Does information and communication technologies improve environmental quality in the era of globalization? An empirical analysis.

Abstract

This study intends to examine the impact of ICTs (i.e., internet usage and mobile cellular subscriptions), globalization, electricity consumption, financial development, and economic growth on environmental quality by using 1994-2014 panel data of BRICS economies. This study employed a second-generation panel unit root test accounting for the presence of cross-sectional dependence and indicated that carbon dioxide emissions, electricity consumption, financial development, internet usage, mobile usage, globalization, and economic growth have integration of order one. The results from Westerlund panel co-integration test confirms that the variables are co-integrated and revealed that ICT-finance-globalization-electricity-GDP-CO2 nexus has long-run equilibrium relationship. The results from dynamic seemingly unrelated regression (DSUR) indicate that internet usage and mobile cellular subscriptions (ICTs) have significant, adverse impact on carbon dioxide emissions. To put it simply, ICT positively contributes towards environmental quality. Similarly, economic growth also has an adverse effect on carbon dioxide emissions. On the other hand, electricity consumption, globalization, and financial development have a significant positive effect on carbon emissions. In addition, Granger causality test results show the presence of a bidirectional causal relationship between internet usage and environmental quality, financial development and electricity consumption, ICT and financial development, mobile cellular subscription and globalization, economic growth and environmental quality, and internet usage and economic growth. A unidirectional causal link is detected running from mobile cellular subscriptions towards environmental quality, ICT towards electricity consumption, financial development towards environmental quality, globalization towards environmental quality, and globalization towards economic growth. Moreover, time series analysis has also been done in this study to analyze the findings for each of BRICS countries which are directed towards important policy implications. For instance, ICT policy can play an integral part in improving environmental quality policy.