The impact of digital transformation on economic growth: A global evidence
0
Online Published:
25/11/2025
Section:
Economics and Economic Management
Main Article Content
Abstract
Digital transformation-driven economic growth is a key socio-economic development objective for many countries. This study explores the impact of digital transformation on economic growth across 77 countries, categorized into three income groups: high-income, upper-middle-income, and lower-middle-income countries, over the period from 2005 to 2022. The research employs an econometric approach based on the Cobb-Douglas production function to quantify the effects on economic growth. The Generalized Method of Moments (GMM) estimation is utilized to address concerns about endogeneity. The findings reveal that digital transformation plays a significant role in fostering economic growth. Countries that actively advance digital transformation initiatives tend to experience accelerated economic expansion. Additionally, fundamental economic drivers such as investment capital and labor also exert a positive influence on growth. The study further provides valuable policy insights to assist governments in formulating strategies to enhance economic development in an era of rapid global digitalization.
Keywords
Cobb - Douglas; Digital transformation; GMM; Growth
Article Details
Field of Economic (JEL Codes)
B22 - Macroeconomics - History of Economic Thought since 1925, O33 - Technological Change: Choices and Consequences • Diffusion Processes - Innovation • Research and Development • Technological Change • Intellectual Property Rights, O47 - Empirical Studies of Economic Growth • Aggregate Productivity • Cross-Country Output Convergence - Economic Growth and Aggregate Productivity
References
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Bon, V. (2021). The digitalization–economic growth relationship in developing countries and the role of governance. Scientific Annals of Economics and Business, 68(4), 481-493. doi.org/10.47743/saeb-2021-0028.
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Bukht, R., & Heeks, R. (2017). Defining, conceptualising and measuring the digital economy. Development Informatics working paper, (68). http://dx.doi.org/10.2139/ssrn.3431732
Cusolito, A. P., Lederman, D., & Pena, J. O. (2020). The effects of digital-technology adoption on productivity and factor demand: Firm-level evidence from developing countries (No. 9333). The World Bank. https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232794
David, O. O., & Grobler, W. (2020). Information and communication technology penetration level as an impetus for economic growth and development in Africa. Economic Research-Ekonomska Istraživanja, 33(1), 1394-1418. https://doi.org/10.1080/1331677X.2020.1745661
Dewan, S., & Kraemer, K. L. (2000). Information technology and productivity: Evidence from country-level data. Management science, 46(4), 548-562. https://doi.org/10.1287/mnsc.46.4.548.12057
Elfaki, K. E., & Ahmed, E. M. (2024). Digital technology adoption and globalization innovation implications on Asian Pacific green sustainable economic growth. Journal of Open Innovation: Technology, Market, and Complexity, 10(1), 100221. https://doi.org/10.1016/j.joitmc.2024.100221
Georgescu, I., Androniceanu, A. M., Kinnunen, J., & Drăgulănescu, I. V. (2021). Correlative approach to digitalization and economic growth. In Proceedings of the International Conference on Business Excellence (Vol. 15, No. 1, pp. 44-57). DOI: 10.2478/picbe-2021-0006
Grossman, G. M., & Helpman, E. (1991). Innovation and growth in the global economy MIT Press.
Gomes, S., Lopes, J. M., & Ferreira, L. (2022). The impact of the digital economy on economic growth: The case of OECD countries. RAM. Revista de Administração Mackenzie, 23, eRAMD220029.
Habibi, F., & Zabardast, M. A. (2020). Digitalization, education and economic growth: A comparative analysis of Middle East and OECD countries. Technology in Society, 63, 101370. https://doi.org/10.1016/j.techsoc.2020.101370
Haftu, G. G. (2019). Information communications technology and economic growth in Sub-Saharan Africa: A panel data approach. Telecommunications Policy, 43(1), 88–99. https://doi.org/10.1016/j.telpol.2018.03.010
Hodrab, R., Maitah, M., & Smutka, L. (2016). The effect of information and communication technology on economic growth: Arab world case. International Journal of Economics and Financial Issues, 6(2), 765-775. https://org.tr/en/pub/ijefi/issue/31978/352520
Howitt, P. (2010). Endogenous growth theory. In Economic growth (pp. 68-73). London: Palgrave Macmillan UK. https://doi.org/10.1057/9780230280823_10
Hosan, S., Karmaker, S. C., Rahman, M. M., Uddin, M. A., & Saha, B. B. (2021). Digitalization, Energy Intensity and Economic Growth: A Panel Study on South Asian Economies. doi.org/10.5109/4738553
Kraemer, K. L., Ganley, D., & Dewan, S. (2005). Across the digital divide: A cross-country multi-technology analysis of the determinants of IT penetration. Journal of the Association for Information Systems, 6(12), 10. DOI: 10.17705/1jais.00071
Khaliq, A., & Noy, I. (2007). Foreign direct investment and economic growth: Empirical evidence from sectoral data in Indonesia. Journal of Economic Literature, 45(1), 313-325. http: / / EconPapers.repec.org/ RePEc: hai: wpaper: 200726
Li, R., & Gospodarik, C. G. (2022). The impact of digital economy on economic growth based on pearson correlation test analysis. In International Conference on Cognitive based Information Processing and Applications (CIPA 2021) Volume 2 (pp. 19-27). Springer Singapore. https://doi.org/10.1007/978-981-16-5854-9_3
Li, K., Kim, D. J., Lang, K. R., Kauffman, R. J., & Naldi, M. (2020). How should we understand the digital economy in Asia? Critical assessment and research agenda. Electronic Commerce Research and Applications, 44, 101004. https://doi.org/10.1016/j.elerap.2020.101004
Lloyd, M. W. (2020). Desigualdades educativas y la brecha digital en tiempos de COVID-19.
