Skip to main content

ICT diffusion and climate change: The role of economic growth, financial development and trade openness


The study examines the relationship between ICT diffusion and climate change for a global panel of 92 countries for the period 1990 to 2018. The study constructs an index of ICT diffusion through principal component analysis and utilizes estimation techniques such as pooled ordinary least squares, the fixed effects model and the system generalized method of moments with panel corrected standard errors. Our study finds that in general, ICT diffusion mitigates CO2 emissions; however, financial development worsens climatic changes. Moreover, the findings indicate that higher levels of economic growth take care of CO2 emissions for the full sample and developing countries but not for the developed countries. On the other hand, trade openness shows differential impacts for developed and developing countries, suggesting that carbon implications of trade openness depend on the country’s regulatory authority and ecological regulations. The study concludes that trade policies and financial development need to be rationalized for sustainable development. However, ICT diffusion should be encouraged as it leads to the mitigation of CO2 emissions.

This is a preview of subscription content, access via your institution.


  1. Note that positively and negatively are meant in the direction of mathematical changes, not colloquial.


  1. Akande, A., Cabral, P., & Casteleyn, S. (2019). Assessing the gap between technology and the environmental sustainability of European cities. Information Systems Frontiers, 21(3), 581–604.

    Article  Google Scholar 

  2. Al-mulali, U., & Binti Che Sab, C. N. (2012). The Impact of energy consumption and CO2 emission on the economic growth and FD in the Sub Saharan African countries. Energy, 39(1), 180–186.

  3. Andrae, A., & Edler, T. (2015). On global electricity usage of communication technology: Trends to 2030. Challenges, 6(1), 117–157.

    Article  Google Scholar 

  4. Antonakakis, N., Chatziantoniou, I., & Filis, G. (2017). Energy consumption, CO2 emissions, and economic growth: an ethical dilemma. Renewable Sustainable Energy Review, 68, 808–824.

  5. Antweiler, W., Copeland, B. R., & Taylor, M. S. (2001). Is free trade good for the environment? American Economic Review, 91(4), 877–908.

    Article  Google Scholar 

  6. Arshad, Z., Robaina, M., & Botelho, A. (2020). The role of ICT in energy consumption and environment: an empirical investigation of Asian economies with cluster analysis. Environmental Science Pollution Research International, 27(26), 32913–32932.

  7. Asongu, S. A., Le Roux, S., & Biekpe, N. (2018). Enhancing ICT for environmental sustainability in Sub-Saharan Africa. Technological Forecasting and Social Change, 127, 209–216.

    Article  Google Scholar 

  8. Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross section data. American Political Science Review, 89, 634–647.

    Article  Google Scholar 

  9. Boutabba, M. A. (2014). The impact of FD, income, energy and trade on carbon emissions: Evidence from the Indian economy. Economic Modelling, 40, 33–41.

    Article  Google Scholar 

  10. Cheng, C. Y., Chien, M. S., & Lee, C. C. (2021). ICT diffusion, FD, and economic growth: An international cross-country analysis. Economic Modelling, 94, 662–671.

    Article  Google Scholar 

  11. Cho, Y., Lee, J., & Kim, T. Y. (2007). The impact of ICT investment and energy price on industrial electricity demand: Dynamic growth model approach. Energy Policy, 2007, 35(9), 4730–4738.

  12. Dedrick, J. L. (2010). Green IS: Concepts and issues for information systems research. Communications of the Association for Information Systems, 27(1), article 11, pp. 173-184.

  13. Dogan, E., Ulucak, R., Kocak, E., & Isik, C. (2020). The use of ecological footprint in estimating the environmental Kuznets curve hypothesis for BRICST by considering cross-section dependence and heterogeneity. Science of the Total Environment, 723(25), 138063.

  14. Farhani, S., & Ozturk, I. (2015). Causal relationship between CO2 emissions, real GDP, energy consumption, FD, trade openness, and urbanization in Tunisia. Environmental Science and Pollution Research, 22, 15663–15676.

