Impact of Digitalization on Sustainable Development: A Comparative Analysis of Developed and Developing Economies

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Reject due to high similarity rate.

Comments on the Quality of English Language

None

Author Response

Comments 1: Reject due to high similarity rate

Comments 1: Reject due to high similarity rate

Response 1: Thank you for your valuable feedback. I understand your concern regarding the high similarity rate. Upon reviewing the document, I found that some sections, particularly the literature review, were heavily cited due to the nature of the topic, which led to higher similarity. To address this, I have revised and paraphrased significant portions of the text to improve its originality and ensure a clearer contribution to the field. I hope these changes are sufficient to resolve the issue. Please let me know if further revisions are needed. Please see the attachement.

Author Response File: Author Response.docx

Reviewer 2 Report

Comments and Suggestions for Authors

The text presents a rigorous structure and well illustrates background, methodology and application. I have no particular comments on the contents and structure of the paper. 
The final paragraph on the possible outputs of the results in terms of input for policymakers in improving digital transformation strategies for sustainable development is very welcome.
However, I would perhaps have indicated in a very short passage/paragraph, which SDGS are most affected or interrelated in the study and how digitisation also impacts the production system in its current state and how these indicators can also guide work on digital transition processes.

Author Response

Comments 1: The text presents a rigorous structure and well illustrates background, methodology and application. I have no particular comments on the contents and structure of the paper.  The final paragraph on the possible outputs of the results in terms of input for policymakers in improving digital transformation strategies for sustainable development is very welcome. However, I would perhaps have indicated in a very short passage/paragraph, which SDGS are most affected or interrelated in the study and how digitisation also impacts the production system in its current state and how these indicators can also guide work on digital transition processes

Response 1: Thank you for pointing this out. We agree with this comment. Therefore, we incorporate a short paragraph into the conclusion to explicitly reference the most relevant SDGs, particularly SDG 9 (Industry, Innovation and Infrastructure), SDG 8 (Decent Work and Economic Growth), and SDG 16 (Peace, Justice and Strong Institutions). We will also briefly elaborate on how digitalization reshapes production systems through automation, data-driven processes, and enhanced connectivity, and how our indicators (e.g., internet access, broadband use, mobile penetration) can serve as benchmarks for guiding digital transition strategies. This change can be found on page 19 number, paragraph 2, and line 575.]

Reviewer 3 Report

Comments and Suggestions for Authors

The paper is well-presented, and the topic is clearly outlined from the outset. The literature review appears well-organized, and the methodology is supported with sufficient data and tables, which are in the correct order. This provides the reader with a clear understanding of the main idea, even though someone without a background in finance might struggle to fully grasp the details. The paper has an academic tone, suggesting that the authors are experienced in this field prior to writing the article. While the paper is concise, it is long enough to develop the concept sufficiently. At times, I would have appreciated a clearer explanation of simpler concepts, particularly for those not deeply familiar with finance. Nevertheless, this paper is a solid foundation for future research, even if it does not delve deeply into financial strategies.

 

Author Response

Comments 1: The paper is well-presented, and the topic is clearly outlined from the outset. The literature review appears well-organized, and the methodology is supported with sufficient data and tables, which are in the correct order. This provides the reader with a clear understanding of the main idea, even though someone without a background in finance might struggle to fully grasp the details. The paper has an academic tone, suggesting that the authors are experienced in this field prior to writing the article. While the paper is concise, it is long enough to develop the concept sufficiently. At times, I would have appreciated a clearer explanation of simpler concepts, particularly for those not deeply familiar with finance. Nevertheless, this paper is a solid foundation for future research, even if it does not delve deeply into financial strategies

Response 1: Thank you for pointing this out. We agree with this comment. Therefore, we we have revised key sections, particularly in the Introduction to include brief clarifying remarks and simplified definitions of core terms (such as “digital economy”, “Human Development Index,” “digital indicators,”. This change can be found on page 1, paragraph 1, and line26-34 and on page 2 paragraph 5 and line 81 .