Lopes, J. M., Silveira, P. , Farinha, L., Oliveira, M., & Oliveira, J. (2021b). Analyzing the root of regional innovation performance in the European territory. International Journal of Innovation Science, 13(5), 565-582. https://doi.org/10.1108/IJIS-11-2020-0267
Mathivanan, S. K., Jayagopal, P., Ahmed, S., Manivannan, S. S., Kumar, P. J., Raja, K. T., ... & Prasad, R. G. (2021). Adoption of e - learning during lockdown in India. International Journal of System Assurance Engineering and Management, 2021, 1-10. https://doi.org/10.1007/s13198-021-01072-4
Mathushan, P., & Pushpanathan, A. (2020). Does green innovative practices matter? the effect of green innovation on green entrepreneurship sustainability. Journal of Business Studies, 7(1).
Park, G. H. E., & Tan, B. (2021). The accrual of digital debt. https://aisel.aisnet.org/icis2021/is_implement/is_implement/1
Papaioannou, S. K., & Dimelis, S. P. (2007). Information technology as a factor of economic development: Evidence from developed and developing countries. Economics of Innovation and New Technology, 16(3), 179-194. Doi.org/10.1080/10438590600661889
Pohjola, M. (2000). Information technology and economic growth: A cross-country analysis. Doi.10.22004/ag.econ.295500
Pradhan, R. P. , Mallik, G., & Bagchi, T. P. (2018). Information communication technology (ICT) infrastructure and economic growth: A causality evinced by cross-country panel data. IIMB Management Review, 30(1), 91–103. https://doi.org/10.1016/j.iimb.2018.01.001
Prasad, A. (2020). The organization of ideological discourse in times of unexpected crisis: Explaining how COVID-19 is exploited by populist leaders. Leadership, 16(3), 294-302. https://doi.org/10.1177/1742715020926783
Soete, L., & Freeman, C. (2012). The economics of industrial innovation. routledge. https://doi.org/10.1177/1742715020926783
Song, M., Zheng, C., & Wang, J. (2022). The role of digital economy in China's sustainable development in a post-pandemic environment. Journal of Enterprise Information Management, 35(1), 58-77.
Soto-Acosta, P. (2020). COVID-19 pandemic: Shifting digital transformation to a high-speed gear. Information Systems Management, 37(4), 260-266.
Tan, N. N., Ngan, H. T. T., Hai, N. S., & Anh, L. H. (2022). The impact of digital transformation on the economic growth of the countries. Prediction and Causality in Econometrics and Related Topics, 670-680. https://doi.org/10.1007/978-3-030-77094-5_49
Thompson Jr, H. G., & Garbacz, C. (2011). Economic impacts of mobile versus fixed broadband. Telecommunications Policy, 35(11), 999 - 1009. DOI. 10.1016/J.TELPOL.2011.07.004
Vaslavskiy, Y., & Vaslavskaya, I. (2019). Infrastructure Public–Private Partnership Projects: Budget Consolidation Policy in Russia and Government Expenditures’ Efficiency Increase. In Modeling economic growth in contemporary Russia (pp. 203-232). Emerald Publishing Limited. https://doi.org/10.1108/978-1-78973-265-820191007
Welfens, P. J. (2017). Macro innovation dynamics and the golden age: New insights into Schumpeterian dynamics, inequality and economic growth. Springer. DOI. 10.1007/978-3-319-50367-7
Yousefi, A. (2011). The impact of information and communication technology on economic growth: Evidence from developed and developing countries. Economics of Innovation and New Technology, 20(6), 581-596. https://doi.org/10.1080/10438599.2010.544470
Zhou, Z., Liu, W., Cheng, P., & Li, Z. (2022). The impact of the digital economy on enterprise sustainable development and its spatial-temporal evolution: An empirical analysis based on urban panel data in China. Sustainability, 14(19), 11948.
