When Does Digitalization Pay Off? The Role of Culture Across the Income Distribution

Mohamed Bouzahzah

MPRA Paper from University Library of Munich, Germany

Abstract: Digitalization boosts economic performance, but its returns vary widely across countries. This paper shows that culture - measured via a World Values Survey index of effort, success, and technological openness - acts as a threshold moderator: internet usage raises log GDP per capita by 0.021 below the cultural threshold (-0.37) vs. 0.033 above it, using 55-country averages (2017-2024). Threshold regressions and quantiles reveal stronger effects in high-culture regimes and upper income quantiles, extending Haller (2024) globally with non-linearities. Results are robust across digitalization proxies (internet, fixed broadband, mobile cellular), implying infrastructure alone fails without cultural readiness for innovation.

Keywords: Digitalization; Culture; Threshold Effects; Economic Growth (search for similar items in EconPapers)
JEL-codes: O33 O47 Z10 (search for similar items in EconPapers)
Date: 2026-01
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