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Article

Dynamic Influence of Digital and Technological Advancement on Sustainable Economic Growth in Belt and Road Initiative (BRI) Countries

by
Sainan Zhao
1,
Yichao Zhang
2,
Huma Iftikhar
3,
Atta Ullah
3,4,
Jie Mao
5 and
Tiantian Wang
6,*
1
School of Business, Geely University of China, Beijing 102202, China
2
National Financing Guarantee Fund, Beijing 100010, China
3
School of Management, Huazhong University of Science and Technology, Wuhan 430074, China
4
Department of Business Administration, ILMA University, Karachi 75190, Pakistan
5
Chengdu Academy of Social Sciences, Chengdu 610023, China
6
Business School, Jishou University, Jishou 410000, China
*
Author to whom correspondence should be addressed.
Sustainability 2022, 14(23), 15782; https://doi.org/10.3390/su142315782
Submission received: 17 October 2022 / Revised: 3 November 2022 / Accepted: 18 November 2022 / Published: 27 November 2022
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Abstract

:
Digital and technological transformation has gained significant attention not only due to the exposure of the latest technologies but also due to its considerable impact on sustainable economic growth. This research determines the influence of digital and technological advancement on sustainable economic growth. Digital and technological advancement is composed of three variables; E-government Development Index (EGDI), Internet Users’ (IU) growth, and information and communications technology (ICT) exports. Besides that, the urbanization and unemployment rate have been considered as control variables. The dataset consists of the year 2004–2020 for 21 Asian region partner countries along Belt and Road (BRI) region. The conclusions of the two-step system GMM were validated through the D-K fixed effect regression technique. Findings indicate that increase in EGDI, ICT exports, and internet users’ growth has a significant and positive influence on sustainable economic growth which leads that digital and technological advancement having a positive influence on sustainable economic growth. Moreover, urbanization has a partial positive impact, while unemployment has a negative influence on sustainable economic growth as Asian regions are emerging economies and the rate of unemployment is very high, which is affecting the real GDP per capita. It is evident and suggested that improvement in the EGDI index, internet users’ growth, ICT exports, and reduction in the unemployment rate would enhance the balanced sustainable economic growth for all Asian countries of the BRI region.

