICS (Brazile, Russia, India, China, and South Africa) economies from 1996 to 2020. This study is a pioneering effort to identify the independent and overlapping effects of information and communication technology (ICT) and financial development indicators on environmental quality. Further, the study uniquely tried to explore the shape of a modified environmental Kuznets curve (EKC) based on ICT by introducing the squared term of ICT in the model. Driscoll Kraay's standard error analysis confirmed a positive significant relationship between ICT and environmental quality. Our findings, among other things, show that in Brazil, China, and South Africa, the finance, environment, and the effects of ICT interact, whereas, in India and Russia, there is no such evidence. To increase the benefits of ICT to the environment, policymakers in Brazil, China, and South Africa should take additional steps to improve their financial sectors. The ICT-based environmental Kuznets curve validated the inverted U shape EKC hypothesis. The study findings suggested that green innovation and technology should be introduced in information and communication technology to mitigate the harmful effect of human activities on the environment.

Keywords

• Ecological footprints
• Rebound effect
• Environmental Kuznets curve
• Financial development
• Driscoll Kraay