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ContentsTHE IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON CO2 EMISSIONS: THE CASE OF OECD Assoc. Prof. Dr. Neşe ALGAN1, Assist Dr. Erhan İŞCAN2, Ph.D. Candidate Duygu SERİN3 1Cukurova University, FEAS, Department of Economics, Adana, nalgan@cu.edu.tr 2Cukurova University, FEAS, Department of Economics, Adana, eiscan@cu.edu.tr 3Cukurova University, Institute of Social Sciences, duyguserinn@gmail.com Abstract Information and Communication Technologies refer to electronic equipment and related software to convert, store, and process, communicate and retrieve digitized information. This includes technology, equipment, software and service elements and both technology infrastructure and end-user devices. In other words, information and communication technology applications may cover both technology products, components and information and communication technology based services. In the literature many studies analyzed the impacts of information and communication technology on economy but beside these impacts only few of the literature analyzed the impact of information and communication technology usage to increase energy efficiency for eliminating the carbon emissions to mitigate the climate change. Increase in the usage of information and communication technology can effect on carbon emissions in three ways. First, direct emissions associated with information and communication technology production, use and disposal. Second, technologies facilitate emission reductions in other industries due to the use of specific factors. Third, technologies for monitoring and managing processes or for dematerializing products decrease the usage of energy by saving. Information and communication technology usage reduces transportation costs or process costs and increases productivity and energy efficiency, and thus this contributes to the reduction of carbon emissions while leading to economic growth. On the other hand, in the literature some of the studies supported the technological progress-led policy framework to mitigate climate change. Research and development expenditure is the main promoter of the technological progress. Especially, increasing research and development expenditure promotes the progress of the low-carbon technologies. Technological progress increases the efficiency and with these low-carbon technologies the carbon emissions will decrease. In short, improving technology by research and development expenditure will mitigate the climate change. Although the literature of the impact of technological progress and information and communication technology on economic growth has increased but the impact of them on carbon emissions reduction has not been examined in depth and its effect is broadly unknown. Therefore, the aim of this study is to analyze relationship between information and communication technology and carbon emissions, using dynamic panel method. It is different from most literature from a perspective of information and communication technology because a research and development expenditure variable is included in the model. For that purpose, we used a data set of selected The Organization for Economic Co-operation and Development countries between the periods 2003-2014. The data for all countries obtained from the World Bank’s Development Indicators. As a conclusion it is found that information and communication technology and research and development expenditure have positive and statistically significant effect on reducing carbon emissions for selected countries. This empirical finding contributed to advancing the existing literature, and also draws special attention of policymakers. Based on the findings, policy makers should change their policy for economic growth by using technology for reducing carbon emissions to mitigate climate change. © 2017 Selection and/or peer-review under responsibility of the organization committee Key Words: Information and Communications Technology; Research and Development; Carbon Emissions; Dynamic Panel Data Analysis; OECD Countries Introduction Climate change is the common value of all countries in the world for the last two decades. For this reason, climate change and environmental problems have much more importance on a global scale. One of the international frameworks for the fight against global warming and climate change is the Kyoto Protocol. The signatories of the protocol promise for reducing the emissions of carbon dioxide and five other gases that cause greenhouse effect. Therefore the countries seek for the different ways for decreasing the emissions. Information and communication technologies are closely related to the amount of carbon emissions because of decreasing the need for energy sources. Information and communication technologies can be understood as all technologies, including the collection, processing, storage, and transmission of information from one place to another via information networks. These technologies include hardware and software tools that run on computers, computer networks, satellite antennas, fiber optic cables and microwave transmitters, and individuals who have educational, teaching and education at different levels [13]. Today, information and communication technologies have an important place in almost all fields. Besides, information and communication technologies, which are seen as solutions to many fundamental problems in human life, increase energy efficiency and reduce the effects of carbon dioxide (CO2) emissions and climate change. In the last two decades, as one of the most important environmental problems affecting humanity, it is necessary to use information and communication technologies to reduce carbon emissions in order to take control of the climate change. Widespread use of information and communication technologies will reduce the amount of carbon emissions. The widespread usage of information and communication technology solutions in all segments of society over the past 25 years has reduced energy consumption while at the same time increasing productivity. Implementation of information and communication technology solutions provides a true transformation of resource-efficient and service-based aggregation, along with significant reductions in carbon emissions, particularly in the construction, transportation and manufacturing sectors. From a macro perspective, market and policy-based approaches are being implemented to reduce greenhouse gas emissions, and markets are turning to new technologies, demanding new, innovative applications. As a result, new markets and industries have been encouraged for research and development to develop new technologies that are significant economic engine for countries throughout the 21st century [16]. Rapid economic growth is the main determinant of increased carbon emissions. The development of the countries such as population growth, rapid urbanization, industrialization and tourism are creating considerable pressure on natural