Constructing a Digitalization Index and Assessing its Effect on CO₂ Emissions: The Case of Türkiye

Abstract Digitalization can affect the environment in many ways. On one hand, digitalization can lead to environmental deterioration by increasing energy consumption, industrial development, and digital service demand. On the other hand, digitalization can increase environmental quality through green processes and service innovation, low-carbon economic transformation, less e-waste, and financial innovation. Hence, the current literature underscores that digitization must attain a specific level of maturity to produce favorable environmental results, meaning digitalization may initially degrade environmental quality but then improve it after reaching a specific threshold. Hence, it further suggests an inverted U-shaped link between digitalization and environmental deterioration. This study aims to investigate the existence of this possible inverted U-shaped link between digitalization and CO 2 emissions in Türkiye by generating a digitalization index over the period 1993–2022. This research also examines the effects of income and renewable energy on CO 2 emissions. The results indicate that economic growth leads to environmental degradation and renewable energy cannot improve environmental quality. The results also imply that digitalization first decreases and then increases CO 2 emissions, meaning there is a U-shaped relationship between digitalization and CO 2 emissions. The study discusses these findings.

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