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Digitalisation and Structural Change: Evidence from Cross-Country Analysis

Karishma Banga et al.

Journal of Digital Economy2026https://doi.org/10.1016/j.jdec.2026.03.003article
ABDC B
Weight
0.50

Abstract

This study examines digitalisation as a driver of Structural Change (SC), a core mechanism of economic development. Using a cross-country panel of 51 economies from 1990 to2018, and panel data methodologies of Fixed Effects estimation and two-step System GMM, we find that digitalisation significantly accelerates economy-wide structural change. A doubling of internet penetration is associated with a 0.14 to 0.18- unit increase in the SC component of labour productivity growth, holding other factors constant. However, the effects of digitalisation on SC are heterogeneous across countries, with stronger effects noted for low and lower-middle income economies, structurally under-developed economies, and countries with higher forward linkages in global value chains (GVCs) than their counterparts. Moreover, digitalisation reduces manufacturing employment shares, pointing to a pattern of digital-led (de)industrialisation in developing countries. Overall, our findings contribute new evidence that digitalisation facilitates a form of leapfrogging in which developing countries transition directly from agriculture to digitally enabled services, bypassing traditional manufacturing-led industrialisation pathways.

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https://doi.org/https://doi.org/10.1016/j.jdec.2026.03.003

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@article{karishma2026,
  title        = {{Digitalisation and Structural Change: Evidence from Cross-Country Analysis}},
  author       = {Karishma Banga et al.},
  journal      = {Journal of Digital Economy},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jdec.2026.03.003},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.