DETERMINANTS OF THE DIGITAL GAP: A COMPARATIVE ANALYSIS OF CENTRAL EUROPE AND SOUTHEAST ASIA, 2002-2024

Abstract

This study examines the determinants of the digital divide and identifies differences in key factors driving digital development between countries in Central Europe and Southeast Asia over the period 2002-2024. The digital gap is understood as disparities in digital infrastructure, digital public service delivery, and human capital that influence broader economic and social development. The analysis integrates institutional quality (government effectiveness, rule of law, and political stability), economic development (log GDP per capita and income inequality), and skills formation inputs (government spending on education and tertiary enrollment) to explain cross-country and temporal variation in digital performance. Given the limited number of countries, the study employs an econometric strategy suitable for small panel data. Dynamic relationships are estimated using bias-corrected least squares dummy variables (LSDVC), while robustness is assessed through static fixed-effects estimation with Driscoll-Kraay standard errors. To address model uncertainty and multicollinearity, Bayesian Model Averaging (BMA) is applied with family constraints to identify the most robust predictors. The results show that income inequality constitutes the main constraint on inclusive digital development in Central Europe, whereas tertiary education expansion is the strongest driver in Southeast Asia. Across both regions, institutional credibility emerges as a universal foundation for sustainable digital progress. The novelty of this study lies in its cross-regional comparative approach using a harmonized digital development index, the combined use of LSDVC and BMA in a small-panel context, and the identification of both universal and region-specific determinants relevant for digital policy design.