Assessing the Role of Digital Economy Transformation in Achieving Green Growth: Insights from Novel Green Growth and Digital Economy Indices

Abstract

The global temperature is rising, and economies need to take stringent measures to keep it below the 1.5 °C limit set by COP28.  For this purpose, global economies need to take strategic measures to reduce pollution levels. The researchers and environmentalists suggest that global economies adopt a long-term, sustainable growth strategy, for instance, green growth (GG). Thus, the digital economy (DE) is a vital solution for promoting the GG through innovation and sustainable practices. The DE plays a significant role in achieving the various Sustainable Development Goals (SDGs) for the economy. Thus, the present study develops the comprehensive indices for the GG and DE.  The study uses panel data from 2000 to 2022 for empirical analysis across 104 global economies, employing two novel econometric techniques: the method of moments quantile regression (MMQR) and the system generalised method of moments (GMM). The outcome found a significant positive impact of DE on global GG across the lower, medium, and higher quantiles.  Interestingly, low-income economies exhibit a higher quantile value for the DE than high-income economies. The findings also highlight the positive influence of trade, general government expenditures and ecological taxes on GG, while urbanization shows a negative association. Further, the outcome from the GMM system is consistent with the MMQR, which shows that the DE has a significant and positive effect on global GG. This study proposes a phased policy framework to achieve SDGs 8 and 13 based on these results.

Keywords- Digital Economy, Green Growth, Ecological Taxes, MMQR, Global Economies