Assessing the Influence of Innovation and Digitalization on Carbon Footprint Across the Middle East, North Africa, and South Caucasus Regions

ABSTRACT The convergence of energy transition and digitalization represents two pivotal trends in the global economy that complement each other. The decrease in carbon dioxide (CO 2 ) emissions is facilitated by larger Internet access and more substantial investments in research and development. This study sheds light on the dual impact of digitalization and innovation on CO 2 emissions in the eight Middle East and North Africa (MENA) and two South Caucasus countries in 2000–2020. The article reveals the nuanced role of economic growth in shaping greenhouse gas emission patterns and underscores the important role of digitalization in mitigating CO 2 emissions. With the use of FMOLS and quantile panel regression methods, the study proved a positive relationship between digitalization and GDP growth, with digital solutions driving economic expansion. Economic growth shows a clear positive correlation with CO 2 levels, supporting the Environmental Kuznets Curve (EKC) hypothesis of an inverted U‐shape relationship between economic development and CO 2 emissions in developing and emerging economies. Digitalization and innovations, on the contrary, contribute to CO 2 emissions mitigation. These results underscore the importance of policy support for research and development and digital transformation to promote sustainable, low‐carbon growth.