Reviewer 4 Report

Comments and Suggestions for Authors

Dear Authors,

Congratulations on your exciting and valuable research. A few identified shortcomings in the paper, whose correction could benefit both you and the readers, will be presented in the following review.

Namely, upon analyzing your paper, I noticed several issues requiring major revision.

In 1. Introduction, after introducing the abbreviation ICT, in the next sentence (lines 31–33), you should use only the abbreviation and not repeat the full term along with the abbreviation “ICT.”

In lines 38–39, correct the sources to: Gao et al., 2022; Liang and Tan, 2024.

In the sentence in lines 54–56, you wrote:

“As highlighted by the Triple Bottom Line theory, sustainable development encompasses economic, social, and environmental dimensions, all of which are increasingly influenced by the transformative power of the digital economy.”

Why did you not provide a source for this quote? Please explain in one or two sentences, including the proper citation of the Triple Bottom Line theory: Elkington, J. (1997). Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Oxford: Capstone Publishing.

In the sentence in lines 70–73, you stated the following:

“Researchers have identified several indicators and indices, notably, the Human Development Index (Chen, et al, 2020 – Mangaraj and Aparajita (2020), the Environmental Performance Index (Wolf et al 2022), the Green Growth Index, the Adjusted Net Savings (Gale, 2018), etc.”All cited sources in this sentence are incorrectly referenced and should be corrected.

In the sentence in lines 73–76, you wrote:

“It is worth mentioning that the current study is particularly concerned with the Human Development Index (HDI), endorsed by the United Nations as a crucial indicator of sustainable development. In other words, the HDI is provided as a proxy for sustainable development.” I would like to know in what way the current study is particularly concerned with the Human Development Index (HDI)? Did you mean that your study applies HDI as a proxy for sustainable development? Or is this perhaps a poorly formulated sentence? If you intended to offer a critical reflection on the use of HDI or something else, please reformulate the sentence and be more precise.

What novelty does your research bring? There is a large number of recently published papers examining the impact of digitalization on sustainable development, which you have not considered. Some of the published works that could help improve your paper include:

• Guandalini, I. (2022). Sustainability through digital transformation: A systematic literature review for research guidance. Journal of Business Research, 150, 556–568. https://doi.org/10.1016/j.jbusres.2022.05.003
• Gupta, S., & Rhyner, J. (2022). Mindful Application of Digitalization for Sustainable Development: The Digitainability Assessment Framework. Sustainability, 14(5), 3114. https://doi.org/10.3390/su14053114
• Vărzaru, A. A., et al. (2024). Assessing the Impact of Digital Technologies on the Sustainable Development Goals Within the European Union. Electronics, 13(23), 4695. https://doi.org/10.3390/electronics13234695

In the Introduction, you should state which gaps in the literature you identified and what motivated you to conduct your research. What contribution will you make to theory, and what to policy and managerial practice? This should be briefly described in the Introduction, and in much more detail at the end, in the Conclusions and Implications section.

You introduced two research hypotheses in the Introduction, but I cannot conclude on what basis? On which sources are your hypotheses grounded? Particularly focus on your second hypothesis about the impact of corruption on the Sustainable Human Index. Namely, I did not notice that you cited any sources supporting your second research assumption. Hypotheses that are not theoretically grounded do not belong in the Introduction, but in the following section, which you should rename to Literature Review. It is necessary to proofread the entire text. I suggest renaming the second subsection of your paper to "Literature Review and Hypothesis Development."

In the second subsection, Literature Review, in the sentence in lines 111–113, you wrote:

“Using a GMM method on a sample of 41 sub-Saharan African countries and OECD countries over the period 2006–2016, they found out that digital innovations have a positive impact on the economic growth.” What does the abbreviation GMM method stand for? Generalized Method of Moments? You need to spell out every abbreviation the first time it is used.

