THE IMPACT OF DIGITAL TRANSFORMATION ON REGIONAL ECONOMIC TRENDS IN THE CONTEXT OF AN INNOVATIVE ECONOMY

Authors

DOI:

https://doi.org/10.60078/2992-877X-2025-vol3-iss8-pp111-118

Abstract

This article examines the impact of digital transformation on regional economic trends in the context of an innovative economy. Based on a systematic literature review (SLR) of studies published in recent years, it analyzes how digital technologies (such as artificial intelligence, big data, and IoT) influence economic growth, innovation potential, and regional disparities. The results indicate that digital transformation significantly stimulates regional economic growth and innovation through positive spillover effects, yet exacerbates ecological challenges and inequalities in developing regions. The conclusion emphasizes the need for integrated policies to mitigate adverse effects and ensure sustainable development. Recommendations encompass the development of digital infrastructure and investments in green innovations.

Keywords:

digital transformation innovative economy regional economic trend economic growth innovation capacity ecological impact regional disparities sustainable development

References

An, Q., et al. (2024) ‘The impact of the digital economy on sustainable development: Evidence from China’, Frontiers in Environmental Science, 12, 1341471. https://doi.org/10.3389/fenvs.2024.1341471

Bocean, C.G. & Vărzaru, A.A. (2023) ‘EU countries’ digital transformation, economic performance, and sustainability analysis’, Humanities and Social Sciences Communications, 10, 875. https://doi.org/10.1057/s41599-023-02415-1

Chen, Z. & Xing, R. (2025) ‘Digital economy, green innovation and high-quality economic development’, International Review of Economics & Finance, 99, 104029. https://doi.org/10.1016/j.iref.2025.104029

Dedola, L., et al. (2023) Digitalisation and the economy. Available at: https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2809~6d29dc358d.en.pdf

Huang, W., Qu, Z. & Tan, Y. (2024) ‘Examining the impact of the digital economy on regional economic growth in China: A study of mediating and spatial factors’, SSRN. https://dx.doi.org/10.2139/ssrn.5049086

Javaid, M., et al. (2024) ‘Digital economy to improve the culture of industry 4.0: A study on features, implementation and challenges’, Green Technologies and Sustainability, 2(2), 100083. https://doi.org/10.1016/j.grets.2024.100083

Jin, L., Song, Y. & Pan, C. (2025) ‘Does the digital transformation of local leading enterprises drive digital economy development? Evidence from China’, SSRN. https://dx.doi.org/10.2139/ssrn.5354510

Le, T.A.T. (2025) ‘The impact of digital transformation on economic integration in ASEAN-6: Evidence from a generalized least squares (GLS) model’, Journal of Risk and Financial Management, 18(4), 189. https://doi.org/10.3390/jrfm18040189

Li, D., Cai, W. & Cai, D. (2025) ‘Digital economy, green technology innovation, and regional economic low-carbon transition’, SSRN. https://dx.doi.org/10.2139/ssrn.5394246

Li, Q., et al.. (2025) ‘The impact of digital economy on regional green and high-quality economic development in China’, Technological and Economic Development of Economy, pp.1–37. https://doi.org/10.3846/tede.2025.23454

Liao, W. (2023) ‘How does the digital economy affect the development of the green economy? Evidence from Chinese cities’, PLoS ONE, 18(8), e0289826. https://doi.org/10.1371/journal.pone.0289826

Lin, Y.C. & Xu, X. (2025) ‘Intelligence-driven growth: Exploring the dynamic impact of digital transformation on China’s high-quality economic development’, International Review of Economics & Finance, 101, 104240. https://doi.org/10.1016/j.iref.2025.104240

Ma, C.W. & Wang, L.S. (2024) ‘Research on digital economy and high quality development of regional economy’, Value, Function, Cost, 4(1). https://doi.org/10.54517/vfc.v4i1.2614

OECD (2020) OECD digital economy outlook 2020. Paris: OECD Publishing. https://doi.org/10.1787/bb167041-en

