Abstract
This study investigates the simultaneous influence of the digital economy, environmental technologies, business activity, and institutional quality on both the environment and economic growth in G7 economies from 1996 to 2020. The study provides an in-depth analysis to investigate the influence of institutional quality, particularly the regulatory environment, on business activity. Employing a rigorous methodology encompassing correlation analysis, long-term examination using Driscoll and regression estimators, and the utilization of various digital economy indicators such as internet usage and cell subscriptions, we uncover significant insights. The findings underscore the substantial impact of digital economies in mitigating carbon emissions and driving economic growth at an accelerated rate. Moreover, the study reveals that certain regulatory constraints on corporate operations can paradoxically facilitate carbon emission management while also fostering economic expansion. The study validates the presence of an inverted U-shaped Environmental Kuznets Curve (EKC) in G7 economies. This suggests that there is a specific point at which economic activities start to contribute more to carbon emissions. Moreover, the study highlights the importance of achieving a balance between economic growth driven by foreign direct investment and the goals of environmental sustainability. Environmental technology is becoming increasingly important in the regulation of emissions. Significantly, the study highlights the need to enhance the quality of implementing institutional regulations. It suggests that G7 economies can improve both environmental quality and economic growth by adopting superior regulatory methods. These findings are relevant for governments seeking economic growth and environmental protection. They suggest the need for specific policy actions to accomplish sustainable development goals.