Digitalization and pollution: Evidence from South Africa

Abstract

Drawing on OECD Inter-Country Input-Output Database and Carbon Dioxide Emissions Embodied in International Trade Database from 2000 to 2018, this study measures the level of industrial digitalization of 44 industries in South Africa from the input side and empirically analyzes the effect of industrial digitalization on CO2 emissions. The results show that industrial digitalization significantly reduces the intensity of CO2 emissions in production. The effect of industrial digitalization on CO2 emissions exhibits more prominent for the tertiary industry and those industries with high digital skills. The digital inputs from foreign countries have a greater impact on CO2 emissions than domestic digital inputs. Industrial digitalization reduces CO2 emissions through two mechanisms: increasing productivity and optimizing the factor input structure. Furthermore, we compare South Africa with other four BRICS countries and find that significant emission reduction effects are observed through industrial digitalization in Brazil, South Africa and China. These findings carry important practical implications for industrial digital transformation and sustainable development in developing countries, particularly in promoting eco-friendly production and enhancing the quality of economic development in African nations.