Does ICT Moderate the Effect of the Shadow Economy on Environmental Sustainability?

Moved by the growing size of the shadow economy and ecological degradation in developing nations, this study scrutinizes the moderating effect of information and communication technology (ICT) on the shadow economy‐environmental sustainability relationship in 31 African countries between 2000 and 2020. Fully modified ordinary least squares and dynamic ordinary least squares are applied to achieve this objective. The robust estimation of the long‐run dynamic effect is confirmed using the augmented mean group technique. The findings suggest that the shadow economy harms the ecosystem. However, the interactive regression results indicate that ICT tools moderate the negative influence of the shadow economy on the environment, thereby mitigating environmental degradation. The study establishes the threshold values at which ICT will effectively moderate the negative impact of the shadow economy, specifically for fixed telephone lines (2 per 100 persons), internet penetration (19% of the total population), and mobile cellular subscriptions (23 per 100 persons). Finally, the study offers some policy implications for enhancing a sustainable environment.