The relationship between the digital economy and economic growth in Egypt: in a post-COVID-19 world

Maha Mohamed Alsebai

African Journal of Economic and Management Studies, 2025, vol. 16, issue 4, 583-613

Abstract: PurposeOur study aimed to verify the role of the digital economy in economic growth in Egypt and the availability of the technological capabilities of the business sector for digital transformation, based on the negative impact of the epidemic on all economic sectors in the world in general and Egypt in particular.Design/methodology/approachThis was verified based on the standard Error correction package modeling (VECM) study and analysis using Xlstat 2023 and EViews 10.FindingsThe results of the study conducted during the period (1996–2022) showed that there is a co-integration relationship in the short and long term between the impact of the digital economy and economic growth. We found a positive, statistically significant relationship between the variables of mobile phone subscriptions and Internet use that had a strong positive effect. At the same time, trade openness hurt economic growth in the short term. In the long run, both mobile phone subscriptions and trade openness had a significant positive effect, and the speed of adjustment toward equilibrium was very severe, estimated at 4.7 years (1/0.21).Research limitations/implicationsThe work is limited to the economies of Egypt, which is part of Africa. We suggest conducting further research on evidence from other emerging and developed economies.Practical implicationsThe results are of great importance to policymakers in Egypt as an African country, as the estimation results were positive between the digital economy and economic growth in the Egyptian economy, and this is consistent with the endogenous growth model of economic growth, which assumes that knowledge is the main driver of economic growth.Social implicationsThe paper documents the importance of the digital economy in boosting economic growth, which impacts social life more than the traditional digital economy, especially in times of crisis.Originality/valueBased on the existing literature, this paper identified various research gaps. First, no consensus has been reached on the concept of the digital economy, and its index system is inadequate. While existing literature concentrates on examining the influence of ICT on economic development in terms of the number of Internet users, fixed broadband Internet users and mobile subscribers. These measures cannot adequately capture the broader implications of the digital economy. Furthermore, research has largely investigated the significance of digitalization in economic development and reached ambiguous conclusions.

Keywords: Digital economy; Digitization; Digital transformation; Information intelligence; Technological progress; COVID-19 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ajemsp:ajems-02-2024-0100

DOI: 10.1108/AJEMS-02-2024-0100

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