Digital intensity and responsible industrial transformation: Infrastructure, human capital, and environmental trade-offs

This study advances the debate on responsible digital transformation by examining how digital intensity, rooted in infrastructure, human capital, and complementary physical systems, shapes industrial transformation beyond an artificial intelligence–centric perspective. Using regional panel data from 2003 to 2022, the analysis investigates how digital intensity shapes both economic performance and environmental sustainability within a unified empirical framework. Fixed-effects results indicate that digital infrastructure significantly enhances economic output, showing its role as a foundational driver of industrial upgrading. However, digital-led growth is associated with higher carbon-emission intensity, highlighting the environmental costs of energy-intensive digital expansion. Importantly, innovation capacity and financial development mitigate these adverse effects, enabling partial decoupling between growth and emissions. The findings reveal that digital transformation is not inherently sustainable but depends on the co-evolution of infrastructure, skills, and institutional conditions. Uniquely, this study integrates digital intensity measurement beyond AI, simultaneous economic–environmental outcomes, regional heterogeneity, and green finance moderation within a unified empirical framework, distinguishing it from prior research that treats these dimensions separately.