In the sentence on line 118,

“In their turn, Fernandez-Portillo et al (2020) studied…”put a period after 'et al.'Likewise, in the sentence on line 129,“Second, from a social perspective, Imran et al (2022)…”add a period after 'et al.'As you have other inappropriately cited sources in the text, please review all in-text citations and correct them according to citation rules.

In line 149, you wrote:

“Within and GLS methods…”For both econometric model estimation methods in statistics and economics, provide sources! Why? Although these methods may seem like common knowledge in statistics and econometrics, many readers may not be familiar with them.

In line 163, correct the source

“Feng, X., et al (2025)” to Feng et al. (2025)

In line 221, remove the period at the end of the title of the first table.

In line 226, correct the source to:

Zhao et al. (2020)

In line 510, correct the source to:

Mohammedi et al. (2022)

Your paper has potential and provides contributions both to theory and policy. The recommendations I have made can help improve your paper. Good luck.

 

Author Response

Comments 1: In 1. Introduction, after introducing the abbreviation ICT, in the next sentence (lines 31–33), you should use only the abbreviation and not repeat the full term along with the abbreviation “ICT.

Response 1: Thank you for pointing this out. We agree with this comment. Therefore, we Thank you for this helpful observation. We have revised the sentence accordingly and now use only the abbreviation “ICT” after its initial introduction, in line with standard academic writing conventions.

Comments 2: In lines 38–39, correct the sources to: Gao et al., 2022; Liang and Tan, 2024.

Response 2: Agree. The in-text citation has been corrected to reflect the appropriate format. In the revised manuscript this change can be found on page 2 , paragraph 1, and line 43.

 

 

 

 

 

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Comments 3: “As highlighted by the Triple Bottom Line theory, sustainable development encompasses economic, social, and environmental dimensions, all of which are increasingly influenced by the transformative power of the digital economy.”

Why did you not provide a source for this quote? Please explain in one or two sentences, including the proper citation of the Triple Bottom Line theory: Elkington, J. (1997). Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Oxford: Capstone Publishing

Response 3 : We acknowledge the omission and have now properly cited the source for the Triple Bottom Line theory as follows: Elkington, J. (1997). Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Oxford: Capstone Publishing. The reference has been added both in-text and to the bibliography. In the revised manuscript this change can be found on page 2 , paragraph 3, and line 60.

 

Comments 4: “Researchers have identified several indicators and indices, notably, the Human Development Index (Chen, et al, 2020 – Mangaraj and Aparajita (2020), the Environmental Performance Index (Wolf et al 2022), the Green Growth Index, the Adjusted Net Savings (Gale, 2018), etc.”All cited sources in this sentence are incorrectly referenced and should be corrected

 

Response 4: Thank you for pointing this out. We have revised the sentence and corrected the citations to properly reflect standard referencing format, as follows:"Researchers have identified several indicators and indices, notably the Human Development Index (Chen et al., 2020; Mangaraj and Aparajita, 2020), the Environmental Performance Index (Wolf et al., 2022), the Green Growth Index, and the Adjusted Net Savings measure (Gale, 2018). In the revised manuscript this change can be found on page 2 , paragraph 6, and line 76.

 Comments 5: It is worth mentioning that the current study is particularly concerned with the Human Development Index (HDI), endorsed by the United Nations as a crucial indicator of sustainable development. In other words, the HDI is provided as a proxy for sustainable development.” I would like to know in what way the current study is particularly concerned with the Human Development Index (HDI)? Did you mean that your study applies HDI as a proxy for sustainable development? Or is this perhaps a poorly formulated sentence? If you intended to offer a critical reflection on the use of HDI or something else, please reformulate the sentence and be more precise.

Respnse 5: Thank you for your observation. Yes, the current study applies the Human Development Index (HDI) as a proxy for sustainable development. The intention is to explore how HDI, as a composite measure of health, education, and income, can serve as a simplified yet informative indicator of broader development outcomes. I will revise the sentence for clarity as follows: This study specifically focuses on the Human Development Index (HDI), which is endorsed by the United Nations and used here as a proxy for sustainable development due to its ability to capture key dimensions of human well-being. In the revised manuscript this change can be found on page 2 , paragraph 6, and line 79.

