Digitalisation and Economic Growth in G-20 Countries: A Panel ARDL Analysis
| Páginas | 18-30 |
| Fecha | 23 Diciembre 2024 |
| Fecha de publicación | 23 Diciembre 2024 |
| Autor | Harshita Jangid,Debi Prasad Bal,Byomakesh Debata |
| Materia | Ciencias sociales |
J. Technol. Manag. Innov. 2024. Volume 19, Issue 4
ISSN: 0718-2724. (http://jotmi.org)
Journal of Technology Management & Innovation © Universidad Alberto Hurtado, Facultad de Economía y Negocios. 18
Digitalisation and Economic Growth in G-20 Countries:
A Panel ARDL Analysis
Harshita Jangid1, Debi Prasad Bal1*, Byomakesh Debata2
Abstract
e 4th industrial revolution, or Industry 4.0 for short, has been ushered in by technological improvements over the past 30 years. As a result, the
growing trend of digitalization has had a distinctly benecial eect on economic growth, particularly in the banking and nancial sector where
it has increased productivity and eciency due to reduced information asymmetry and by making nancial services more widely available and
reasonably priced for a wider range of people. Keeping in mind the notable benets brought about by rising digital advancements and its impact
on nancial sector, this study aims to show the dynamic relationship between digitalization, nancial inclusion and economic growth for G20
nations. We used the annual data for the time span of 2010 to 2020 for G20 countries and has used panel ARDL approach for the analysis. e
panel ARDL technique reveals a positive correlation between digitalization and long-term economic growth. Conversely, the research ndings in-
dicate a negative relationship between them in the short run. Similarly, we spot an detrimental long-term association between nancial inclusion,
measured as the number of commercial bank branches, and economic growth. e study also comes to the conclusion that, in the short and long
terms, respectively, population and gross-xed capital formation have an impact on economic growth. Further, we have checked the robustness of
our results by using internet usage as proxy for digitalization. e nding in this case proves the robustness of our study. Based on our study, we
suggest that widespread digitalization and nancial inclusion along with the introduction of FinTech might contribute to sustainable economic
growth from a policy perspective.
Keywords: Digitalization, Financial Inclusion, G20 countries, Panel ARDL model, Technological Innovation and Economic Growth
(1) Department of Economics & Finance, BITS Pilani, Pilani Campus
(2) Department of Economics & Finance, BITS Pilani (on leave) and IIT Jodhpur
*Corresponding author: debiprasad.bal@pilani.bits-pilani.ac.in
Submitted: March 13, 2024 / Approved: November 17, 2024
1. Introduction
e growing adoption of cutting-edge digital technologies in the digital
realm, such as blockchain, big data, and the Internet of ings (IoT),
not only boosts productivity and lowers transaction costs, but also ben-
ets consumers and helps get past infrastructure-related obstacles to
nancial inclusion. ese barriers include both physical infrastructure
impediments in the form of the supply of bank branches (Célerier &
Matray, 2019) and also social and cultural impediments (Miller, Re-
ichelstein, Salas, & Zia, 2015), which obstruct the benets of these ser-
vices to reach to communities that varies in education (Carpena et al.,
2019; Lusardi & Mitchell, 2014), ethnicity as well as sex (Sharier, 2016;
2018; Sharier et al., 2020). e term “digital economy” refers to the use
of digitally enabled technologies, such as cloud computing, big data,
ntech, the Internet of ings, and others, to digitally gather, store,
analyse, and share information, giving modern economic activities
greater exibility and agility. To add further, digitalization refers to the
adoption of technological innovations into all areas of the economy and
societythat has altered the way enterprises operate and oer value. Use
of technologies, platforms, and processes that improve eectiveness, in-
novation, and performance is an aspect of this evolution.
Pushing economic progress, increasing the productivity of current
companies and trade, fostering new markets and sectors, and ad-
vancing inclusive and sustainable growth are all made possible by
digitalization. In addition to that, the rising trend of digitalization may
exert a positive inuence on GDP growth and enhanced economic
performance in the form of increased productivity, eciency, and con-
sumption, as well as increased nancial inclusion through better access
to resources, knowledge, markets, increased communication capacity,
and improved infrastructure. Subtle changes have been observed in the
operation and strategies of dierent sectors worldwide because of rap-
idly increasing digital technologies. Digital technology has transformed
the rms’ operations, from e-commerce and online sales to outsourc-
ing business processes (Lacity et al., 2016; Lie and Aron, 2104). e
contribution of digitalization is not only limited to economic growth,
productivity, or eciency; its benets are also transferred toward in-
creasing the scope, scale, and speed of trade. To explain, by digitally
connecting people across the world, digitalization helps the rm to
bring in new products and services, and further, by introducing new
and innovative digital tools, digitalization helps to facilitate payments,
enable collaboration, and so on (Gonzalez, 2022) and this is not only
limited to buying of goods and services but is also extended to the in-
formation and data transmission internationally. In accordance with
the data from October 2023, it was observed that internet users across
the globe have reached 5.3 billion, which is around 65.7% of the glob-
al population. From the use of telecommunication in daily life to the
use of IT technologies and modern digital equipment for production,
agriculture, healthcare, and education to further expanding its role to
labour activities and conducting business using products of scientic
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