Digital economy dynamics: propelling FDI and GDP growth in developing nations through mobile and broadband innovation

Abstract

Abstract

This study examines how the digital economy, including mobile subscriptions (MOB), internet penetration (INTR), and 4 G availability, affects macroeconomic outcomes in developing countries. We use Ordinary Least Squares, two-step fixed effects, and the System Generalised Method of Moments (GMM) to address endogeneity. We look at panel data from 90 developing countries (42 low- to middle-income and 48 upper-middle-income) from 2000 to 2023. Our research shows that MOB, INTR, and 4 G significantly positively affect GDP and FDI, especially in low- to middle-income countries, and the effects are even more substantial during the COVID-19 crisis. Quantile regression shows that lower FDI percentiles have more potent effects, highlighting the importance of digital infrastructure in less developed markets. Robustness checks indicate that the results are consistent. Based on the Resource-Based View and Endogenous Growth Theory, this study provides new insights into how digital infrastructure affects the economy and suggests ways for policymakers to improve connectivity, institutional quality, and resilience to encourage long-term growth and investment in developing economies.