1. Introduction

The digital and technological advancement initiated after the invention of the first electronic computer during the Second World War. The capacity for data storage and speed of data processing improved multiple times in the next decade. In the 80’s, public administration, universities, research centers, military service, SMEs and households started using computers. In the 90’s, the next impulse of digital and technological advancement approached with the growth of the internet, telecommunication, robots, and artificial intelligence [1]. Now, countries are categorized into developed/developing countries based on technology and innovation. Manual labor has been replaced in most aspects of life by the latest technology. It has become impossible to spend life in offline mode [2]. Digital innovations have enhanced the standard of living, productivity, and the rate of employment [1]. Digital and technological advancement is a procedure of transformation and it has a key influence on individuals and all practices. It engenders speed, efficacy, production, and a decline in the rate of errors. It is beneficial for performance and economic growth and these gains are also reflected in brand, reputation, and competitiveness. It is not only changing the ways of communication, but it has also replaced the way people work and live. It increases access to education, finance, and jobs. It creates the common platforms for e-government services, social networks, and e-commerce. Digital and technological advancement is a term with many variables, so it is very difficult to define [2].
Digital and technological advancement has been accelerated after the COVID-19 pandemic as it has given motivation to work online [3]. COVID-19 has augmented digital advancement not only in organizations but also in public entities and the lives of individuals. However, digital and technological advancement has helped countries to maintain normal operations during COVID-19 pandemic. COVID-19 was observed as a “great accelerator” in changing business strategies, lifestyle, and work patterns [4]. In fact, COVID-19 worked as a “catalyst” for the adoption of latest technologies in work organizations. Recently, the digital and technological advancement has gained substantial attention in our economy from academics to legislators. It has gained attention due to exposure of big data, artificial intelligence, new technologies and its impact on our society and economy [5]. It signifies a general-purpose technology which could be beneficial for economic activities as it can be applied in public administration, scientific research, and military services [1]. Latest technologies have shifted the organizations to remote and paperless operations [4]. The concept of digital and technological advancement has gained significant attention after the exposure of its influence on the economy [6]. Moreover, Mshvidobadze and Ginta [7] exhibited that stimulating the development of ICTs has noteworthy prospects for motivating digital and technological progressions in all domains of society, economy, and growing GDP. Further, Mondejar et al. [8] stated that digitalization is a step towards a smart green planet and sustainable development goals. Digitalization has great potential for socio-economic development as technology has spread its wings in all spheres of the life and it been helpful in communicating, connecting, and empowering people [9].
China initiated the BRI project in 2013 to connect Asia with Europe and Africa as shown in Figure 1. Currently, BRI is covering more than 100 countries including 21 Asian region economies. The main purpose of BRI project was to boost sustainable economic development in the region [10,11,12]. All BRI countries have different ratios of economic growth, geographical area, and endowment resources. BRI project has five key priorities: unrestricted trade, infrastructure connectivity, policy harmonization, financial integration, and people connections [11]. It has been predicted that BRI would be the biggest infrastructure project in human history till 2049, having a worth greater than US$8 trillion [13]. Foreign direct investments promote technological processes [14] so the BRI project is essential for enhancing trade and sustainable economic growth in the world. As most of the Asian countries are developing economies so if the Asian countries of BRI region would accomplish the targets of sustainable economic growth then it would be beneficial for the whole world [15].
The overall trend of the world has changed from GDP growth to sustainable economic growth as it is a growth that is maintained without creating economic issues for future generations. It is a positive deviation in the creation of services and goods in an economy (Dvorský, Petráková, Ajaz Khan, Formánek, & Mikoláš, 2020). It is determined by the real GDP (Gross Domestic Product) per capita [2,16]. The rate of urban development is increasing in the Asian region of BRI countries and situation of unemployment is getting worst in developing countries [17] which are also affecting the sustainable economic growth.
Previous researchers have focused on developed countries, especially European countries to measure the influence of digital and technological advancement on sustainable economic growth [2,18]. Most of the previous researchers have measured the impact of digital and technological advancement at the enterprise level [7,18] and suggested measuring the impact of digital and technological advancement on the economic growth of the countries and their groups [18] as level of digitalization varies amongst all the enterprises of a country, each country, and a group of countries. Previous studies have measured digitalization with ICT exports only [1,6,18].
The novel conception of this research contributes to the domain of digital and technological advancement and BRI economies in many ways; this is the first study that has considered the Asian countries of BRI region to measure the impact of digital and technological advancement on sustainable economic growth. The BRI region includes Asian, European, and African countries but this research only focused on Asian countries as the maximum Asian countries are low and middle-income/developing countries. Most of the previous studies were done for developed countries. Developing countries especially rural areas in developing countries face institutional constraints such as poor telecom networks, regulatory framework, and poor internet infrastructure [4] so developing countries were considered for this research. These factors especially good institutional quality is mandatory for innovation [19]. The Asian countries of BRI include emerging economies which are quite different from developed economies in terms of technology, employment structure, income distribution, productivity, economic growth, and usage of resources but these countries have a vast territory, urbanization, rapidly growing population, and rapid economic growth. Secondly, our digital and technological advancement index is comprised of three variables; E-government Development Index (EGDI), internet users’ (IU) growth, and information and communications technology (ICT) exports which were not considered in any previous study.
Previous researchers have measured digital and technological advancement with the number of patents or ICT Exports only. All 3 variables can play a significant role for digital and technological advancement. The first variable EGDI encompasses the e-participation index in online services, e-government ranking of the country, infrastructure index of telecommunication, and human capital index. Thus, e-government is the most remarkable and appropriate contributing element, emphasizing human capital and the latest technologies. It can efficiently react to alterations in a country’s vital circumstances, regional development, and transparency. Furthermore, it can provide assistance to legislators for a path to accomplish sustainable economic growth. The second variable is ICT exports which increase developed countries’ productivity, human development, the diffusion of knowledge, and trade performance. An increase in ICT products provides stimulation impact for developing countries to overcome poverty and increase productivity as per the World Bank [20]. The third variable is internet users’ growth as people are getting more inclined towards new technologies and the usage of the internet to be updated within this digital world. This knowledge of advantaged technology has an impact on sustainable economic growth [16]. As digital and technological advancement changes economic policies, international economic relationships, productivity, etc. So, it is very important to find out how EGDI, ICT exports and internet users’ growth have affected sustainable economic growth. Third, the research would be beneficial for local governments, policymakers, and economists to make investments in the domain of digital and technological advancement as it is the first contributing research for the Asian region BRI countries with these comparatively novel variables. The research work also extends the current literature on ICT exports, EGDI, internet users’ growth, urbanization and unemployment rate regarding sustainable economic growth.
The primary goal of this research is to measure the effect of digital and technological advancement on sustainable economic growth from 2004 to 2020 by using panel data for 21 BRI countries of the Asian region by highlighting how the e-government development index (EGDI), internet users’ growth, and ICT export contribute to sustainable economic growth based on the rate of change of real GDP. As computers and robots are taking over people so how would the rate of unemployment affect sustainable economic growth? As the urbanization rate is increasing in BRI regions to boost trade but it is equally important to measure that what would be the influence of rapid urban development on sustainable economic growth? The structure of the research is as follows; the purpose of the study has been clarified in chapter one. Chapters two and three coverthe Literature review and methodology. Chapters four and five contain the discussion of results and conclusion respectively. Chapter six includes the research limitation and future research directions.

