The Role of Digital Connectivity in Economic Growth under Global Economic Uncertainty: Evidence from ASEAN Countries

Abstract

Purpose: This empirical study investigates the influence of digital connectivity on economic growth amidst global economic uncertainty in ASEAN countries, and examines its potential moderating effect on the relationship between global economic uncertainty and economic growth.

Design/methodology/approach: The analysis utilizes balanced panel data from seven ASEAN countries spanning the period 2011–2024. Economic growth is quantified using the natural logarithm of GDP, digital connectivity is represented by the percentage of Internet users in the population, and global economic uncertainty is measured by the World Uncertainty Index (WUI). The Random Effects Model was selected as the most suitable estimation method, based on the results of the Chow, Hausman, and Breusch–Pagan Lagrange Multiplier tests. HC1 heteroskedasticity-consistent robust standard errors were employed following the detection of heteroskedasticity and serial correlations through diagnostic tests.

Findings: The findings indicate that digital connectivity exerts a positive and statistically significant impact on economic growth, while global economic uncertainty does not have a significant direct effect. Furthermore, the interaction between digital connectivity and global economic uncertainty is found to be insignificant, suggesting that digital connectivity does not moderate the relationship between global economic uncertainty and economic growth.

Practical implications: These results imply that enhancing digital infrastructure and improving Internet accessibility are crucial for promoting sustainable economic growth in ASEAN, although digitalization alone is inadequate to counteract the negative effects of global economic uncertainty. Originality/value: This study contributes to the literature by providing recent evidence that digital connectivity acts as a direct catalyst for economic growth rather than a moderating mechanism under conditions of global economic uncertainty in ASEAN countries.

Paper type: Empirical.