The Impact of Digital Transformation and Internet Quality on Economic Growth in Libya: An Econometric Study Using the ARDL Model (2017–2024)

Abstract

This study examines the impact of digital transformation and internet quality on economic growth in Libya during the period 2017–2024, using quarterly data and the Autoregressive Distributed Lag (ARDL) model. The variables included internet usage, internet speed, inflation rate, broad money supply (M2), and oil revenues. Unit root tests confirmed that the series were integrated at either level or first difference, validating the ARDL framework. Bounds testing indicated the existence of long-run cointegration, with an error correction term of -0.624, suggesting that 62.4% of short-run disequilibria are corrected within one period. The results reveal that internet usage and speed have a significant positive effect on economic growth (0.412 and 0.287, respectively), while oil revenues also contribute positively (0.331). Conversely, inflation showed no significant impact. These findings highlight the crucial role of digital infrastructure and internet quality as drivers of sustainable growth and economic diversification in Libya, reducing reliance on hydrocarbon revenues. The study recommends further investment in digital transformation policies aligned with broader macroeconomic strategies to ensure long-term stability and development.