2. Literature Review and Research Hypotheses

Numerous definitions of digital and technological advancement have been recommended over time. Digitalization was defined by [21] as the influence of digital media on modern social life and digital communication. Digital and technological advancement integrates digital technologies in industry and produces financial development. It can be defined from an alternative viewpoint to grow business in a digital environment. It can also be defined as to transform communications, interactions, business models, and business functions into digital data, which is generally compacted into a mixture of the physical and digital, e.g., industrialization of production or integrated marketing with a mix of manual and semi-autonomous operations, Omni-channel customer service, electronic services, and autonomy, etc. Cultural change is obligatory for the digital and technological transformation, as it mainly depends on human resources rather than digital technology. Digitalization can be also described as “the workforce works differently” [2]. Also, Georgescu, et al. [2] discovered how digitalization has influenced economic growth. The dataset was based on Eurostat and the World Bank. Results showed that digitalization affected economic growth by 70.33% with a correlation of 0.800. Besides that, Brodny and Tutak [18] measured the impact of the level of digitalization on economic growth amongst enterprises of EU-27 countries. It was suggested that EU-27 member states should take a decisive approach to financing R&D activities. Further, Hosan, et al. [16] established the link amongst digitalization, energy intensity, demographic dividend, and sustainable economic growth from 1995 to 2018 for 30 developing countries. Digitalization was measured by internet users’ growth and its impact was found positive on per capita GDP. The association between E-government Development Index (EGDI), ICT exports, internet users’ growth, urbanization, and unemployment rate with sustainable economic growth is further explained with the support of relevant literature.

2.1. Relationship amongst E-Government Development Index (EGDI) and Sustainable Economic Growth

Recently, EGDI has gained a lot of attention from policymakers, economists, and researchers. There is a relatively low chance of corruption in e-government than in simple government. E-government sets up a relationship of trust between the government and citizens. The achievement of different government policies depends on the cooperation of citizens which can be achieved through trust in public policies. E-government contributes to enhance the per capita growth of a country by enhancing the efficiency of public sectors. E-government is more efficient and accountable than conventional government. As per [22], e-government denotes the implication of ICT by government to deliver better services and refined information to people.
Moreover, Ullah, et al. [23] has classified the e-government evolution into five stages shown in Figure 2. The first and second stage focus on technology. The first stage is related to information exchange by adopting modern ICT facilities. The second stage is relevant to the automation of financial transactions. The focus of the third stage is public administration-related matters as it emphasizes on delivering government services, shared information, and administrative reforms. E-government research turned toward technology adoption in the fourth stage as it focuses on adoption methods and barriers to adoption. Fifth stage of e-government is about citizen perceptions e.g., service quality, online services, and technological transformation and digital platforms.
In addition, Malik, Majeed and Luni [24] explored the e-government and economic growth nexus from 2003 to 2010 by employing large panel data of 154 countries globally. The outcomes showed that e-government was an essential tool for the country to boost economic growth. Likewise, Malik and Majeed [25] considered internal trade as a mediator and presented additional evidence about the influence of EGDI on sustainable economic growth. The dataset covered 147 countries worldwide. They stated that worldwide economies can get benefited from trade if satisfactory quality of EGDI is guaranteed. EGDI coefficient indicated that a 1% rise in quality of EGDI increases economic growth about 1.06%. The cross term of trade and e-government was found positive and significant, which denotes that e-government is also contributing to economic growth through trade. Trade is reinforcing the positive influence of EGDI on economic growth. So, a rise in EGDI adaption escalates to high sustainable economic growth. Recently, EGDI has attracted attention as it is playing a vital role in sustainable economic development.
H1. 
E-government Development Index (EGDI) has a statistically significant and positive influence on sustainable economic growth.

2.2. Internet Users’ Growth and Sustainable Economic Growth

Internet users’ growth has been considered a major part of digital and technological advancement as it accelerates the sustainable economic growth of the nation by boosting the development of new business models and the acceptance of innovation. Also, Nardotto, Valletti and Verboven [26] indicated that the degree of internet usage determines economic growth. Alternatively, an increase in sustained economic growth can accelerate the degree of internet usage. Furthermore, Rangkakulnuwat and Dunyo [27] estimated the influence of internet usage on the economic development of South Africa from 2003–2014 by using constructed data set of 19 African countries. The outcomes indicated that internet usage had a significant positive influence on economic growth while it is complementary to technology and physical capital. Besides that, Bardesi [28] examined and evaluated the influence of Internet usage on economic development from 1994 to 2018 for Saudi Arabia by utilizing the ordinary least squares (OLS) model. The outcomes indicated that there is an association amongst the GDP growth rate and the number of internet users. Based on the literature review, our proposed hypothesis is;
H2. 
Internet users’ growth has a statistically significant and positive influence on sustainable economic growth.

2.3. ICT Exports and Sustainable Economic Growth

Recently, advancements have been observed in information-based technological development, so ICT exports’ share has been very important in the GDP of the country for both advanced and emerging economies. According to Nasab and Aghaei [29] explored the impact of ICT exports on economic growth from 1990–2007 for OPEC member countries by using the GMM technique. Results showed that the average GDP per capita would enhance by 0.2% with a rise of 10% in ICT investments. (Ishida, 2015) presented that ICT export growth enhanced the economic growth by enhancing service delivery efficiency, employment, and education for Japan from 1980–2010. Besides, ICT export growth was observed due to an acceleration in economic growth. Furthermore, Sinha [30] investigated the causal linkage amongst ICT exports, CO2 emissions, internet usage, and economic growth for 28 OEDC economies from 1991 to 2015. The level of infrastructural development of a country is determined by ICT to a great extent. Exporting ICT goods, ICT services and creation of ICT infrastructure contribute to the economic growth of a country. Also, Lukas and Raeskyesa [6] analyzed the effect of digitalization on economic growth from 1999 to 2014 for eight middle-income ASEAN countries by using panel regression analysis. The GDP per capita growth was dependent variable and ICT indicators, human capital, and physical capital were independent variables. Results indicated that ICT indicators have a significant and positive influence on economic growth, beside human capital and physical capital. The intensity and the usage of ICT have a greater influence as compared to the access to ICT. Apart from that, Žarković, et al. [31] explored the impact of ICT exports on sustainable economic development for old and new EU countries from 2000-2020 by using the PMG and ARDL models and the result proved that ICT exports positively affected economic growth. Based on the literature review, our proposed hypothesis is as follows.
H3. 
Information and communications technology (ICT) export has a statistically significant and positive influence on sustainable economic growth.

