Abstract

ABSTRACT This paper investigates how digitalization contributes to inclusive development by analyzing global panel data using fixed-effect models. The main finding is the reverse U-shaped relationship between digitalization and inequality reduction. By testing the moderation and mediation effects, we further illustrate the intricate dynamics of digitalization on inequality. The findings suggest that while digitalization fosters inclusive institutions, it may also foster polarized relationships. Furthermore, we demonstrate that reverse U-shaped effects are particularly pronounced in countries in the global south, indicating a diffusion of relational norms.

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