Digitalization and economic development: lessons from globalized developing countries
Abstract
Purpose
This paper aims to empirically investigate the dynamic interlinkages among globalization, digitalization and economic development in the top 75 most globalized countries from 2000 to 2019. The selection of the 75 most globalized developing countries is based on the overall scores of the KOF Globalization Index (2021).
Design/methodology/approach
The research design is based on secondary data collected from the World Bank (2021), the International Telecommunication Union (2021) and the KOF Globalization Index (2021). The study uses panel unit root tests followed by the panel cointegration techniques. Further, the estimation uses panel fully modified ordinary least squares and panel dynamic ordinary least squares methods.
Findings
The empirical results reveal that the effect of globalization on economic development is sensitive to different estimation procedures; in some cases, but not in every case, the effect is positive and significant. However, the positive and significant effect of digitalization on economic development is robust across all estimated models. Long-run equilibrium relationships and bidirectional causalities strongly affirm the nexus among globalization, digitalization and economic development, substantiating the interconnectedness among 75 developing economies.
Originality/value
The study reinstates that the forces of globalization and digitalization will be instrumental in shaping the selected most globalized economies in the long run. Adopting various econometric methodologies takes care of the time-specific and cross-sectional dynamics, as evident in the panel framework considered in this study. The empirical findings truly ascertain the theoretical synergy among the forces of globalization leading to more digitalization and economic development. This makes the empirical interplay highly conducive to framing long-term policies to expand the information communication network in terms of its access and reach.
Keywords
Acknowledgements
The authors express their gratitude to the Bank Indonesia Institute and the Asia-Pacific Applied Economics Association for providing them an opportunity to present a previous version of this paper at the 17th Bulletin of Monetary Economics and Banking International Conference. They are heartily thankful to the Guest Editor of the journal Professor Paresh Narayan, the Discussant at the conference Dr Susan Sharma and the anonymous referees of the journal, for offering a variety of highly insightful comments to improve the quality of the paper and also for kindly considering this paper. Useful disclaimers apply.
Citation
Sinha, M., Roy, S. and Tirtosuharto, D. (2024), "Digitalization and economic development: lessons from globalized developing countries", Studies in Economics and Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/SEF-12-2023-0701
Publisher
:Emerald Publishing Limited
Copyright © 2024, Emerald Publishing Limited