2.4. Control Factors

2.4.1. Urbanization and Sustainable Economic Growth

As per the United Nations, urbanization denotes the level of the urban population relative to the overall population [32]. The urbanization offers prospects for urban population proximity, marketplace competition, and diversity [33]. More and more people are shifting to urban areas from rural areas. Digital agriculture has also promoted urbanization [34]. Rapid urbanization leads to economic growth, but it is responsible for global environmental burdens and other climate change-related risks. Urbanization raises water and waste pollution, resource overconsumption, and improper land-use design, so urban management is mandatory to control such issues [35]. Furthermore, Turok and McGranahan [36] stated that it is a policy concern to establish the association amongst urbanization and development, specifically in Asia and Africa. The main findings suggested that the development would have an impact on urbanization and the magnitude of agglomeration economies is very inconstant. Size of the city and productivity, or urbanization and economic growth doesn’t have linear association. Likewise, Nguyen and Nguyen [37] examined the association amongst urbanization and economic growth for ASEAN countries from 1993-2014 by using Driscoll and Kraay, FE, RE, PMG, and D-GMM methodologies. The dataset consists of seven ASEAN economies: Vietnam, Brunei, Malaysia, Indonesia, Philippines, Cambodia, and Thailand. The outcomes exhibited that there is a causal link amongst urbanization and economic growth and urbanization has a positive influence on economic growth. Yet, non-linear association exists amongst urbanization and economic growth. Urbanization may obstruct economic growth after reaching to threshold value which is 67.94% for the dynamic model and 69.99% for the static model. Economic growth can be accelerated by urbanization, but it would be determined by investments in appropriate public infrastructure and establishment of favorable institutions. Based on the literature review, our proposed hypothesis is;
H4. 
Urbanization has a positive impact influence on sustainable economic growth.

2.4.2. Unemployment and Sustainable Economic Growth

According to the Sirah and Atilaw [17] stated that the situation of unemployment is getting worst in developing countries and the rate of unemployment is also increasing in developed countries because of an unbalanced association amongst rapid unemployment growth and the rate of economic growth. The COVID-19 pandemic has inflated this instability in Ethiopia. The need for the labor market depends on the rate of economic growth. Alternatively, the unemployment rate/loss of jobs increases due to an economic recession. This research concluded that the rise in unemployment rate is reducing economic growth. Similarly, Hjazeen, Seraj, and Ozdeser [38] investigated the influence of unemployment rate on the economic growth of Jordan from 1991–2019 by using the ARDL (auto-regressive distributed lag) model to examine the association amongst the other variables and unemployment rate. The results specified a long-term association amongst the unemployment rate, urbanization, education, economic growth, and the female populace in Jordan. The outcomes presented a negative relationship between unemployment rate and economic growth. Based on the literature review, our proposed hypothesis is;
H5. 
Unemployment has a statistically significant and negative influence on sustainable economic growth.
The extensive body of the literature reviewed above has focused on the important contributions of other scholars. The strategic importance, drivers, and challenges of all the variables used in this study have been discussed in the literature review. Accordingly, the importance of EGDI, ICT Exports, and Internet users’ growth has been highlighted. The first and perhaps most important gap this research explored is that researchers have not investigated the digital and technological advancement impact on SED. No previous study has considered EGDI, ICT Exports and Internet users’ growth as parameters of digital and technological advancement as only number of patents or ICT exports were considered as proxy for digital and technological advancement. So, we are taking different proxies for digital and technological advancement and measuring their impact on sustainable economic development.

