The association between digital divide and economic growth: Evidence from 81 developing countries

This study investigates the impact of the digital divide on economic growth in 81 developing countries from 2016 to 2023. In the context of an accelerating global digital transformation, digital divide is conceptualized as a barrier limiting individuals’ access to technology, knowledge capital, and development opportunities, thereby hindering productivity, innovation, and economic integration. Addressing the gap in macro-level evidence, this paper constructs a Digital Divide Index (DDI) that captures disparities in digital access and usage. Using panel data from 81 developing countries, the study applies fixed effects and random effects models to examine the relationship between the DDI and gross domestic product per capita (GDPPC). The empirical results show that digital divide is negatively associated with economic growth, while foreign direct investment, domestic capital formation, trade openness, and government effectiveness positively influence growth. Robustness tests with lagged variables and heterogeneity analysis results confirm that the negative influence of digital inequality is extant across regions, though its magnitude may differ. These findings suggest that narrowing digital divide through investments in information and communication technology infrastructure, digital literacy, and institutional efficiency is essential for achieving sustainable and inclusive growth in developing economies.