Digital Economy, a catalyst for Pakistan's Economic Growth

Abstract

This study explores the impact of main indicators from the digital economy on Pakistan’s economic growth from 1995 to 2023. For the data, this study uses the Autoregressive Distributed Lag (ARDL) model. The analysis includes the study’s results for the long and short term impacts of the GDP and five factors: ICT, education, internet usage, mobile network subscriptions and trade openness. According to the findings, ICT investment and mobile network subscriptions are the main reasons behind the increases in GDP over time. Alternatively, education and internet use actually relate negatively to GDP over a long period. This suggests that apart from poor schooling, being without fair digital skills and not using the internet for financial benefit may be two more possible causes. Even with open trade, countries may suffer from lower growth because of unbalanced related to exports and imports and difficulties in the digital arena. It is made clear by the research that digital gainers are held back by problems like structural constraints, inadequate coordination between policies and not being digitally equipped. Since this is important, the country needs a balanced investment in ICT, reforms in the education system, more digital literacy and better trade competitiveness to make digitalization a key part of its sustainable economic growth.

Keywords: Digital Economy, ICT Investment, Economic Growth, ARDL, Internet Usage, Mobile Connectivity, Pakistan