2.5. Data and Measurement

The aim of this research was to measure the impact of digital and technological advancement on sustainable economic growth based on 21 BRI countries of the Asian region and data collected from 2004 to 2020. Based on Gross National Income (GNI) per capita, the World Bank [39] categorized the worldwide economies into four main groups; high- income economies; low-income economies; lower-middle-income economies; and upper-middle-income economies. Amongst the 21 Asian countries of the BRI region, fifteen countries including Mongolia, Pakistan, India, Bangladesh, Nepal, Cambodia, Indonesia, Sri Lanka, Laos Lao PDR, Myanmar, Philippines, Bhutan, Vietnam, Kyrgyzstan, and Tajikistan have been classified as low-middle-income economies. Four countries including China, Malaysia, Thailand, and Kazakhstan have been classified as upper-middle incomes economies group. Two countries including Brunei and Singapore are in high-income economies group. Control factors include urbanization, and the unemployment rate. The rate of change of real GDP was used to measure sustainable economic growth (dependent variable), which was provided by the World Bank. This proxy followed for sustainable economic growth was recommended by [2,16,40,41]. EGDI was used as an independent variable which was established on the UN e-knowledge database survey report of EGDI for each country. EGDI was established on the index of digital and technological infrastructure, human capital, and online services. This proxy of EGDI was recommended by [42,43,44,45]. The independent variable, information and communication technology (ICT) export was determined by the percent of total goods exports which was provided by United Nations (UN). This proxy was used by [46]. The independent variable, Internet users’ growth was measured by Internet users’ growth percent of population which was provided by World Bank (WB). Furthermore, other factors contain urbanization and unemployment rate. According to United Nations (UN), every country has its own urbanization standards due to national differences between rural and urban characteristics. Urbanization denotes the extent at which the urban community is expanding [32]. This proxy was used by [35]. Furthermore, unemployment represents the percentage of the workforce that is available for employment, but they are without work/looking for employment regardless of legal status or citizenship. Unemployment rate data was provided by World Bank.

2.6. The Conceptual Framework

The Solow Neoclassical growth theory is the most appropriate theory for this study as it is appropriate to highlight the concept of sustainable economic growth [47]. Development is determined by digital and technological progress only, so the role of digital and technological advancement is very crucial for economic growth. This study is based on Solow’s neoclassical model as it measured the effect of digital and technological advancement on sustainable economic growth for the Asian countries of the the BRI region. The structure of the study is represented in Figure 3.
The sustainable economic growth “SEG” (dependent variable) can be supposed as a function of the E-Government Development Index (EGDI), Information and Communication Technology Exports (ICTE), and Internet Users’ (IU) growth. Also, control factors are unemployment rate (UR), and urbanization (UP). So, the association of the model can be specified as follows;
SEG = ∫ (EGDI, ICTE, IU, UP, UR)
An econometric two-step sys-GMM dynamic model is explained as follows;
S E G i , t = β i + λ ( S E G ) i , t − 1 + β 1 E G D I i ,   t + β 2 I C T E i ,   t + β 3 I U i ,   t + β 4 U P i ,   t + β 5 U R i ,   t   φ t + ε it
Robustness D-K regression
S E G i , t = β i + β 1 E G D I i ,   t + β 2 I C T E i ,   t + β 3 I U i ,   t + β 4 U P i ,   t + β 5 U R i ,   t + φ t + ε it + φ t + ε it
where, “SEG” indicate the dependent variable sustainable economic growth and can be supposed as a function of E-government Development Index (EGDI), Information and Communication Technology Exports (ICTE), and Internet Users (IU). Also, control factors are the unemployment rate (UR), and urbanization (UP). i, t−1 indicate the SDI lag value. φ t represents year effect/dummies (i.year). Moreover, β i , β 1 and, β 2 are the unknown parameters to be estimated.
The GMM technique was used as it is the most appropriate technique for our dataset (21 countries data for 17 years (2004–2020)). The two-step system GMM method is the best technique to inspect measurement errors, auto-correlation, over-identifying restrictions, and endogeneity issues in the panel dataset [48,49]. Previous scholars used different regression techniques for the analysis. Also, Brodny and Tutak [18] used “Entropy-Multi-Objective Optimization on the basis of Ratio Analysis (MOORA) method” to determine the impact of digitalization among the companies of the EU-27. Besides that, Mshvidobadze and Ginta [7] measured the impact of digitalization (ICT) for IT industry in Ukraine by using regression models. Most of the previous research was done at enterprise level but this research has been conducted for 21 countries so these techniques may not be accurate when analyzing data at country level.
As BRI project is a long-term project so GMM is the most appropriate technique to measure long-term effect of the variables. It is a more advanced technique as compared to the other techniques. The vital criterion for this technique is that number of cross-sections (represented by N) must be more as compared to the number of periods. GMM technique provides better results as compared to single equation techniques. It is the most suitable technique when distribution of the dependent variable is not clear. The lag value of sustainable economic growth has been taken in GMM to overcome autocorrelation issue. Therefore, GMM provides accurate estimation by controlling the lag effect of sustainable economic growth. Dependent variable values rely on previous value for more accurate prediction of future values. Multiple scholars have recommended GMM technique for panel dataset [41,50,51,52]. As panel data has been used for this study so, GMM technique is the very appropriate for the analysis. Hansen test was performed to develop more exploration by observing the over-identifying restrictions. p-Value of AR1 should be smaller than 0.05, whereas AR2 p-value should be more than 0.05.
D-K (Driscoll-Kraay) Standard Errors methodology was used for the robustness check. It is a perfect method for unbalanced values and panel equilibrium because it incorporates all types of temporal dependency and cross-sectional dependence (CD). It has been considered as one of the most impactful techniques while dealing with data heteroscedasticity, spatial and serial dependence.

