Impact of Market-Oriented Business Environment and ICT on Sustainable Development: Panel Evidence from the New EU Member States

Abstract

Sustainable development has become a key factor in decreasing economic and social inequalities and environmental problems in the world. This problem aligns with the crusade of the United Nations Sustainable Development Goals (UNSDGs-8 and 10). To this end, the present study seeks to identify factors underlying sustainable development for vital and optimal policymaking. The primary objective of the present study is to investigate the influence of a market-oriented business environment together with information and communication technologies (ICT) on overall sustainable development in new EU members who experienced a transition to a market economy for annual frequency period ranging from 2000–2020 via novel cointegration and causality tests adequate to the dataset size and characteristics. The study aimed to make a contribution to the related empirical literature, as there is a paucity of documentation in the extant literature on the nexus between the business environment and overall sustainable development. Furthermore, the use of cointegration and causality tests considering heterogeneity and cross-sectional dependence increased the robustness of the empirical results. The consequences of causality and cointegration analyses uncovered that the market-oriented business environment and ICT were short- and long-run drivers of sustainable development. However, the impact of ICT on sustainable development was relatively stronger than the impact of the market-oriented business environment in the long run. As a result, policies to improve market-oriented business environments, ICT infrastructure, ICT adoption, and digital literacy can be useful to make progress in overall sustainable development.