DefinePK

Abstract

In recent decades, the digital economy has played a pivotal role in driving global economic growth. Developing countries in Asia also fuel their economic development through the digital economy. However, these countries have inefficient technical infrastructure, limited access to modern technology, and inadequate investment in innovation and communication. Therefore, this study was conducted to empirically explore the determinants of the digital economy in Asia's developing countries from 2001 to 2021. The results of diagnostic tests suggest the use of a cross-sectionally augmented autoregressive distributed lags (CS-ARDL) model. The results of the CS-ARDL show that technical infrastructure is statistically significant in both the short run and the long run. When technical infrastructure increases by 1 percent, the related outcome increases by 0.61percent.  However, in the short run, all other variables, such as access to modern technology, return on telecom investment, and technological innovations, have statistically insignificant effects. However, these variables play a crucial role in the long run, like return on telecom investment has a strong positive effect with a coefficient of 0.25, technological innovation has a coefficient of 0.20, and modern technology access has a negative coefficient of -0.30, but significant, and shows that extensive access might seem helpful at first, but leads to oversaturation. The result also shows that the model is dynamically stable, and any short-run disequilibrium can be corrected in the long run. Ultimately, the study presented several valuable suggestions for policymakers.