OECD (2024) OECD digital economy outlook 2024 (Volume 1): Embracing the technology frontier. Paris: OECD Publishing. https://doi.org/10.1787/a1689dc5-en

Paul, J., et al. (2024) ‘Digital transformation: A multidisciplinary perspective and future research agenda’, International Journal of Consumer Studies, 48(2), e13015. https://doi.org/10.1111/ijcs.13015

Qi, X. & Yang, C. (2024) ‘The digital economy drives the improvement of regional innovation capacity’, Proceedings of the 4th International Conference on Economic Development and Business Culture (ICEDBC 2024), Vol.299, p.177. Springer. https://doi.org/10.2991/978-94-6463-538-6_22

Secretariat UNCTAD (2022) Recovering from COVID-19 in an increasingly digital economy: Implications for sustainable development. Intergovernmental Group of Experts on E-Commerce and the Digital Economy. https://unctad.org/system/files/official-document/tdb_ede5d2_en.pdf

Shang, R. & Sieng, L.W. (2022) ‘Regional economic upgrading and development based on digital and intelligent innovation’, Mobile Information Systems, 2022(1), 8572096. https://doi.org/10.1155/2022/8572096

Sun, B. & Chen, Y. (2025) ‘Impact of digital economy on regional innovation efficiency from the perspective of spatial spillover’, Applied Economics, pp.1–17. https://doi.org/10.1080/00036846.2025.2514818

Tian, S. & He, Y. (2025) ‘The impact of digital industry development on regional economic resilience: Evidence from China’, PLoS ONE, 20(2), e0315203. https://doi.org/10.1371/journal.pone.0315203

UNCTAD (2024) Digital economy report 2024: Shaping an environmentally sustainable and inclusive digital future. Geneva: International Trade Centre. https://unctad.org/publication/digital-economy-report-2024

UNCTAD (2025) World investment report 2025: International investment in the digital economy. Geneva: UNCTAD. https://unctad.org/publication/world-investment-report-2025

Wang, H. & Ling, Y. (2022) ‘Research on the impact of digital economy on regional innovation capability’, Frontiers in Business, Economics and Management, 4(2), pp.19–21. http://dx.doi.org/10.54097/fbem.v4i2.609

World Bank (2023) Digital progress and trends report 2023. Washington, DC: World Bank. https://openknowledge.worldbank.org/bitstream/95fe55e9-f110-4ba8-933f-e65572e05395

World Bank (2025) Digital development global practice: Digitalization is the transformative opportunity of our time. Washington, DC: World Bank. https://www.worldbank.org/en/topic/digital/overview#3

Yee, L., et al. (2025) McKinsey technology trends outlook 2025. McKinsey Digital. https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-top-trends-in-tech#

Yoo, I. & Yi, C.G. (2022) ‘Economic innovation caused by digital transformation and impact on social systems’, Sustainability, 14(5), 2600. https://doi.org/10.3390/su14052600

Zhang, J., et al. (2022) ‘The impact of digital economy on the economic growth and the development strategies in the post-COVID-19 era: Evidence from countries along the “Belt and Road”’, Frontiers in Public Health, 10, 856142. https://doi.org/10.3389/fpubh.2022.856142

Zhang, Q., et al. (2024) ‘Digital transformation and economic growth efficiency improvement in the digital media era: Digitalization of industry or digital industrialization?’, International Review of Economics & Finance, 92, pp.667–677. https://doi.org/10.1016/j.iref.2024.02.010

Zhao, X., et al. (2024) ‘Study on the impact of digital transformation on the innovation potential based on evidence from Chinese listed companies’, Scientific Reports, 14, 6183. https://doi.org/10.1038/s41598-024-56345-2

Downloads

Published

How to Cite

Rajabov, A. (2025). THE IMPACT OF DIGITAL TRANSFORMATION ON REGIONAL ECONOMIC TRENDS IN THE CONTEXT OF AN INNOVATIVE ECONOMY. Economic Development and Analysis, 3(8), 111-118. https://doi.org/10.60078/2992-877X-2025-vol3-iss8-pp111-118