Digital growth alone is not enough to achieve sustainability goals

Regions with more advanced digital economies tend to perform better on sustainability indicators, benefiting from improved efficiency, innovation capacity, and coordination across sectors. Digital tools reduce information gaps, lower transaction costs, and enable more precise allocation of resources, all of which support more sustainable patterns of production and consumption.

Does digitalization inherently support sustainable development, or does its impact depend on how it is governed and integrated into broader innovation systems? New research offers a clear answer, showing that digital growth can significantly advance sustainability goals, but only under specific institutional and policy conditions.

In a study titled The Digital Economy and Sustainable Development Goals: A Predictive Analysis of the Interconnections Between Digitalization and Sustainability, published in the journal Sustainability, researcher Meng Ding provides a large-scale empirical assessment of how digitalization interacts with sustainable development outcomes. 

Digitalization as a conditional driver of sustainable development

The study demonstrates that digitalization can act as a strong driver of sustainable development when measured across economic, environmental, and social dimensions. Regions with more advanced digital economies tend to perform better on sustainability indicators, benefiting from improved efficiency, innovation capacity, and coordination across sectors. Digital tools reduce information gaps, lower transaction costs, and enable more precise allocation of resources, all of which support more sustainable patterns of production and consumption.

These effects are not limited to high-income or technology-intensive regions. The analysis shows that as digital infrastructure expands, sustainability gains can emerge across diverse economic contexts. This challenges the assumption that digital dividends are restricted to already advanced economies. Instead, the study suggests that digitalization has the potential to support inclusive and balanced development, provided that access and capabilities are widely distributed.

China serves as a useful example in this context due to the scale and speed of its digital transformation. Over the past decade, rapid expansion of broadband networks, digital platforms, and data-driven industries has reshaped regional economies. The study finds that areas with stronger digital foundations consistently show better sustainability performance. However, the findings are not presented as uniquely Chinese. Rather, China’s experience illustrates how digitalization can influence development trajectories at scale, offering insights that are applicable to other national and regional contexts.

The study points up that digitalization is not an automatic solution. Digital growth alone does not guarantee environmental improvement or social inclusion. Without complementary mechanisms, digital tools may simply accelerate existing patterns of resource use or inequality. The sustainability impact of the digital economy depends on how technology is embedded within innovation systems and governed by public institutions.

Green innovation as the central transmission mechanism

Digital tools lower barriers to innovation by improving access to data, enabling collaboration, and reducing experimentation costs. Advanced analytics, artificial intelligence, and digital platforms allow firms and researchers to test solutions more rapidly and optimize environmental performance. This accelerates the development of clean technologies and supports their adoption across industries.

The study finds that a substantial share of the positive effect of digitalization on sustainability operates through this innovation pathway. Regions with stronger digital capabilities tend to generate more green innovation outputs and achieve better environmental outcomes. This highlights the importance of viewing digitalization not just as a productivity enhancer, but as an enabler of structural change toward greener economic systems.

China’s experience again provides a useful illustration. Digital platforms and data infrastructure have supported rapid growth in renewable energy technologies, smart manufacturing, and environmental monitoring. At the same time, the study makes clear that similar mechanisms are observable elsewhere. Countries investing in digital research ecosystems, open data frameworks, and innovation-friendly policies are better positioned to leverage digitalization for environmental progress.

The findings also underscore the role of policy alignment. Digital infrastructure investments yield stronger sustainability returns when paired with support for green research, innovation incentives, and environmental regulation. Without such alignment, digitalization may boost economic output without delivering proportional environmental benefits.

Governance determines the sustainability payoff

The study identifies governance quality as a decisive factor in shaping digitalization’s sustainability impact. The research reveals a clear threshold effect: the benefits of digitalization increase sharply once institutional capacity reaches a certain level.

In regions with weaker governance, digitalization still contributes positively to sustainable development, but the effect is limited. Where governance quality is higher, the impact of the digital economy on sustainability more than doubles. This nonlinear relationship highlights that institutions play a critical role in translating technological progress into public value.

Strong governance enhances the effectiveness of digitalization by ensuring regulatory enforcement, reducing misuse of digital resources, and aligning incentives with long-term goals. It allows governments to guide digital transformation toward green priorities, manage externalities, and protect against risks such as market concentration or environmental rebound effects.

China’s regional variation in governance capacity provides empirical support for this argument. Areas with stronger institutions and regulatory frameworks are better able to harness digital tools for sustainability, while regions with weaker governance see more modest gains. This pattern is not unique to China. It reflects a broader principle applicable across political and economic systems.

For countries at different stages of development, the implication is clear. Digital transformation strategies must be accompanied by institutional strengthening. Investments in connectivity, data platforms, and digital industries are most effective when paired with reforms that improve transparency, accountability, and policy coordination.