Impact of Public and Private Sector Digitalization on Economic Growth in South Asia

Abstract

This study investigates the differential impact of public and private sector digitalization on economic growth in South Asia, addressing a gap in the literature that rarely distinguishes between these two dimensions. Using panel data for Pakistan, India, Bangladesh, and Sri Lanka over the period 2000–2024, public digitalization is proxied by the E-Government Development Index (EGDI), while private digitalization is captured through a composite index of internet usage, mobile subscriptions, and broadband penetration. A Random Effects model, selected based on the Hausman specification test, is employed to estimate the relationship, controlling for trade openness, urbanization, foreign direct investment, and industrial value added. The results reveal that both public and private digitalization significantly enhance economic growth, with public digitalization exerting a comparatively stronger effect. Trade openness and urbanization are also found to be growth-enhancing, while the effects of foreign direct investment and industrialization are statistically insignificant. The findings highlight the complementary roles of state-led digital governance and private ICT diffusion in improving productivity and institutional efficiency. The study contributes to digital economy literature by providing comparative evidence from South Asia offers policy implications for strengthening digital infrastructure, promoting inclusive access, and enhancing regional digital integration. Keywords: Digitalization, economic growth, public sector, private sector, South Asia, E-government, ICT adoption, panel data .