3. Results

3.1. Outcomes of Descriptive Summary

The outcomes of descriptive statistics comprising observation count, the mean value, the standard deviation, minimum values and maximum values for the control variables, dependent variable, and independent variable have been presented in Table 1. There are 357 observations for a sample of 21 BRI Asian economies from 2004 to 2020. All values are within the range as per outcomes of the descriptive statistics.
Table 2 exhibits the Variance Inflation Factor (VIF) and 1/VIF. VIF was determined for all independent variables regarding technological advancement and control variables of the study to make sure that a multi-collinearity issue was not found in our data. If the value of VIF would be more than 5 for any variable, then it would identify the multi-collinearity issues in the dataset [53,54]. In Table 2, all VIF values in are smaller than 5, which identifies that there is no multi-collinearity in our dataset.
Table 3 demonstrates the pair-wise association amongst dependent, independent and control variables.
The outcomes of Table 3 represent that EGDI and internet users’ growth have a statistically significant and positive association at 22.8%, 35.4%, correspondingly, with sustainable economic growth at a 1% significance level. ICT Exports and urbanization are also positively associated with sustainable economic growth at a 5% significance level. Yet, the unemployment rate is negatively associated with sustainable economic growth.

3.2. Outcomes of E-Government, ICTs and Factors That Affect Sustainable Economic Growth: Two-Step System GMM Method

Table 4 evaluates the sustainable economic growth estimation with a two-step system GMM. Column 1 shows the two-step system GMM final model by indicating that the coefficient of SEG lags, i.e., SEG is positive (0.270) having a p-value of smaller than 1% that specifies the dynamic nature of SEG. Additionally, outcomes demonstrate that EGDI coefficient is significant and positive (10.092), having a p-value of smaller than 1%. IU and ICTE positively impact sustainable economic growth; urbanization has a partial positive impact on sustainable development while unemployment hurt sustainable economic growth at the 5% significance level. It indicates that EGDI and internet users’ growth have contributed to sustainable economic growth in the BRI Asian countries from 2004 to 2020.
For the robustness check, D-K (Driscoll-Kraay) Standard Errors methodology was used as an alternate method. The D-K regression specifies the robust estimator’s cross-sectional dependence (CD). This methodology integrates the weighted autocorrelation and heteroscedasticity compatible estimator (HAC) values and a stranded error into the weighted HAC values amongst the variables and residuals. Driscoll-Kraay Standard Errors method has been considered one of the most impactful techniques while dealing with data heteroscedasticity, spatial and serial dependence. Driscoll-Kraay Standard Errors method is a perfect technique for unbalanced values and panel equilibrium because it incorporates all types of temporal dependency and cross-sectional dependence (CD) [40,42,44]. The p-value of Arellano–Bond (AR1) is smaller than 5%, whereas the p-value of second-order difference’s Arellano–Bond (AR2) is greater than 5%. The Sargan test value is 27.32 while the Hansen test statistic value is 15.65 with a p-value of 0.208. Additionally, the numbers of instruments are 19, which is less as compared to our 21 groups; so the validity of the two-step system GMM instruments has been established. Moreover, the Wald test Chi-square showed that the p-value is less than 1%, so the model is fit to use. The outcomes of the diagnostic test identify that estimation procedures are accurate and reliable and because all assumptions are correct.

4. Discussion

This research measured the influence of digital and technological advancement on sustainable economic growth for 21 Asian Region Partner Countries of the BRI project from 2004 to 2020. Digital and technological advancement was comprised of three variables: EGDI, internet Users’ (IU) growth, and ICT exports. The two-step system GMM technique measured the influence of EGDI, internet users’ growth and ICT exports on sustainable economic growth. The conclusions of descriptive statistics exhibited that all outcomes are in range and outcomes of the VIF test specified that multi-collinearity doesn’t exist in data set as the values of all variables were below 5. The D-K standard-error regression technique was used for robustness check. The two-step system GMM’ results confirmed the dynamic nature of sustainable economic growth (SEG is positive (0.270) having a p-value of smaller than 1%), which is signifying that all the Asian nations of BRI region are on the path of sustainability. The outcomes also validated that the EGDI, internet users’ growth, and ICT exports, positively affected sustainable economic growth.
The conclusions of two-step system GMM were validated through D-K fixed effect regression technique. Findings indicate that one percent increase in EGDI, ICT exports and internet user’s growth have a significantly positive influence and will boost sustainable economic growth by 10.092%, 0.014%, and 0.073% respectively, which leads that digital and technological advancement has a positive influence on sustainable economic growth. Although this impact is not very strong as compared to [2] findings as they stated that the digital and technological advancement has affected economic growth by 70.33% in Europe. They conducted the research for 27 European/developed countries but this research has been conducted for 21 lower-middle-income Asian nations. So, the outcomes indicate that digital and technological advancement is at the initial stage in Asian countries of the BRI region.
Urbanization was taken as a control variable as urbanization rate also defines the economic growth of the country. Urbanization has lot of advantages for human beings; it provides access to modernized equipment, better internet connection, educational opportunities, and better access to e-government systems. A partial positive impact of urbanization was observed on sustainable economic growth. In contrast, unemployment rate is negatively related to sustainable economic growth, having p-value of smaller than 5%, which depicts that rate of unemployment is high is Asian region of BRI project and this is highly impacting the sustainable economic growth of BRI region. Results established that all the indicators of digital and technological advancement positively influence sustainable economic growth. Results confirmed the hypothesis (H1), which specifies that the EGDI would have a positive influence on SEG. Our results are in line with [24]. The outcomes also validated that internet users’ growth play a significant role on SEG which validates our hypothesis H2. Our outcomes are in line with [26,28]. ICT export has a positive impact on SEG, and or results are in line with [6,29,30,55]. Furthermore, urbanization has a partial positive influence on SEG for BRI Asian countries, and our outcomes are in line with [36,37]. The unemployment rate was observed to be a substantial negative contributor to SEG for BRI Asian nations, and our outcomes are according to [38].