resources and the environment. The increase in economic growth leads to an increase in the level of carbon emissions [17]. Information and communication technologies have a vital role to achieve sustainable economic growth and carbon emissions reduction targets. If the new technology is important for the mitigating then research and development expenditures will be the one of the main key for the new technologies. In this context, especially in the light of the global economy, information and communication technologies are emerging as the best policy instruments to promote economic growth and reduce carbon emissions. The development of information and communication technologies is on a global scale, and each country invests in these technologies to ensure economic growth. As a result, technological developments change old, energy intensive structures with fresh, carbon neutral structures. The widespread use of information and communication technologies reduces distances, increases productivity and provides energy, thus this will contribute to the reduction of carbon emissions [24-21]. In recent years, studies empirically examining the relationship between environmental problems and the economy have increased rapidly. Most of the studies deal with the amount of carbon emissions as pollution indicators. There is a need for intensive energy use in order for countries to achieve high sustainable economic growth. Energy consumption, especially from fossil fuels, increases carbon dioxide emissions. This study deals with the impact of information and communication technologies on carbon emissions in general in order to create a more comprehensive framework. If the climate change is a global problem, as every country is now causing an increase in the amount of carbon emissions, every country must change their policies to mitigate climate change [5-17-20]. This study is analyzing the impact of usage of information and communication technologies and research and development for reducing the use of fossil fuels as they provide more opportunities to prevent energy spending through telephones, mobile applications, websites and new technologies. By using new technologies and information and communication technologies for low carbon emissions will reduce climate change and are a general economic development strategy that aligns with targets to increase energy security while at the same time providing gradual elimination of unproductive businesses and job creation in sectors where services and high technology are involved [32]. The study has five sections. In the next section theoretical background and literature will be presented. Then, in the third section the model, method and data will be introduced. In the fourth section, empirical results will be discussed and in the conclusion section, the results of empirical findings will be evaluated and the policy implications will be offered. Theoretical Background and Literature Review Economic activity is the main determinant of carbon emissions. Economic growth is often associated with high carbon emission per unit output in specialized industries. Historically, there is a close relationship between economic growth and carbon emissions. Many of the studies in the literature emphasize that economies grow in parallel with environmental problems. On the other hand, analyzing the mitigation of the climate change for sustainable development became main aim for the studies. The studies in the literature are mainly divided into three paths. First path is the studies that analyze the impact of economic growth on carbon emission, and the second path is the studies analyzing the effect of foreign trade on carbon emission. Third path is the new one and analyze the impact of new technologies (includes all research and development, information and communication technologies) on carbon emission [1-9-11]. Despite the large number of studies for the first two path in the literature, studies that demonstrate the effect of new technologies on reducing carbon emissions are limited. This study is a contribution to the third path of the literature by using main indicators for the new technologies and information and communication technologies. The rationale behind this study is quite different from the literature. The effect of the two new indicators to carbon emission is analyzed with the energy usage as the main determinant of the carbon emission. These two indicators are the research and development expenditure and a proxy for information and communication technology. Energy usage is the main determinant of the carbon emission and a positive impact is expected. Second indicator is the research and development expenditure used as a proxy for the new technologies and a negative impact is expected. Third indicator is the proxy for information and communication technology and a negative impact is expected. The relevant literature summary for carbon emissions is given below [12-14]. Selden and Song (1994) analyzed the effect of economic growth on carbon emissions on panel data analysis. They found that carbon emissions exhibit inverted-U relationships with per capita GDP. They suggested that carbon emissions will decrease in the very long run with a continuing growth in global emissions over the next several decades [28]. Antweiler et. al. (2001) analyzed the effect of foreign trade openness on carbon emissions. As a result of the study, countries' economic growth rates increased while carbon emissions rose in parallel. It was found that carbon trade increased while foreign trade margin increased [4]. Mielnik and Goldemberg (2002) analyzed twenty of developing countries, and they found a decline in the energy intensity as foreign direct investment increases. The use of new technologies rises by foreign direct investment over the old fashioned traditional technologies [23]. Perman and Stern (2003) tested the EKC hypothesis using a panel dataset of sulfur emissions and GDP data for 74 countries over a span of 31 years. They found that EKC has a long run equilibrium relationship and sulfur emissions are a concave function of income. Within empirical results they thought that EKC is a problematic concept in the case of sulfur emissions [25-30]. Say and Yücel (2006) analyzed the relationship between energy consumption and carbon emissions. The analysis was tested for Turkey between 1970-2002. As a result of the analysis, energy consumption has reached the result of increasing carbon emissions [27]. In his study Halicioğlu (2009) tested the relationship between energy usage, income and foreign trade. Time series method was used for 1960-2005 years in Turkey. As a result of the analysis, income has been found to have an impact on carbon emissions and long-term carbon emissions, energy consumption, foreign trade and income are important [15]. Bella et al (2010) studied the relationship between economic growth and carbon emissions. They used 1971-2006 period for 77 countries and estimate the model with panel data method. The results support