Do Digital Technologies Contribute to TFP and Growth in Asia? A Theoretical and Empirical Investigation

The digital revolution in Asia plays as an engine towards sustainable economic growth. The governments of this region are thriving in increasing spending on digital infrastructures that enhance connectivity and ultimately reduce the digital divide. This study theoretically uses simple models to show the contribution of digital technologies to growth and total factor productivity (TFP). Furthermore, this study empirically explores the nexus between the dependent variables [log of gross domestic product (GDP) per capita and TFP] and explanatory variables [e-government index, information communication technology (ICT), e-participation index, online service index, human capital index, telecommunication index and institutions] for 47 Asian countries across the period 2002–2023 by using the fixed effects (FE) model. Analysis is constructed for all Asian countries, advanced Asian economies [countries with gross national income (GNI) per capita <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" display="inline" overflow="scroll"> <mml:mo>≥</mml:mo> <mml:mi>$</mml:mi> <mml:mn>4,516</mml:mn> </mml:math> ] and low-income Asian economies (countries with GNI per capita <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" display="inline" overflow="scroll"> <mml:mo>≤</mml:mo> <mml:mi>$</mml:mi> <mml:mn>4,515</mml:mn> </mml:math> ). On average the results show that ICT raises the living standards (GDP per capita) in all three groups. ICT increases TFP in all three groups. JEL Classification: D2, F2