How does digitalization affect the urban-rural income gap? A study using panel fsQCA and NCA in developing economies

Against the backdrop of the accelerating wave of global digitalization, digitalization is considered a key opportunity to bridge the urban-rural income gap in developing economies. However, existing research conclusions on this topic are fragmented and inconclusive. Based on a configurational theory perspective, this study combines panel fuzzy set qualitative comparative analysis (fsQCA) and necessary condition analysis (NCA) to examine sample data from 96 developing economies between 2013 and 2021. It aims to reveal the diversified digitalization development pathways that drive the reduction in the urban-rural income gap. This study identifies three distinct yet equifinal digitalization-empowered models that effectively narrow the urban-rural income gap: (1) digital transplantation based on comprehensive development, (2) technology-economy dual-drive model based on economic prosperity and good governance, and (3) comprehensive digitalization based on economic prosperity and openness. Further analysis reveals that several dimensions of digital transformation play universally positive yet distinctly characterized key roles. Moreover, the configurational mechanisms exhibit “completeness” and “substitutability” logic, the “Matthew effect” across different economies, and specific spatio-temporal characteristics. These findings deepen the theoretical understanding of the complex causal relationship between digitalization and the urban-rural income gap, offering important empirical evidence and policy implications for developing economies and international organizations in formulating more targeted and effective digitalization strategies to promote coordinated urban-rural development.