the hypothesis of the environmental kinship curve for all countries included in the study [8]. Jaunky (2011) analyzed the relationship between economic growth and carbon emissions through the panel cointegration method. The study covered the years 1980 to 2005 for 36 countries. As a result of the analysis, it is emphasized that economic growth has increased by 1% and carbon emissions have increased by 0.68% [18]. Zhang (2011) studied the relationship between carbon emissions and financial liberalization. The study was tested for China using the Granger causality method. The result is that financial liberalization increases carbon emissions [33]. Çınar (2011) analyzed the relationship between economic growth and carbon emissions for the OECD countries between 1971-2007. Panel cointegration method was used in the study. As a result of the analysis, it was determined that there is a cointegration relation between economic growth and carbon emissions and that rapid economic growth increases environmental pollution [10]. Ruth (2011) studied information and communication technologies, carbon emissions and energy consumption for developed countries. As a result of the analysis, the information and communication technology sector has been found to have a major impact on carbon emissions and energy consumption. It has been found that using these technologies reduces energy consumption by about 3-5% [26]. Adom et al. (2012) studied of the relationship between carbon dioxide emissions and economic growth for the African continent. As a result of econometric analyzes, econometric growth for Ghana and Morocco has increased carbon emissions, but no similar situation has been observed in Senegal [2]. Ahmed and Long (2012) analyzed the relationship between carbon emissions, energy consumption, trade liberalization, population density and economic growth. The study was tested for the period 1971-2008 for Pakistan with the ARDL boundary test approach. A short-term and long-term relationship between carbon emissions and growth has been identified. These results support the hypothesis of environmental kinship for Pakistan [3]. Simpson (2013) studied the impact of information and communication technology use on carbon emissions for the period 1990-2009. As a result of the analysis, information and communication technologies have been found to be effective on carbon emissions in two directions. As a result, it has been determined that information and communication technology tools contribute to the increase of greenhouse gas due to energy-consuming and heat-emitting vehicles, while the widespread use of these technologies reduces carbon emissions due to the use of intelligent devices [29]. Yildirim (2013) analyzed the effect of foreign trade openness and income on carbon emissions. In the analysis, the 20 strongest economies in the world were tested for 1990-2009. As a result of the model analyzed with the least squares model, it is reached that countries' foreign trade openness increases carbon emissions and supports environmental hypothesis curve hypothesis for all countries[31]. Lee and Brahmasrene (2014) used panel cointegration analysis to examine the short and long term relationship between information and communication technologies, carbon emissions and economic growth. In the analysis, 1991-2009 period was considered for 9 countries which are members of Southeast Asian nations. As a result of the econometric analysis, long term equilibrium relation was found between three variables. Information and communication technologies have an important influence on economic growth and carbon emissions [21]. In Aytun and Akın (2015) study, the relationship between carbon emissions, energy consumption and education level variables were tested for Turkey using the causality method. In practice, the relationship between primary, secondary and tertiary levels and carbon emissions for the period 1971-2010 has been studied separately. As a result of the application, it is found that there is no causality relation between primary and secondary schooling levels and carbon dioxide emissions and energy consumption, whereas higher education is a causality relation to carbon dioxide emission and energy consumption from schooling level [7]. Methodology and Data Set In this study, the effect of information and communication technology index and research and development expenditure on carbon emissions was tested using the System Generalized Moments Method, a dynamic panel data analysis technique [6]. Data covering the years 2003-2014 of the 29 selected OECD member countries were used in the study. The reason for handling the period of 2003-2014 as the observation interval is that the data pertaining to the variables are not regular for each country and year. These countries are as follows; Germany, Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, France, Finland, Finland, Germany, Italy, Netherlands, Norway, Spain, Sweden, Sweden, United Kingdom, United States, United States, Canada, Luxembourg, Norway, Portugal, Sweden, Switzerland, Slovakia, Turkey and Greece. The model to explain the effect of information and communication technologies on carbon emissions is as follows:  (1)
In the equation, i is the index country, t is the time index. The variables used in the logarithmic form in the analysis can be listed as follows: CO2: Carbon emissions are mostly caused by the burning of fossil fuels and the production of cement. These include the production of carbon dioxide produced during the consumption of solid, liquid and gaseous fuels. Annual carbon dioxide emission per capita is used as carbon emission and values are in metric tons. ICTI: An index is used as proxy for information and communication technology. The expected direction of the link between information and communication technology products and carbon is negative. The reason for this is the widespread use of information and communication technologies increase productivity and reduce global carbon emissions. The information and communication technology index is calculated as follows. 
 (2)
EU: Per capita energy use is the main reason of the carbon emissions and values are taken as equivalent to kg of oil. The expected direction of the link between per capita carbon emissions and per capita energy consumption is likely to be positive, as the increase in energy consumption will increase carbon emissions. RDS: It is the expenditure of research and development of countries. Values are in current prices and in US dollars. Based on the literature, it is thought that increasing research and development expenditures will reduce emission effects and carbon emissions. For this reason, a negative relation is expected in the coefficient. Data obtained from the International Telecommunication Union (ITU) and the Organization for Economic Co-operation and Development (OECD) and the World Bank (WB) were used in the analyze. The series are listed in table 1. Table 1.Variables
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