Does Digitalization Increase Economic Growth? Evidence from SADC Countries

Abstract

The fourth industrial revolution has contributed significantly towards the growing global technological transfers that enhance productivity, employment and standard of living. The outbreak of the COVID-19 pandemic has undeniably disrupted lives globally; however, it enhanced technological transformation by causing an abrupt shift towards digital technology usage. The development and diffusion of digitalisation is expected to drive economic growth as we move towards the 2030 Sustainable Development Agenda. This study examines the impact of digitalisation on economic growth for 14 Southern African Development Community (SADC) countries from 2000 to 2020 employing the Fixed Effects model. Results reveal that all digitalisation indicators employed tend to have a positive impact on economic growth. A percentage change in individual usage of information communication technologies (ICTs), fixed broadband subscriptions, and mobile cellular subscriptions leads to a 0.17%, 0.11% and 0.12% increase in GDP per capita, respectively. Therefore, usage of and access to digital technologies stimulate economic growth in the SADC region. Public policies should seek to  stimulate private sector investments in technological infrastructure and liberalise the telecommunications and innovation market. This accelerates digitalisation and consequently leads to higher economic growth and development in the SADC region.