The Role of Digitalization in Alleviating Poverty across Developing Economies

Abstract

This study examines how digitalization and macroeconomic conditions jointly shape inclusive development in the Global South. Using an unbalanced panel of up to 85 developing and emerging economies over 1995–2024, it constructs a composite Digitalisation Index and estimates three structural equations for poverty. Fixed-effects, random-effects and two-stage least-squares estimators address unobserved heterogeneity and endogeneity, while interactions with institutional quality and energy structure capture context dependence. Results show that higher digitalisation significantly reduces poverty and raises real GDP per capita, with the largest gains in low- and lower-middle-income economies and where governance is stronger and financial systems are deeper. The findings underline that digital and green transitions must be sequenced and co-ordinated to deliver inclusive, sustainable development, and they provide comparable elasticities for theory and policy.