Digitalization, Globalization and Economic Growth: A Panel Analysis using GMM

In the context globalization, this study analyzes the influence of digitalization on economic growth in 120 countries from 2000 to 2020 and we use the generalized methods of moments (GMM) estimators. The empirical findings showed that digitalization has a negative impact on economic growth, while the quadratic term of digitalization positively influence the economic growth. Therefore, the existence of a U-shaped relationship between digitalization and economic growth. Initially, digitalization thwarts economic growth. Once it reaches a certain level, digitalization will boost economic growth. In addition, the finding also shows that the negative effect of globalization on economic growth. However, the interaction effect of digitalization and globalization, that is digitalization mitigates the negative effect of globalization on economic growth, implies that digitalization moderates the detrimental effect of globalization on economic growth. These results are particularly interesting as the promote globalization through digitalization has created more advanced technologies to accelerate economic development in the countries. The policy implications of this study suggest that approach the global level and realizing opportunities for the industry to leverage digitalization, integrate digitalization into the workplace and provide better knowledge of digital infrastructure will improve economic performance in the digital economy era. Furthermore, the findings provide a basis for policymakers to better formulate policies to achieve the Sustainable Development Goals (SDGs).

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