<p>This study investigates the correlation effect between digitalization indicators and economic growth in the Middle East and North Africa (MENA) region between 1990 and 2023, focusing on the moderating role of foreign direct investment (FDI) and urbanization. Using panel data across 15 MENA countries, the analysis explores how internet penetration, fixed broadband subscriptions, mobile cellular subscriptions, and ICT goods exports influence GDP per capita. Guided by Endogenous Growth Theory (EGT), Technology Spillover Theory (TST), and the Urbanization-led Growth Hypothesis (ULGH), the study employs fixed effects estimation, fixed effects with Driscoll-Kraay standard errors, and panel-corrected standard errors (PCSE) to account for heterogeneity, serial correlation, and cross-sectional dependence. The results show that internet penetration significantly promotes economic growth, while fixed broadband subscriptions exhibit a negative relationship. Mobile subscriptions and ICT exports yield mixed or statistically weak results depending on the model specification. Urbanization demonstrates a complex role, exerting both positive and negative interactions with digitalization variables, while FDI moderates the digitalization-growth nexus in limited ways. Particularly, internet use interacted positively with FDI, but broadband-FDI interactions displayed negative coefficients. The findings highlight that digitalization contributes to economic growth in MENA. However, its effectiveness depends on structural conditions such as urban density and capital inflows. The study further underlines that digitalization’s developmental contributions in MENA cannot be evaluated only through economic growth; it must be assessed against broader imperatives of social inclusion, institutional resilience, and environmental responsibility. Therefore, policymakers are advised to invest in digital infrastructure as well as in complementary institutions and urban management systems to maximize economic gains from digitalization.</p>

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Digitalization and Economic Growth: The Moderating Roles of FDI and Urbanization in the MENA Region

  • Abdelhak Senadjki,
  • Au Yong Hui Nee,
  • Vikniswari Vija Kumaran,
  • Iddrisu Mohammed Awal,
  • Saliha Djouahra

摘要

This study investigates the correlation effect between digitalization indicators and economic growth in the Middle East and North Africa (MENA) region between 1990 and 2023, focusing on the moderating role of foreign direct investment (FDI) and urbanization. Using panel data across 15 MENA countries, the analysis explores how internet penetration, fixed broadband subscriptions, mobile cellular subscriptions, and ICT goods exports influence GDP per capita. Guided by Endogenous Growth Theory (EGT), Technology Spillover Theory (TST), and the Urbanization-led Growth Hypothesis (ULGH), the study employs fixed effects estimation, fixed effects with Driscoll-Kraay standard errors, and panel-corrected standard errors (PCSE) to account for heterogeneity, serial correlation, and cross-sectional dependence. The results show that internet penetration significantly promotes economic growth, while fixed broadband subscriptions exhibit a negative relationship. Mobile subscriptions and ICT exports yield mixed or statistically weak results depending on the model specification. Urbanization demonstrates a complex role, exerting both positive and negative interactions with digitalization variables, while FDI moderates the digitalization-growth nexus in limited ways. Particularly, internet use interacted positively with FDI, but broadband-FDI interactions displayed negative coefficients. The findings highlight that digitalization contributes to economic growth in MENA. However, its effectiveness depends on structural conditions such as urban density and capital inflows. The study further underlines that digitalization’s developmental contributions in MENA cannot be evaluated only through economic growth; it must be assessed against broader imperatives of social inclusion, institutional resilience, and environmental responsibility. Therefore, policymakers are advised to invest in digital infrastructure as well as in complementary institutions and urban management systems to maximize economic gains from digitalization.