Digitalization and economic growth in the MENA region: Evidence from panel data analysis

This study investigates the impact of digitalization on economic growth in the MENA region using balanced panel data from 15 countries over the period 2001–2023. Employing a comprehensive econometric approach—including Fixed Effects, Random Effects, and dynamic panel estimation via System GMM (xtabond2)—the analysis reveals that digital transformation, measured through internet penetration, ICT investment, and digital skills development, has a positive and statistically significant effect on economic growth. Notably, the interaction between internet usage and education underscores the amplifying role of human capital in enhancing the returns to digital infrastructure. Results also highlight substantial cross-country disparities: Gulf countries benefit from advanced infrastructure, institutional maturity, and cohesive digital strategies, while fragile states face structural constraints that limit the diffusion and effectiveness of digital technologies. By integrating infrastructure, education, and governance into a unified empirical framework, the study extends prior global evidence—such as Vu (2011)—and offers region-specific insights into the mechanisms of digital-led growth. The findings call for multi-dimensional policy strategies that combine technological investment with educational reform, institutional strengthening, and regional cooperation. As the global digital economy evolves, MENA countries must leverage these synergies to achieve inclusive, resilient, and innovation-driven development.