Digital Development Models and Transaction Costs: Empirical Evidence from Equity-Focused Versus Scale-Intensive Approaches in Emerging Economies

Yiu Fai Chan () and Yuvraj V. Bheekee
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Yiu Fai Chan: International Foundation Year Programme, University of Salford, Maxwell Building, University Road, Salford M5 4WT, UK
Yuvraj V. Bheekee: International Business Management, UoB Manchester, Base Building, Greenheys Lane, Manchester M15 6LR, UK

Economies, 2025, vol. 13, issue 9, 1-22

Abstract: Research Problem: Despite growing recognition that digital transformation strategies affect economic coordination, no study has empirically tested whether different national digital development models create systematically different transaction cost environments, particularly in emerging economies pursuing Sustainable Development Goals (SDGs). Research Gap and Novelty: This study addresses a critical gap by providing the first comprehensive empirical validation of how equity-focused versus scale-intensive digital development strategies influence coordination efficiency outcomes. Unlike previous studies that focus on aggregate digital infrastructure investment or single-country analyses, we develop a novel multi-dimensional Digital Coordination Efficiency Index and systematic development model classification framework to test transaction cost economics (TCE) predictions across diverse emerging economy contexts. Methodology: Using panel data from 16 strategically selected emerging economies (2017–2022) representing distinct development pathways, we apply advanced econometric techniques including comprehensive diagnostic testing, jackknife analysis, and bootstrap procedures to ensure robust causal inference. Key Findings: Development model choice explains 63.4% of variation in digital coordination efficiency compared to only 8.9% explained by GDP per capita—a 7.1-fold improvement in explanatory power—though this finding is based on a limited sample of 16 countries. Countries pursuing equity-focused strategies achieve 15.42 points higher coordination efficiency ( p < 0.05) and demonstrate 49.4% superior mobile infrastructure penetration in our sample. The Vietnam–India comparison illustrates how an equity-focused model can systematically outperform a scale-intensive approach, with Vietnam achieving 68.4% higher GDP per capita, though we acknowledge this represents one specific case rather than a universal pattern. Practical Implications: Emerging economies can achieve superior economic outcomes by prioritizing digital inclusion over concentrated innovation, with equity-focused approaches providing measurable coordination advantages that translate into higher GDP growth and better SDG attainment. Multinational corporations should consider coordination capabilities when making location decisions, as equity-focused countries offer superior environments for distributed operations.

Keywords: transaction cost economics; digital development; sustainable development goals; emerging economies; coordination efficiency; digital governance; institutional economics (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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