119 EXPLORING THE ROLE OF DIGITALIZATION ON ECONOMIC GROWTH IN LOW-MIDDLE INCOME COUNTRIES: EVIDENCE FROM A PANEL DATA APPROACH

Abstract

The research study evaluates the role of digitalisation on the economic growth with special reference to low- and middle-income countries. Furthermore, the study utilises a panel dataset comprising the results of 33 nations over the period from 2000 to 2021. The measure used to evaluate economic growth is GDP per capita, and it serves as the proxy for economic growth. There are a variety of measures used to gauge the effect that digitalization has on the economy. These measures include evaluating the digitalization are fixed telephone subscriptions, mobile subscribers, fixed broadband subscribers, and the proportion of internet users. In order to regulate the impact of different factors on the GDP, this research incorporates a group of macro-economic measures that includes gross fixed capital formation, trade and labour force participation, and inflation. These macroeconomic factors also consist of population features, public consumption, research and development expenses. Both the static panel regression analysis and the dynamic two-step system generalized method of moments (GMM) estimation strategy are employed to deal with endogeneity, heterogeneity, and the dynamic nature of growth. It is found that digitalization positively and significantly influences economic growth, and broadband and internet access have a significant impact on economic growth. Traditional drivers of economic growth, such as investments and the participation of the labour force, also retain their relevance. This study has significant implications for developing countries, and it suggests that developing the information and communications technology sector, besides other economic means, can contribute to economic growth.