Abstract:
Productivity growth has remained slow in Asian countries. The study examines the impact
of digitalization and innovation on output productivity in four Asian countries: China, India,
Bangladesh, and Pakistan, using data from 1990 to 2022. The panel autoregressive distributed lag
(ARDL) model was employed to investigate the long-run relationship between the variables. The study
implements the Fully Modified OLS (FMOLS) method for robustness checks. The long-run results show
that digitalization and innovation have a positive and significant impact on productivity in each
country. Human capital, foreign direct investment (FDI), and trade openness also have a significant
impact on productivity. The panel ARDL result shows that digitalization, innovation, human capital,
trade openness, and FDI significantly affect productivity in the long run. The study recommends
encouraging investments in digital infrastructure, inventions, and innovations across various economic
sectors, including R&D activities, fostering industry-academia collaborations, and technological
advancements. These countries should also invest in education, technical, and vocational training to
improve labor productivity and efficiency.