5. Conclusions

This research addressed the dynamic effect of digital and technological advancement (comprised of EGDI, internet users’ growth and ICT exports) on sustainable economic growth in Asian Region Partner Countries along with the BRI region (21 countries) from 2004 to 2020. This study is an effort to determine the impact of urbanization and unemployment rate as control factors on sustainable economic growth. The direct channel outcomes pointed out that the two-step Sys-GMM approach best fits the sample dataset. This research has established theoretically that those Asian countries of BRI region are on a path to sustainable economic growth.
Outcomes indicate that a 1% increase in EGDI, ICT exports and internet user’s growth will boost sustainable economic growth by 10.092%, 0.014%, and 0.073% respectively. Yet, EGDI practices of BRI countries of the Asian region are still underdeveloped as the conception of EGDI is comparatively novel as compared to European countries of BRI region. Even, the trend of EGDI is not same in all Asian countries of BRI region as China has shown remarkable progress in delivering e-government services in recent years. Other Asian countries should learn from China and European countries of BRI region regarding successful implementation of e-governance development systems. Developments in the e-government system will lead the country towards durable economic growth. To extract maximum positive consequences of trade on sustainable economic growth; e-commerce, and e-procurement should be promoted in Asian countries. In addition, investment in human capital needs to enhance to take the maximum advantages of the global economy through e-government. As most of the Asian countries are developing economies and still utilizing traditional ICT infrastructure. Domestic governments need to increase R&D expenditure or allocate a substantial budget for installation of modern ICT infrastructure for producing high value-added technological goods. The middle income nations especially China have high ratio of internet users’ growth as compared to other Asian countries. Local government should spend more funds on education and training of human capital to increase internet users’ growth and to get supreme advantages from digital and technological advancement.
A partial positive impact of urbanization was observed on sustainable economic growth. Rapid urbanization is the key driver of ecological changes, so infrastructure growth must be preceded by proper planning to minimize its impact on biodiversity. There must be a balance between rural and urban populations for sustainable economic growth and policies are required regarding proper urban planning. Population density, inefficiency of the public sector, absence of career advancement, and poverty are main sources of unemployment in Asian countries. Economists, governments and policy makers should develop some strategies, e.g., relief packages for small and medium enterprises and industries, free technical training of human capital etc. Banks should offer a low cost of debt servicing to encourage investors to finance in different sectors. Middle and high income nations should cooperate with low income nations to decrease unemployment rate. It would decrease poverty in the whole region, which would be beneficial for sustainable economic growth.
This research contributes to the existing literature in many ways. First, this is the first study that has measured digital and technological transformation via EGDI, internet users’ growth, and ICT exports. Most of the previous researchers selected number of patents to measure technological advancement or digitalization. Secondly, previous researchers have focused on developed countries for digital and technological transformation while this research has been conducted for the Asian countries of the BRI region which are different from developed economies in terms of R&D infrastructure, ICT exports, internet usage, productivity, and sustainable economic growth. Previous researchers reported impact of digital and technological advancement at the enterprise level (Brodny & Tutak, 2022); (Mshvidobadze & Ginta, 2022) while this study has been done for 21 Asian countries of BRI region. The findings of the research would be beneficial for governments of the BRI countries to make investments in the domain of digital and technological advancement.

6. Research Limitations and Future Research Directions

There are certain limitations of the study. First, the long-term effect of digital and technological advancement on sustainable economic growth is not checked because of the unavailability of data for a longer time span. Future researchers can add more years while conducting research.
Secondly, there are more than 100 countries from Asia, Africa, and Europe in BRI project but this research work is only covering BRI partner countries of the Asian region (21 countries in total sample) so dataset is limited. It can be extended for specific regions of the world such as European or African countries. Future researchers can conduct this research for Asian, European, and African countries of BRI project/or they can establish group based on income (low, middle, and high income countries of BRI project) as this comparison would be a great contribution in the literature.
Third, a robustness check was done by using the D-K Standard Errors method as D-K method is good for panel data. Driscoll-Kraay Standard Errors method is a perfect method for robustness check as it incorporates CD (cross-sectional dependence) and all types of temporal dependency. Future researchers can use “Bootstrapped Quantile Regression” method for robustness check.
Future studies can investigate the effect of digital and technological advancement on sustainable economic growth through other channels such as institutional quality, globalization, and multi-dimensional regional integration.
In this research, digital and technological advancement comprises EGDI, ICT Exports and internet users’ growth. Future researchers can take “Fintech” as a measure for technological advancement. Furthermore, the links of digital and technological advancement with sustainable development need to be explored for BRI region.

