The Role of the Digital Economy in Enhancing Economic Growth and Reducing Unemployment in Developing Countries

Abstract

This study investigates the role of the digital economy in promoting economic growth and reducing unemployment in developing countries. As digital technologies reshape production and labor systems, understanding their economic effects becomes crucial for sustainable development. Using a quantitative approach, panel data from developing nations (2010–2025) were analyzed through fixed and random effects regression models to measure the influence of internet penetration, ICT investment, and digital financial inclusion on GDP growth and unemployment. The findings reveal that the digital economy positively and significantly enhances economic growth while reducing unemployment rates, particularly when supported by education and capital investment. These results confirm that digitalization drives productivity, innovation, and job creation. The study concludes that developing countries should strengthen digital infrastructure, promote digital literacy, and implement supportive policies to harness the full potential of digital transformation for inclusive economic progress.