Comments 6: What novelty does your research bring? There is a large number of recently published papers examining the impact of digitalization on sustainable development, which you have not considered. Some of the published works that could help improve your paper include:

• Guandalini, I. (2022). Sustainability through digital transformation: A systematic literature review for research guidance. Journal of Business Research, 150, 556–568. https://doi.org/10.1016/j.jbusres.2022.05.003
• Gupta, S., & Rhyner, J. (2022). Mindful Application of Digitalization for Sustainable Development: The Digitainability Assessment Framework. Sustainability, 14(5), 3114. https://doi.org/10.3390/su14053114
• Vărzaru, A. A., et al. (2024). Assessing the Impact of Digital Technologies on the Sustainable Development Goals Within the European Union. Electronics, 13(23), 4695. https://doi.org/10.3390/electronics13234695

Response 6 : Thank you for this valuable observation and for highlighting relevant recent contributions. We have now incorporated the suggested literature (Guandalini, 2022; Gupta and  Rhyner, 2022; Vărzaru et al., 2024) into the revised literature review to better situate our study within the current academic discourse. Additionally, we have clarified the novelty of our research by emphasizing its comparative panel approach across 55 countries (both developed and developing).In the revised manuscript this change can be found on page 4 , paragraph 1, and line128, page 5, paragraph 2, and line 201 and on page 6 paragraph 2and line 237.

 

Comments7: In the Introduction, you should state which gaps in the literature you identified and what motivated you to conduct your research. What contribution will you make to theory, and what to policy and managerial practice? This should be briefly described in the Introduction, and in much more detail at the end, in the Conclusions and Implications section.

Response 7: Agree. we have revised the Introduction to explicitly state the key research gaps, namely, the lack of comparative empirical studies examining the impact of digitalization on sustainable development across both developed and developing countries, and the limited integration of institutional quality variables such as corruption into such analyses. We now clearly articulate our motivation: to clarify the heterogeneous effects of digital indicators on sustainable development as measured by the Human Development Index (HDI). Contributions are summarized in the Introduction and further detailed in the Conclusion and Implications section. In the revised manuscript this change can be found on page 3 , paragraph 2, and line 99.

Comments 8: You introduced two research hypotheses in the Introduction, but I cannot conclude on what basis? On which sources are your hypotheses grounded? Particularly focus on your second hypothesis about the impact of corruption on the Sustainable Human Index. Namely, I did not notice that you cited any sources supporting your second research assumption. Hypotheses that are not theoretically grounded do not belong in the Introduction, but in the following section, which you should rename to Literature Review. It is necessary to proofread the entire text. I suggest renaming the second subsection of your paper to "Literature Review and Hypothesis Development.

Response 8: In response, we have made the following revisions:

1. We moved the discussion of the two research hypotheses from the Introduction to a newly renamed section titled “Literature Review and Hypothesis Development”, in line with your suggestion.
2. We strengthened the theoretical grounding of both hypotheses, particularly the second hypothesis on the negative impact of corruption on sustainable human development. We now support this assumption with relevant literature

In the revised manuscript this change can be found on page 3 , paragraph 3, and line 123.and on page 6 , paragraph 4, and line 245

Comments 9 : In the second subsection, Literature Review, in the sentence in lines 111–113, you wrote:

“Using a GMM method on a sample of 41 sub-Saharan African countries and OECD countries over the period 2006–2016, they found out that digital innovations have a positive impact on the economic growth.” What does the abbreviation GMM method stand for? Generalized Method of Moments? You need to spell out every abbreviation the first time it is used.

Response 9: We have revised the sentence to spell out the abbreviation upon its first use.  In the revised manuscript this change can be found on page 4 , paragraph 1, and line 136.

