Reconsidering the Long-Term Impacts of Digitalization, Industrialization, and Financial Development on Environmental Sustainability in GCC Countries

Abstract

Gulf Cooperation Council (GCC) countries have faced environmental challenges in recent decades. This study aims to identify the contribution of digitalization, industrialization, and financial development to the ecological footprint (EF) in GCC countries between 2000 and 2021. The empirical investigation involves estimating the STochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model using the augmented mean group (AMG), common correlated effects mean group (CCEMG) and cross-sectionally augmented autoregressive distributed lag (CS-ARDL) estimators. The findings reveal the existence of long-term linkages between EF and the factors mentioned above. Furthermore, there is evidence that adopting digitalization and information and communication technologies (ICT) improves long-term environmental quality. In contrast, both industrialization and financial development exert detrimental effects on the environment. Finally, the JKS Granger non-causality test revealed that all variables, except financial development, predict environmental degradation in GCC countries. These findings can assist in formulating efficient strategies to reduce ecological degradation and achieve environmental sustainability in GCC countries.