DIGITALIZATION-GROWTH NEXUS: SOME EMPIRICAL EVIDENCE FROM FOUR REGIONS WITH A MUSLIM MAJORITY

Year 2023, Volume: 18 Issue: 1, 84 - 85, 15.01.2024

Mehmed Ganic

https://doi.org/10.17261/Pressacademia.2023.1860

Abstract

Purpose- The purpose of this study is to investigate whether regional variations exist in the development of the digital economy and how they impact growth in the four global regions where Muslims predominate.
Methodology- The study employs empirical examination of 48 countries with Muslim majority divided in four regions (Middle East and North Africa region, Europe and Eurasia region, South Asia, East Asia region and the Pacific and Africa region) between 2000 to 2021. The study employs Kao Residual Cointegration Test, and the Long-run Valuation of Fully Modified Ordinary Least Squares (FMOLS/DOLS-Dynamic). A certain number of specific variables in the econometric model will be employed to measure the level of digitization on economic growth, such as: Digital economy infrastructure proxied by Individuals using the internet, Digital economic openness proxied by ICT product exports and Digital technology competitiveness proxied by Research and Development as share of GDP.
Findings- The analysis reveals that despite the fact that the digital economy made a positive contribution to economic growth in both Sub-Saharan Africa and Europe and Euroasia, the impact on these regions is less than that on the Middle East and North Africa, South Asia, East Asia, and the Pacific countries due to the underdeveloped infrastructure of the digital economy The least effect of digitalization on growth was found in Sub-Saharan African countries with low incomes..
Conclusion- Based upon the analysis, it may be concluded that digitalization can considerably boost economic growth, but its benefits may differ depending on how developed a nation is. There is a clear geographical imbalance in the development of the digital economy across 48 nations with a majority of Muslims .To increase overall GDP growth, those countries need to look into policies that will help increase ICT and the digital economy use.

Keywords

Digital economy, economic growth, ICT, the Muslim Word, panel cointegration model

References

• Albiman, M. M., Sulong, Z. (2016). The role of ICT use to the economic growth in Sub Saharan African region (SSA). Journal of Science and Technology Policy Management, 7, 306–29.
• Barefoot K, Curtis D, Jolliff W, Nicholson JR. (2018). Omohundro R. Defining and Measuring the Digital Economy. Washington, DC: US Department of Commerce Bureau of Economic Analysis p.15.
• Becchetti, L., Adriani, F. (2005). Does the digital divide matter? The role of information and communication technology in cross-country level and growth estimates. Economics of Innovation and New Technology, 14(6), 435–453.
• Bukht R, Heeks, R. (2017). Defining, Conceptualising and Measuring the Digital Economy. Development Informatics working paper doi: 10.2139/ssrn.3431732
• Farhadi M, Ismail R, Fooladi, M. (2012). Information and Communication Technology Use and Economic Growth. PLoS ONE 7(11): e48903. doi:10.1371/ journal.pone.0048903
• Gomes, S., Lopes, J. M., Ferreira, L. (2022). The impact of the digital economy on economic growth: The case of OECD countries. Revista de Administração Mackenzie, 23(6), 1–31. https://doi.org/ doi:10.1590/1678-6971/eRAMD220029.en
• Grossman, G. M., Helpman, E. (1991). Innovation and growth in the global economy. MIT Press.
• Kao, C. and Chiang, M.H. (2000) On the Estimation and Inference of a Cointegrated Regression in Panel Data. In: Baltagi, B., Ed., Nonstationary Panels, Panel Cointegration, and Dynamic Panels (Advances in Econometrics), JAI Press, Amsterdam, 161-178. http://dx.doi.org/10.1016/S0731-9053(00)15007-8
• Lee, S. H., Levendis, J., Gutierrez, L. (2012). Telecommunications and economic growth: An empirical analysis of Sub-Saharan Africa. Applied Economics, 44, 461–69.
• Lucas, Jr., Robert, E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(4), 3-42.
• Myovella, G., Karacuka, M., Haucap, J. (2020). Digitization and economic growth: A comparative analysis of sub-Saharan Africa and OECD economies. Telecommunications Policy, 4, 141-156. https://doi.org/10.1016/j.telpol.2019.101856.
• Phillips, P. Moon, H. (1999). Linear regression limit theory for nonstationary panel data. Econometrica, 67, 1057-1111. http://dx.doi.org/10.1111/1468-0262.00070
• Pohjola, M. (2002). The new economy: Facts, impacts and politics. The Journal of Information Economics and Policy, 14, 133–44.
• Pradhan, Rudra P., Mak B. Arvin, and Neville R. Norman. (2015). The dynamics of information and communications technologies infrastructure, economic growth, and financial development: Evidence from Asian countries. Technology in Society, 42, 135–49.
• Romer, P. M. (1994). The origins of endogenous growth. Journal of Economic Perspectives, 8(1), 3-22.
• Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), 221-234.
• Sassi, S., Goaied,M. (2013). Financial development, ICT diffusion and economic growth: Lessons from MENA region. Telecommunications Policy, 37, 252–61.
• Wang, E. H. H. (1999). ICT and economic development in Taiwan: analysis of the evidence. Telecommunications Policy, 23(3), 235-243.
• Williams LD. (2021). Concepts of Digital Economy and Industry 4.0 in Intelligent and information systems. International Journal of Intell Netw. 2:122–9. doi: 10.1016/j.ijin.2021.09.002.
• World Bank (2023). World Development indictors (WDI) databases.
• Zhang J, Zhao W, Cheng B, Li A, Wang Y, Yang N, Tian Y. (2022). The Impact of Digital Economy on the Economic Growth and the Development Strategies in the post-COVID-19 Era: Evidence From Countries Along the "Belt and Road". Front Public Health. May 9;10:856142. doi: 10.3389/fpubh.2022.856142. PMID: 35669751; PMCID: PMC9164196.
• 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, 581–96
• Field, A. (2009). Discovering statistics using SPSS 3rd ed. Thousand Oaks, California, SAGE Pub.
• Finney, J. (1970). Time and again. New York, NY, Simon and Schuster.
• Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. (2010). Multivariate Data Analysis. Seventh Edition. Essex, Prentice Hall.
• Jacksi K. (2015). Design and implementation of online submission and peer review system: a case study of e-journal of University of Zakho. International Journal of Scientific & Technology Research, 4(8), 83-85.
• Norusis, M. J. (1993). SPSS for windows: professional statics. Release 6.0, Chicago: SPSS Inc.
• Nunnally, J. C. (1978). Psychometric Theory (2nd ed.), New York, McGraw-Hill.