 

 

 

Comments 10: In their turn, Fernandez-Portillo et al (2020) studied…”put a period after 'et al.'Likewise, in the sentence on line 129,“Second, from a social perspective, Imran et al (2022)…”add a period after 'et al.'As you have other inappropriately cited sources in the text, please review all in-text citations and correct them according to citation rules.

Response 10; Thank you for your observation. We have carefully reviewed and corrected all in-text citations throughout the manuscript to ensure proper punctuation and adherence to citation standards. Specifically, we have added the appropriate periods after "et al." in all instances (e.g., Fernandez-Portillo et al. (2020) and Imran et al. (2022)).  In the revised manuscript this change can be found on page 4, paragraph 3, and line 144 and 155

Comments11: Within and GLS methods…”For both econometric model estimation methods in statistics and economics, provide sources! Why? Although these methods may seem like common knowledge in statistics and econometrics, many readers may not be familiar with them

      Response 11: Thank you for your insightful comment. We agree that not all readers may be familiar with the Within and Generalized Least Squares (GLS) estimation methods, even though they are commonly used in econometrics. To address this, we have added appropriate references to explain both techniques. Specifically, we have cited:

• Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data. MIT Press – for a detailed explanation of the Within estimator.
• Greene, W. H. (2018). Econometric Analysis (8th ed.). Pearson – for a comprehensive discussion on the GLS method.

 In the revised manuscript this change can be found on page 4, paragraph 5, and line 175

       Comments 12: In line 163, correct the source “Feng, X., et al (2025)” to Feng et al. (2025)

Response 12 :Thank you for your careful reading. The in-text citation has been corrected to: Feng et al. (2025) in accordance with citation standards. In the revised manuscript this change can be found on page 5 , paragraph 1, and line 189

Comment 13: In line 221, remove the period at the end of the title of the first table

Response 13: The period at the end of the title of Table 1 has been removed as requested.

Comments 14:I n line 226, correct the source to:

Zhao et al. (2020)

Response 14: The in-text citation has been corrected to: Zhao et al. (2020) and Mohammedi et al. (2022)

in accordance with citation standards. In the revised manuscript this change can be found on page 9, paragraph 1, and line 318

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

1. Weak theoretical integration (p.2, line 55)

The paper adopts the TBL framework as the foundational concept of SD, but does not sufficiently integrate or operationalize key sustainability theories within the empirical analysis. SD is multidimensional, encompassing economic, social, and environmental factors (as reflected in TBL). However, the study relies solely on HDI, which primarily focuses on social and environmental dimensions, while neglecting environmental and institutional factors.

2. Over-reliance on HDI as sole proxy for SD (p.8, line 312)

See (1). This limitation may affect the findings of the paper, particularly in light of digitalization and corruption, which can impact environmental outcomes and institutional integrity

Let’s think about including other indices such as SDG, governance, or institutional indicators, etc. By doing so, the paper will provide more nuanced and policy-relevant insights.

3. Insufficient explanations on the negative impact of internet use and fixed capital formation on SD (p.19)

The findings of the empirical analysis contradict the majority of existing studies, which generally show positive or neutral effects. The paper lacks a sufficient theoretical or contextual explanation to explain why increased internet use and capital investment do not translate into SD in countries.

4. Contradictory Interpretation of Corruption Indicators (p.15, line 454 & p.19, line 576)

H2 posits a negative impact of corruption on SD. Yet, the empirical results suggest that the effect of corruption on SD is weak/marginal in developing countries. This raises the question: Does corruption really hinder development in these countries as expected?

5. Lack of clarity in methodological choices (p.17, line 497)

What makes the Arellano-Bond method more appropriate than alternatives? The justification should be more rigorous.

6. Policy recommendations are vague (p.1, line 20)

In the abstract, empirical findings show that the digital economy has mixed effects in developing countries. Thus, the policy implications mentioned here are somehow vague. How should policymakers in developing countries use these findings if the results are mixed?

