Economic digitalization and energy transition for green industrial development pathways

Abstract

This study explores the novel aspect of how economic digitalization moderates the effect of energy transition on green industrial development in the presence of urban agglomeration, international investment inflows, and economic prosperity. We examine G7 countries from 2003 to 2019, employing advanced empirical techniques, which indicate that economic digitalization induces a short- and long-term green industrial development promotion effect. Furthermore, the energy transition had positive short- and long-term consequences on developing the green industrial sector. Most notably, economic digitalization positively moderated the impact of the energy transition on green industrial development, with the effect being more pronounced in the long run. The short-run causality revealed a unidirectional causality from economic digitalization and moderation term to green industrial development, while other variables established a bidirectional causality link with the same. Policies strengthening the integrated coordination of digital and energy transition technologies are recommended to achieve a green industrial structure for sustainable development.