  15. Feridun, M., Ayadi, F. S., & Balouga, J. (2006). Impact of trade liberalization on the environment in developing countries: The case of Nigeria. Journal of Developing Societies, 22(1), 39–56.

    Article  Google Scholar 

  16. Gallegos, D., & Narimatsu, J. (2015). ICT at COP21: Enormous potential to mitigate emissions, connections; No. 30. World Bank, Washington DC.

  17. Grossman, G. M., & Krueger, A. B. (1991). Environmental impacts of a North American free trade agreement (No. W3914). National Bureau of Economic Research.

  18. Grossman, G. M., & Krueger, A. B. (1995). Economic Growth and the Environment. The Quarterly Journal of Economics, 110(2), 353–377.

    Article  Google Scholar 

  19. Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46, 1251–1271.

    Article  Google Scholar 

  20. Higón, D. A., Gholami, R., & Shirazi, F. (2017). ICT and Environmental Sustainability: A Global Perspective. Telematics and Informatics, 34(4), 85–95.

    Article  Google Scholar 

  21. Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281–312.

  22. Houghton, J. W. (2009). ICT and the Environment in Developing Countries: An Overview of Opportunities and Developments. Communications & Strategies, 76, 39–60.

    Google Scholar 

  23. International Energy Agency. (2009). International Energy Agency (IEA). France.

    Google Scholar 

  24. IPCC (2014). Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), Geneva, Switzerland.

  25. Kaygusuz, K. (2009). Energy and Environmental Issues Relating To Greenhouse Gas Emissions for Sustainable Development in Turkey. Renewable and Sustainable Energy Reviews, 13(1), 253–270.

    Article  Google Scholar 

  26. Khan, F. N., Sana, A., & Arif, U. (2020). Information and communication technology (ICT) and environmental sustainability: A panel data analysis. Environmental Science and Pollution Research, 27(29), 36718–36731.

    Article  Google Scholar 

  27. Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, 45(1), 1–28.

    Google Scholar 

  28. Lee, J. W., & Brahmasrene, T. (2014). ICT, CO2 Emissions and Economic Growth: Evidence from a Panel of ASEAN. Global Economic Review, 43(2), 93–109.

    Article  Google Scholar 

  29. Lu, W. C. (2018). The Impacts of Information and Communication Technology, Energy Consumption, FD, and Economic Growth on Carbon Dioxide Emissions in 12 Asian Countries. Mitigation and Adaptation Strategies for Global Change, 23(8), 1351–1365.

    Article  Google Scholar 

  30. Majeed, M. T., & Khan, F. N. (2019). Do information and communication technologies (ICTs) contribute to health outcomes? An empirical analysis. Quality and Quantity, 53(1), 183–206.

    Article  Google Scholar 

  31. McCarney, G. R. & Adamowicz, W. L. (2006). The effects of trade liberalization of the environment: An empirical study. In 2006 Annual Meeting, August 12–18, 2006, Queensland, Australia (no. 25297). International Association of Agricultural Economists, Milwaukee.

  32. Mingay, S. (2007). Green IT: The New Industry Shock Wave. Gartner RAS Research Note G, 153703(7).

  33. Nguyen, T. T., Pham, T. A. T., & Tram, H. T. X. (2020). Role of information and communication technologies and innovation in driving carbon emissions and economic growth in selected G-20 countries. Journal of Environmental Management, 261, 110162.

    Article  Google Scholar 

  34. Park, Y., Meng, F., & Baloch, M. A. (2018). The effect of ICT, financial development, growth, and trade openness on CO2 emissions: an empirical analysis. Environmental Science and Pollution Research, 25(30), 30708–30719.

