The role of institutions and governance on digitalisation: evidence from ASEAN economies

This study investigates how institutions and governance influence digitalisation and how economic growth moderates these effects. Despite the substantial benefits of digitalisation, less developed economies are still lagging behind in terms of maturity. This study employs panel data analysis, using data from eight ASEAN countries from 2000 to 2023. The study employs Feasible Generalized Least Squares (FGLS) for short-run analysis and Fully Modified Ordinary Least Squares (FMOLS) for long-run effects. The results reveal that strong institutions are crucial in ensuring policy stability and effective regulation for driving digitalisation. Economic growth, when interacting with institutions and governance, further enhances these positive impacts. However, ASEAN governance has an adverse influence on digitalisation, and prolonged economic growth may lead to diminishing effects in digital adoption if institutions fail to progress accordingly. The findings highlight the importance of transparent regulatory frameworks, regional standards, and capacity-building initiatives to enhance an integrated and resilient digital ecosystem across ASEAN economies. This study provides empirical evidence on how institutions and governance affect digitalisation in ASEAN economies while incorporating the moderating role of economic growth in both short-run and long-run dynamics.