Digitalisation and Economic Growth: Evidence from Leading E-Commerce Economies

Abstract

This study investigates the impact of digitalisation on economic growth across ten major e-commerce economies over the period 1995 to 2024. Grounded in endogenous growth theory, innovation diffusion theory, and the digital economy framework, the study examines how information and communication technology and e-commerce contribute to economic expansion alongside traditional macroeconomic factors. A quantitative panel data approach is employed using panel least squares estimation to capture both cross-sectional and time-series variations. The model incorporates key variables including investment, unemployment, inflation, information and communication technology, e-commerce, and economic openness, allowing for a comprehensive assessment of both technological and macroeconomic influences on growth. The empirical findings reveal that digitalisation plays a significant and positive role in enhancing economic growth. Information and communication technology and e-commerce both exhibit positive and statistically significant effects, with e-commerce emerging as a particularly strong driver through its ability to expand market access, reduce transaction costs, and improve efficiency. Investment also shows a positive and significant contribution, reinforcing the importance of capital accumulation in supporting digital transformation and productivity gains. In contrast, unemployment and inflation exert negative and statistically significant effects, indicating that macroeconomic instability and labor market inefficiencies hinder economic performance. Economic openness further contributes positively to growth by facilitating trade, competition, and technology transfer. Overall, the results underscore that digitalisation acts as a critical engine of economic growth when supported by stable macroeconomic conditions and complementary policies. The findings highlight the importance of investing in digital infrastructure, promoting e-commerce development, and maintaining economic stability to fully realize the growth-enhancing potential of digital transformation in modern economies.