DIGITAL TECHNOLOGY AND THE ECONOMIC GROWTH: AN EMPIRICAL EVIDENCE FROM SOUTH ASIA

Abstract

Objective: This paper examines how digital technologies—specifically internet and mobile‐phone penetration—drive economic growth in six South Asian economies over the period 1990–2021. Although broadband access and mobile connectivity have rapidly expanded across the region, the literature lacks a systematic assessment of their long‐run growth effects.

Methodology/Design: We address this gap by assembling a balanced panel of annual data for Bangladesh, India, Pakistan, Sri Lanka, Bhutan and Nepal, and applying panel‐cointegration techniques alongside Dynamic OLS (DOLS) and Fully Modified OLS (FMOLS) estimators. Pedroni, Kao, and Westerlund tests all confirm a stable long‐run relationship among GDP per capita, internet usage, mobile‐phone subscriptions, and key control variables.

Findings: Our results reveal bidirectional Granger causality between digital technology adoption and economic growth, and robustly positive long‐run elasticities: a 1 percent increase in internet users raises per‐capita GDP by approximately 0.15 percent, while a similar rise in mobile subscriptions boosts GDP by around 0.10 percent. These findings underscore the crucial role of affordable, high-quality digital infrastructure in enhancing productivity, fostering entrepreneurship, and improving household welfare.

Policy recommendation: We recommend that South Asian policymakers deepen regional cooperation on broadband expansion, invest in rural connectivity, and adopt regulatory reforms to lower service costs—measures that will help translate digital diffusion into sustained, inclusive economic development.