Author Contributions

All authors made significant work. Conceptualization, S.Z. and T.W.; methodology, Y.Z. and J.M.; software, S.Z. and A.U.; formal analysis, T.W. and A.U.; investigation Y.Z.; original draft preparation, H.I.; review and editing, J.M., H.I. and A.U.; visualization, T.W., H.I. and A.U.; supervision, S.Z. and T.W. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Data available upon request.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 14 15782 g001 550
Figure 1. BRI Region and Projects.
Figure 1. BRI Region and Projects.
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Figure 2. E-government Evolution Stages.
Figure 2. E-government Evolution Stages.
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Figure 3. Model Framework.
Figure 3. Model Framework.
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Table
Table 1. Outcomes of Descriptive Statistics.
Table 1. Outcomes of Descriptive Statistics.
VariablesObservationMean ValueStd.Dev.MinimumMaximumSkew.Kurt.
Sustainable Economic Growth3576.0043−2.4717.290.0851.491
E-government Development Index3570.4440.1520.1570.8420.5732.845
Internet Users’ Growth35725.223.8680.0295.5460.1591.15
ICT Exports3578.92813.298048.540.3070.346
Urbanization3572.510.995−1.4225.9090.121.033
Unemployment rate3574.0142.8450.413.880.0230.715
Table
Table 2. Analysis Variance inflation factor Analysis.
Table 2. Analysis Variance inflation factor Analysis.
Dependent Variable: Sustainable Economic GrowthVIF1/VIF
E-government Development Index4.030.247
Internet Users’ Growth2.960.338
ICT Exports1.760.569
Urbanization1.320.758
Unemployment rate1.250.801
MeanVIF 2.26.
Table
Table 3. Pairwise Correlations.
Table 3. Pairwise Correlations.
Variables(1)(2)(3)(4)(5)(6)
Economic Growth1.000
E-government Development Index0.228 ***1.000
Internet Users’ Growth0.354 ***0.505 ***1.000
ICT Exports0.008 **0.561 ***0.494 ***1.000
Urbanization0.111 **−0.361 ***−0.235 ***0.0381.000
Unemployment rate−0.0790.200 ***0.054−0.165 ***−0.314 ***1.000
*** p < 0.01, ** p < 0.05.
Table
Table 4. Digital and Technological Transformation Factors Effecting SEG.
Table 4. Digital and Technological Transformation Factors Effecting SEG.
Two-Step System GMMRobustness Check
Dependent VariableSEGSEG
Sustainable Economic Growth-SEG (1 − t)0.270 ***
(0.034)
E-government Development Index10.092 ***0.258 *
(2.225)(1.753)
Internet Users’ Growth0.073 ***0.033 ***
(0.010)(0.010)
ICT Exports0.014 *0.033 **
(0.012)(0.014)
Urbanization0.3060.007
(0.219)(0.162)
Unemployment rate−0.121 **−0.012 **
(0.057)(0.053)
I.Year F. E.YesYes
Observations336357
R-squared-0.640
Post Analysis
Arellano–Bond 1 (AR1)p-Value of AR1−2.997
0.00273
Arellano–Bond 2 (AR2)p-Value of AR2 −1.184
0.236
Sargan TestSargan (p-value)27.32
0.695
HansenHansen (p-value)15.65
0.208
No. of Instruments (J. Statistics)
Wald Test (CHI2)		19
509.9
p-Value of Wald Test (CHI2)
Total Countries		0
2121
Note: Standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1, respectively. Diagnosis Criteria: The p-value of Arellano–Bond (AR1) should be smaller than 5%-Pass. p-Value of second-order difference’s Arellano–Bond (AR2) should be greater than 5%-Pass. Sargan Test (p-value) should be insinificant-Pass. Hansen (p-value) should be 0.10-0.30-Pass. No. of Instruments (J. Statistics should be less than Number of Groups (Total Countries)-Pass. Wald Test (CHI2) value should be significant-Pass.
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Zhao, S.; Zhang, Y.; Iftikhar, H.; Ullah, A.; Mao, J.; Wang, T. Dynamic Influence of Digital and Technological Advancement on Sustainable Economic Growth in Belt and Road Initiative (BRI) Countries. Sustainability 2022, 14, 15782. https://doi.org/10.3390/su142315782

AMA Style

Zhao S, Zhang Y, Iftikhar H, Ullah A, Mao J, Wang T. Dynamic Influence of Digital and Technological Advancement on Sustainable Economic Growth in Belt and Road Initiative (BRI) Countries. Sustainability. 2022; 14(23):15782. https://doi.org/10.3390/su142315782

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Zhao, Sainan, Yichao Zhang, Huma Iftikhar, Atta Ullah, Jie Mao, and Tiantian Wang. 2022. "Dynamic Influence of Digital and Technological Advancement on Sustainable Economic Growth in Belt and Road Initiative (BRI) Countries" Sustainability 14, no. 23: 15782. https://doi.org/10.3390/su142315782

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