CAN DIGITALIZATION BREAK THE URBANIZATION–POLLUTION CURSE? EVIDENCE FROM PM2.5 EXPOSURE IN SELECTED ASIAN ECONOMIES

Abstract

The high level of urbanization in Asia is causing unprecedented pressures on air quality and exposure to PM2.5 is a persistent environmental challenge. Meanwhile, digitalization is booming and it remains uncertain if more digital connectivity is necessarily clean urban growth. The study investigates the moderating effect of digitalization between urbanization and PM2.5 exposure for 12 selected Asian economies from 2000 to 2021. Digitalization is proxied using World Development Indicators: Internet use, as the core control, as well as industrialization and renewable-energy consumption are included, while trade openness is used as the robustness analysis. Heteroskedasticity, serial correlation and cross-sectional dependence are addressed by using fixed-effects estimation with Driscoll–Kraay standard errors. The result indicates that there is a positive and significant interaction between urbanization and digitalization, such that increased digitalization reduces the negative relationship between the urbanization and PM2.5 exposure. This relationship is strongest for low digitalization, weaker for the mean, and not statistically significant for high digitalization levels, in keeping with marginal effects. A higher level of industrialization is linked to an increase in PM2.5 exposure, while an increase in renewable-energy consumption is linked to a decrease in PM2.5 exposure. The results reveal that digital expansion is not enough to ensure clean urban development; it needs to be supported by cleaner energy systems and sustainable urban policies.