Investigation of the Influence of ICT and Financial Development on Environmental Quality in Saudi Arabia

In line with global efforts to address climate change, Saudi Arabia is dedicated to achieving net zero greenhouse gas (GHG) emissions. The country has set a target to reduce 278 million tonnes of CO2 equivalent annually by 2030 as outlined in Vision 2030. This study aims to explore the potential impact of information and communication technology (ICT) and financial development on reducing greenhouse gas emissions in Saudi Arabia. Consequently, the study investigates the effects of ICT and financial development on environmental quality in the Kingdom of Saudi Arabia using an autoregressive distributed lag (ARDL) approach for annual data from 1990 to 2022. Environmental quality is approached using carbon emissions per capita and greenhouse gas emissions per capita. Some control variables are included in the model such as primary energy consumption per capita, GDP per capita, trade openness, and urbanization. Using different versions of the ARDL model, the findings indicate that financial development has a positive impact on environmental quality in both the short and long run. However, the results of information and communication indicators are mixed. Additionally, traditional factors such as economic output, energy use, urbanization, and trade openness all have negative effects on environmental quality. Moreover, we do not find support for the environmental Kuznets curve hypothesis. These findings have important implications for policy-making. In order to meet the greenhouse gas emission reduction goals outlined in Vision 2030, policymakers should prioritize enhancing financial development and reducing dependence on fossil fuels, while also exploring diversification strategies for Saudi Arabia's economic activities. Furthermore, investing in certain types of ICT can expedite the decrease in GHG emissions.