7. Lack of theoretical rationale or literature for including macroeconomic explanatory variables in the model (TOP, PGR, PUBC, GFCF) (p.9)

That the explanatory variables are included without clear justification might lead to the question of whether they are appropriate or meaningful in the context of analysis, in some cases, even undermining confidence in the validity and interpretability of the regression results.

8. Unrelated conclusions (p.19, line 576)

The question of how digital technology, digitization, and the Internet are considered as better solutions for cryptocurrencies and for the stability of the global ecosystem does not relate much to the findings/conclusions of the paper. Let’s consider moving this sentence to a separate part “Future Research”.

9. Inconsistent terminologies (p.8 (Table 1) & p.9, line 319)

In Table 1, the internet user is written as UINT, while it is INTU on page 9. Please standardize terminology across the paper.

10. Minor mistakes/typos in data analysis and numbers (p. 11, Table 5 & p.15, line 454)

In Table 5, the coefficient of CoCr is 0.6314, showing a positive correlation with HDI, meaning that better corruption control is associated with higher HDI. However, the empirical regression suggests a “marginal” effect of corruption control on HDI in developing countries (page 15). Check it!

Some typos: e.g., extra dot (Table 7)

Reduce the similarity to under 15%

Comments on the Quality of English Language

The English could be improved to more clearly express the research.

Author Response

Comment 1: 1.     Weak theoretical integration (p.2, line 55) The paper adopts the TBL framework as the foundational concept of SD, but does not sufficiently integrate or operationalize key sustainability theories within the empirical analysis. SD is multidimensional, encompassing economic, social, and environmental factors (as reflected in TBL). However, the study relies solely on HDI, which primarily focuses on social and environmental dimensions, while neglecting environmental and institutional factors. 2.     Over-reliance on HDI as sole proxy for SD (p.8, line 312) See (1). This limitation may affect the findings of the paper, particularly in light of digitalization and corruption, which can impact environmental outcomes and institutional integrity. Let’s think about including other indices such as SDG, governance, or institutional indicators, etc. By doing so, the paper will provide more nuanced and policy-relevant insights.

Responses 1, 2: Thank you for pointing this out. We agree with you regarding the theoretical integration of the TBL framework and the reliance on HDI as a proxy for sustainable development. While we fully recognize that sustainable development is inherently multidimensional, encompassing economic, social, environmental, and institutional dimensions, we chose the Human Development Index (HDI) as our primary indicator for both conceptual and empirical reasons. HDI is a globally recognized composite measure that captures key aspects of human well-being, particularly health, education, and income, and thus aligns closely with the social and economic pillars of the TBL framework. Although HDI does not explicitly include environmental or institutional factors, it provides a practical and widely used approximation of sustainable development, especially in cross-country studies where data availability and consistency are critical. Furthermore, the influence of digitalization and corruption is most immediately observable in human development outcomes, which HDI effectively captures. While the current empirical model is based on HDI, we view this as a foundational step and welcome future extensions that incorporate a broader set of sustainability metrics, particularly those that capture environmental integrity and institutional strength in the digital era.

Comment 3:  Insufficient explanations on the negative impact of internet use and fixed capital formation on SD (p.19)