Aghaei, M., & Rezagholizadeh, M. (2017). The impact of information and communication technology (ICT) on economic growth in the OIC Countries. Economic and Environmental Studies, 17(2 (42), 257–278. https://doi.org/10.25167/ees.2017.42.7
Bahrini, R., & Qaffas, A. A. (2019). Impact of information and communication technology on economic growth: Evidence from developing countries. Economies, 7(1). https://doi.org/10.3390/economies7010021
Blundell, R., & Bond, S. (2000). GMM estimation with persistent panel data: an application to production functions. Econometric reviews, 19(3), 321-340. https://doi.org/10.1080/07474930008800475
Bon, V. (2021). The digitalization–economic growth relationship in developing countries and the role of governance. Scientific Annals of Economics and Business, 68(4), 481-493. doi.org/10.47743/saeb-2021-0028.
Brynjolfsson, E., & McAfee, A. (2014). The second machine age: Work, progress, and prosperity in a time of brilliant technologies. WW Norton & company.
Bukht, R., & Heeks, R. (2017). Defining, conceptualising and measuring the digital economy. Development Informatics working paper, (68). http://dx.doi.org/10.2139/ssrn.3431732
Cusolito, A. P., Lederman, D., & Pena, J. O. (2020). The effects of digital-technology adoption on productivity and factor demand: Firm-level evidence from developing countries (No. 9333). The World Bank. https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232794
David, O. O., & Grobler, W. (2020). Information and communication technology penetration level as an impetus for economic growth and development in Africa. Economic Research-Ekonomska Istraživanja, 33(1), 1394-1418. https://doi.org/10.1080/1331677X.2020.1745661
Dewan, S., & Kraemer, K. L. (2000). Information technology and productivity: Evidence from country-level data. Management science, 46(4), 548-562. https://doi.org/10.1287/mnsc.46.4.548.12057
Elfaki, K. E., & Ahmed, E. M. (2024). Digital technology adoption and globalization innovation implications on Asian Pacific green sustainable economic growth. Journal of Open Innovation: Technology, Market, and Complexity, 10(1), 100221. https://doi.org/10.1016/j.joitmc.2024.100221
Georgescu, I., Androniceanu, A. M., Kinnunen, J., & Drăgulănescu, I. V. (2021). Correlative approach to digitalization and economic growth. In Proceedings of the International Conference on Business Excellence (Vol. 15, No. 1, pp. 44-57). DOI: 10.2478/picbe-2021-0006
Grossman, G. M., & Helpman, E. (1991). Innovation and growth in the global economy MIT Press.
Gomes, S., Lopes, J. M., & Ferreira, L. (2022). The impact of the digital economy on economic growth: The case of OECD countries. RAM. Revista de Administração Mackenzie, 23, eRAMD220029.
Habibi, F., & Zabardast, M. A. (2020). Digitalization, education and economic growth: A comparative analysis of Middle East and OECD countries. Technology in Society, 63, 101370. https://doi.org/10.1016/j.techsoc.2020.101370
Haftu, G. G. (2019). Information communications technology and economic growth in Sub-Saharan Africa: A panel data approach. Telecommunications Policy, 43(1), 88–99. https://doi.org/10.1016/j.telpol.2018.03.010
Hodrab, R., Maitah, M., & Smutka, L. (2016). The effect of information and communication technology on economic growth: Arab world case. International Journal of Economics and Financial Issues, 6(2), 765-775. https://org.tr/en/pub/ijefi/issue/31978/352520
Howitt, P. (2010). Endogenous growth theory. In Economic growth (pp. 68-73). London: Palgrave Macmillan UK. https://doi.org/10.1057/9780230280823_10
Hosan, S., Karmaker, S. C., Rahman, M. M., Uddin, M. A., & Saha, B. B. (2021). Digitalization, Energy Intensity and Economic Growth: A Panel Study on South Asian Economies. doi.org/10.5109/4738553
Kraemer, K. L., Ganley, D., & Dewan, S. (2005). Across the digital divide: A cross-country multi-technology analysis of the determinants of IT penetration. Journal of the Association for Information Systems, 6(12), 10. DOI: 10.17705/1jais.00071
Khaliq, A., & Noy, I. (2007). Foreign direct investment and economic growth: Empirical evidence from sectoral data in Indonesia. Journal of Economic Literature, 45(1), 313-325. http: / / EconPapers.repec.org/ RePEc: hai: wpaper: 200726
Li, R., & Gospodarik, C. G. (2022). The impact of digital economy on economic growth based on pearson correlation test analysis. In International Conference on Cognitive based Information Processing and Applications (CIPA 2021) Volume 2 (pp. 19-27). Springer Singapore. https://doi.org/10.1007/978-981-16-5854-9_3
Li, K., Kim, D. J., Lang, K. R., Kauffman, R. J., & Naldi, M. (2020). How should we understand the digital economy in Asia? Critical assessment and research agenda. Electronic Commerce Research and Applications, 44, 101004. https://doi.org/10.1016/j.elerap.2020.101004
Lloyd, M. W. (2020). Desigualdades educativas y la brecha digital en tiempos de COVID-19.
