Harnessing Digital Technology for Sustainable Growth in Southeast Asia: The Role of Trade Openness and Institutional Excellence

Abstract

The United Nations Sustainable Development Goals (SDGs) emphasize the importance of harnessing innovation and technology to address pressing global challenges like poverty, inequality, climate change, and economic sustainability. Southeast Asia’s ASEAN countries have shown remarkable growth in GDP and the digital economy, but also face significant pollution issues. Despite these dynamics, research into ASEAN's sustainability remains limited. This study examines the impact of digital technology and digital service trade on sustainable development in ASEAN, with a focus on the moderating role of institutional quality. Using panel data from 10 ASEAN countries between 2005 and 2019, this study employs feasible generalized least squares and generalized estimating equations to examine the influence of institutional quality on sustainability. This study incorporates population size and industrial value added as control variables. The findings reveal that while digitalization alone does not ensure sustainability, digital service trade can pose risks unless supported by strong institutions. This research highlights the importance of institutional development in harnessing digital advancements for environmental and social progress. The study showed that enhancing institutional quality and aligning policies are crucial to transforming digital innovation and trade into sustainable and equitable growth across ASEAN.