The digital economy and its impact on economic development in Arab countries

Abstract

To measure progress in the digital economy fields of Arab countries, the Arab Digital Economy Index was adopted, along with its strategic dimensions, as an effective tool to assess the extent to which Arab countries keep pace with global changes. The index showed a gap in digital transformation between Arab countries, as they were divided into (leading countries, promising countries, and countries that need to improve their path). The main objective of this study was to identify the impact of the dimensions of the digital economy represented in (digital government, digital foundations, digital innovation, digital citizen, and digital business) on economic development in Arab countries, expressed in terms of per capita share of the gross domestic product, with inflation and unemployment rates as controlling variables. The quantitative approach was employed by collecting secondary data based on the publications of the Arab Digital Economy Index and the World Bank, and utilizing a cross-sectional time series model (Panel data) as the most suitable for this study in Arab countries during the period from 2017 to 2024. The study concluded that there is a positive impact of each of the digital foundations, digital innovation, and digital citizenship on economic development in Arab countries, while the study also found that there is no impact of digital government and digital business on economic development. The study also presented a set of recommendations, the most important of which is the need to enhance political stability and focus on developing human capital, as well as creating a strong and solid infrastructure that would accelerate digital transformation in the economies of the third group of countries.