Lopes, J. M., Silveira, P. , Farinha, L., Oliveira, M., & Oliveira, J. (2021b). Analyzing the root of regional innovation performance in the European territory. International Journal of Innovation Science, 13(5), 565-582. https://doi.org/10.1108/IJIS-11-2020-0267
Mathivanan, S. K., Jayagopal, P., Ahmed, S., Manivannan, S. S., Kumar, P. J., Raja, K. T., ... & Prasad, R. G. (2021). Adoption of e - learning during lockdown in India. International Journal of System Assurance Engineering and Management, 2021, 1-10. https://doi.org/10.1007/s13198-021-01072-4
Mathushan, P., & Pushpanathan, A. (2020). Does green innovative practices matter? the effect of green innovation on green entrepreneurship sustainability. Journal of Business Studies, 7(1).
Park, G. H. E., & Tan, B. (2021). The accrual of digital debt. https://aisel.aisnet.org/icis2021/is_implement/is_implement/1
Papaioannou, S. K., & Dimelis, S. P. (2007). Information technology as a factor of economic development: Evidence from developed and developing countries. Economics of Innovation and New Technology, 16(3), 179-194. Doi.org/10.1080/10438590600661889
Pohjola, M. (2000). Information technology and economic growth: A cross-country analysis. Doi.10.22004/ag.econ.295500
Pradhan, R. P. , Mallik, G., & Bagchi, T. P. (2018). Information communication technology (ICT) infrastructure and economic growth: A causality evinced by cross-country panel data. IIMB Management Review, 30(1), 91–103. https://doi.org/10.1016/j.iimb.2018.01.001
Prasad, A. (2020). The organization of ideological discourse in times of unexpected crisis: Explaining how COVID-19 is exploited by populist leaders. Leadership, 16(3), 294-302. https://doi.org/10.1177/1742715020926783
Soete, L., & Freeman, C. (2012). The economics of industrial innovation. routledge. https://doi.org/10.1177/1742715020926783
Song, M., Zheng, C., & Wang, J. (2022). The role of digital economy in China's sustainable development in a post-pandemic environment. Journal of Enterprise Information Management, 35(1), 58-77.
Soto-Acosta, P. (2020). COVID-19 pandemic: Shifting digital transformation to a high-speed gear. Information Systems Management, 37(4), 260-266.
Tan, N. N., Ngan, H. T. T., Hai, N. S., & Anh, L. H. (2022). The impact of digital transformation on the economic growth of the countries. Prediction and Causality in Econometrics and Related Topics, 670-680. https://doi.org/10.1007/978-3-030-77094-5_49
Thompson Jr, H. G., & Garbacz, C. (2011). Economic impacts of mobile versus fixed broadband. Telecommunications Policy, 35(11), 999 - 1009. DOI. 10.1016/J.TELPOL.2011.07.004
Vaslavskiy, Y., & Vaslavskaya, I. (2019). Infrastructure Public–Private Partnership Projects: Budget Consolidation Policy in Russia and Government Expenditures’ Efficiency Increase. In Modeling economic growth in contemporary Russia (pp. 203-232). Emerald Publishing Limited. https://doi.org/10.1108/978-1-78973-265-820191007
Welfens, P. J. (2017). Macro innovation dynamics and the golden age: New insights into Schumpeterian dynamics, inequality and economic growth. Springer. DOI. 10.1007/978-3-319-50367-7
Yousefi, A. (2011). The impact of information and communication technology on economic growth: Evidence from developed and developing countries. Economics of Innovation and New Technology, 20(6), 581-596. https://doi.org/10.1080/10438599.2010.544470
Zhou, Z., Liu, W., Cheng, P., & Li, Z. (2022). The impact of the digital economy on enterprise sustainable development and its spatial-temporal evolution: An empirical analysis based on urban panel data in China. Sustainability, 14(19), 11948.
How to Cite
Pham, N. T., Vo, T. H., Huynh, L. G., & Nguyen, M. H. (2025). The impact of digital transformation on economic growth: A global evidence. Journal of Finance - Marketing Research, 4(1en). https://doi.org/10.52932/jfmr.v4i1en.738