How does digital transformation drive manufacturing growth in developing countries?

NGUYEN NGOC MAI

Foreign Trade University; Email: [email protected]

THUY HIEN NGUYEN

Corresponding author, Foreign Trade University; Email: [email protected]

Abstract

This study examines the impact of digital transformation on the manufacturing sector across 131 developing countries between 2010 and 2023. Employing an extended Cobb-Douglas production function and a Generalized Least Squares (GLS) regression model, the analysis reveals that digital exports, capital formation, and labor productivity significantly contribute to manufacturing growth, whereas inflation exerts a negative influence. The findings also suggest that e-government development has a particularly strong positive impact in less developed regions, such as Africa, by enhancing institutional efficiency. Overall, the study underscores that strategic investments in digital trade, governance, and infrastructure are crucial for policymakers seeking to foster sustainable industrial growth in developing economies.

Keywords: Digital transformation, manufacturing sector, developing countries

(This article was published in the Vietnam Economic&Financial Review, Vol 1, Issue 1, October 2025)

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