Green Initiative and Digital Technology: Unraveling the Impact on Environmental Quality in Developing Countries

Abstract

Environmental quality in emerging countries is examined in this research in relation to eco-friendly initiatives, digital innovation, financial growth, economic expansion, and trade liberalization. The World Development Indicators provide a panel dataset of developing economies that spans the years 1990–2022. Dynamic panel data analysis makes use of the System Generalized Method of Moments (SYS-GMM) to account for possible dynamics in the dependent variable, unobservable heterogeneity, and endogeneity. Economic growth, green initiatives, and digital technology all have negative effects on environmental quality, whereas financial development, trade liberalization, and digital technology all have positive effects. This emphasizes the importance of replacing fossil fuels with renewable energy sources, implementing digital tools for managing resources and keeping an eye on the environment, and encouraging green investment via the banking system. Among the policy consequences is the need for low-income governments to promote green technology adoption, increase financing options for environmentally responsible investments, and ensure that international climate commitments and sustainable development goals are consistent with one another. In order to achieve long-term economic development, this research stresses the need of digitization and financial advances in enhancing environmental quality growth.