Digitalization and sustainable development: Evidence from OECD countries

Abstract

To examine the intricate relationship between digitalization development and sustainable development, this study commences its analysis by employing the entropy method to establish an integrated indicator of digitalization development among advanced nations. Subsequently, we utilize a panel dataset spanning a decade from 2010 to 2020, encompassing 36 developed countries, to estimate Green Total Factor Productivity (GTFP) growth. We establish a fixed effects model, a mediation effect model and a threshold regression model to explore the relationship between the two variables. The empirical findings of this research reveal a significant positive association between the progress and enhancement of digitalization and the advancement of sustainable development (GTFP). Furthermore, this research elucidates the underlying mechanism by which digitalization development indirectly fosters the advancement of green productivity. This facilitation occurs through the promotion of technological innovation, the enhancement of human capital, and tupgrades in the industrial framework. Notably, our study finds the non-linear relation between digitalization development and GTFP growth, suggesting that the magnitude of impact on environmental performance is contingent on the scale of technological innovation, the growth of human capital, and the level of financial development.