Asymmetric Effects of Digital Trade on Environmental Sustainability: Evidence from GCC Economies

Rapid digital transformation is reshaping global trade and raising important questions about its environmental impact, particularly in energy-intensive GCC economies. Despite growing interest, existing evidence remains inconclusive and often overlooks potential nonlinear effects. This study explores how digital trade influences environmental sustainability in Gulf Cooperation Council (GCC) countries over the period 2010–2024. Using a balanced panel dataset for the six economies, the analysis applies a fixed-effects approach with Driscoll–Kraay standard errors to account for cross-sectional dependence and other econometric concerns. To better capture the complexity of the relationship, the study also adopts an asymmetric framework that distinguishes between positive and negative changes in digital trade. The findings show that digital trade does not have a significant effect in the linear model. However, once asymmetry is considered, a clearer pattern emerges. Increases in digital trade are associated with lower CO 2 emissions, while decreases tend to raise emissions. Energy consumption remains the primary driver of emissions, while technological readiness helps reduce environmental pressure. Urbanization and political stability, on the other hand, are linked to higher emissions, reflecting ongoing structural challenges in the region. Overall, the results highlight the importance of sustaining digital trade growth and strengthening technological capabilities to support environmental sustainability in GCC economies.