  35. Quah, D. (2003). Digital Goods and the New Economy. CEPR Discussion Papers 3846 C.E.P.R. Discussion Papers.

  36. Raheem, I. D., & Oyinlola, M. A. (2015). Financial development, inflation and growth in selected West African countries. International Journal of Sustainable Economics, 7(2), 91–99.

  37. Raheem, I. D., Tiwari, A. K., & Balsalobre-Lorente, D. (2019). The role of ICT and FD in CO2 emissions and economic growth. Environmental Science and Pollution Research, 27, 1912–1922.

    Article  Google Scholar 

  38. Reed, W., & Ye, H. (2009). Which panel data estimator should I use? Applied Economics, 43(8), 985–1000.

  39. Sadorsky, P. (2011). FD and energy consumption in Central and Eastern European frontier economies. Energy Policy, 39(2), 999–1006.

    Article  Google Scholar 

  40. Salahuddin, M., Alam, K., & Ozturk, I. (2016). The effects of internet usage and economic growth on CO2 emissions in OECD Countries: A panel investigation. Renewable and Sustainable Energy Reviews, 62, 1226–1235.

    Article  Google Scholar 

  41. Schumpeter, J. A. (1911). The Theory of Economic Development (Social Science Classic Series). Transaction Publishers.

    Google Scholar 

  42. Shahbaz, M., Hye, Q. M. A., Tiwari, A. K., & Leitão, N. C. (2013). Economic growth, energy consumption, FD, international trade and CO2 emissions in Indonesia. Renewable and Sustainable Energy Reviews, 25, 109–121.

    Article  Google Scholar 

  43. Shahbaz, M., Nasir, M. A., & Roubaud, D. (2018). Environmental degradation in France: the effects of FDI, FD, and energy innovations. Energy Economics, 74, 843–857.

  44. Shahiduzzaman, M., & Alam, K. (2014). Information technology and its changing roles to economic growth and productivity in Australia. Telecommunications Policy, 38(2), 125–135.

    Article  Google Scholar 

  45. Sui, D. Z., & Rejeski, D. W. (2002). Environmental impacts of the emerging digital economy: the e-for-environment e-commerce. Environmental Management, 29(2), 155–163.

    Article  Google Scholar 

  46. Tamazian, A., Peneiro, J., & Vadlamannati, K. C. (2009). Does higher economic and FD lead to environmental degradation: evidence from BRIC countries? Energy Policy, 37, 246–253.

    Article  Google Scholar 

  47. Uddin, M., & Rahman, A. A. (2012). Energy efficiency and low carbon enabler green IT framework for data centers considering green metrics. Renewable and Sustainable Energy Reviews, 16(6), 4078–4094.

    Article  Google Scholar 

  48. Webb, M. (2008). Smart 2020: Enabling the low carbon economy in the information age. The Climate Group. London.

  49. Widmer, R., Oswald-Krapf, H., Sinha-Khetriwal, D., Schnellmann, M., & Böni, H. (2005). Global Perspectives on E-waste. Environmental Impact Assessment Review, 25(5), 436–458.

    Article  Google Scholar 

  50. World Bank. (2019). World Development Indicators (WDI). World Bank.

    Google Scholar 

  51. Zhang, Y. (2011). The impact of FD on carbon dioxide emissions: an empirical analysis in China. Energy Policy, 39, 2197–2203.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations


Corresponding author

Correspondence to Farzana Naheed Khan.



Table 6, Table 7, Table 8, Table 9

Table 6 Sampling test for adequacy
Table 7 Descriptive statistics (developed countries)
Table 8 Descriptive statistics (developing countries)
Table 9 List of countries

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Sana, A., Khan, F.N. & Arif, U. ICT diffusion and climate change: The role of economic growth, financial development and trade openness. Netnomics (2022).

Download citation

  • Accepted:

  • Published:

  • DOI:


  • Information and communication technology index
  • financial development
  • trade openness
  • CO2 emissions
  • climate change

JEL Classifications

  • C23
  • F15
  • F18
  • O14