Response 3: Agree. We acknowledge that our findings, indicating a negative association between internet use, fixed capital formation, and sustainable development in developing economies, diverge from the prevailing literature, which often reports positive or neutral effects. To address this, we have expanded the discussion in the manuscript (see p.18 line 550) to provide a more robust theoretical and contextual explanation. Specifically, we argue that in the context of many developing countries, the benefits of internet expansion and capital investment may not materialize due to weak institutional environments, inadequate digital infrastructure, low absorptive capacity and corruption or misallocation of resources. These contextual factors help explain why increased internet penetration or capital investment may not automatically translate into improved sustainability outcomes in the absence of good governance, inclusive policies, and strategic development planning. Comment 4: Contradictory Interpretation of Corruption Indicators (p.15, line 454 & p.19, line 576) H2 posits a negative impact of corruption on SD. Yet, the empirical results suggest that the effect of corruption on SD is weak/marginal in developing countries. This raises the question: Does corruption really hinder development in these countries as expected? Response 4: We thank you for highlighting the apparent contradiction between Hypothesis 2 and the empirical findings. While H2 posits that corruption negatively impacts sustainable development (SD), our results show only a marginal effect in developing countries. We interpret this in light of contextual factors: in many developing economies, corruption may be deeply institutionalized, reducing its observable marginal impact. Additionally, the perception-based nature of corruption indices may limit their sensitivity to sector-specific effects on SD. We have revised the manuscript (see p.15 line 465)  to incorporate this nuanced explanation and clarified that while corruption remains theoretically detrimental, its measurable impact may be context-dependent and indirect in certain settings. Comment 5: Lack of clarity in methodological choices (p.17, line 497) What makes the Arellano-Bond method more appropriate than alternatives? The justification should be more rigorous Response 5: Agree. We have revised the manuscript (see p.18 line 526) to provide a clearer justification for our use of the Arellano–Bond (1991) two-step GMM estimator. This method is particularly appropriate given the dynamic nature of our model, the likely endogeneity of key regressors (e.g., internet use, corruption, capital formation), and the short time dimension of our panel. The estimator also addresses unobserved heterogeneity via first-differencing and employs internal instruments to reduce bias. Diagnostic tests (AR(2), Sargan) confirm the model’s validity. Comments 6:  Policy recommendations are vague (p.1, line 20) In the abstract, empirical findings show that the digital economy has mixed effects in developing countries. Thus, the policy implications mentioned here are somehow vague. How should policymakers in developing countries use these findings if the results are mixed? Response 6: Agree, the mixed effects of the digital economy underscore that digitalization alone is insufficient for sustainable development. We have revised the abstract (see p.1 line 20) to clarify that policy implications are context-specific: digital transformation must be accompanied by investments in infrastructure, institutional quality, and digital inclusion. This perspective offers targeted, actionable guidance rather than broad recommendations. Comment 7:  Lack of theoretical rationale or literature for including macroeconomic explanatory variables in the model (TOP, PGR, PUBC, GFCF) (p.9) That the explanatory variables are included without clear justification might lead to the question of whether they are appropriate or meaningful in the context of analysis, in some cases, even undermining confidence in the validity and interpretability of the regression results. Response 7: We appreciate your concern regarding the theoretical justification for including the macroeconomic explanatory variables. These variables have been widely used in the sustainable development literature due to their well-documented roles in influencing economic growth, resource distribution, and institutional capacity, which are fundamental components of sustainable development as proxied by the Human Development Index (HDI). These variables are thus not only theoretically relevant but empirically validated in prior studies examining determinants of HDI or broader sustainable development indicators Comment 8: Unrelated conclusions (p.19, line 576) The question of how digital technology, digitization, and the Internet are considered as better solutions for cryptocurrencies and for the stability of the global ecosystem does not relate much to the findings/conclusions of the paper. Let’s consider moving this sentence to a separate part “Future Research”. Response 8: Thank you for this helpful suggestion. We agree that the sentence discussing the broader implications of digital technology, digitization, and cryptocurrency does not directly relate to the core findings and conclusions of our study. To improve the coherence and relevance of the conclusion, we have moved this statement to the last paragraph of the conclusion (see p.30 line 643) where we briefly outline potential areas for extended investigation, such as the role of digital innovations, including cryptocurrencies, in shaping sustainable development and global digital ecosystems Comment 9 : Inconsistent terminologies (p.8 (Table 1) & p.9, line 319) Response 9: Thank you for pointing out the inconsistency in the abbreviation of the Internet User variable (UINT vs. INTU). We have carefully reviewed the manuscript and standardized the terminology to INTU across all tables, figures, and text to maintain consistency and clarity. Comment 10: Minor mistakes/typos in data analysis and numbers (p. 11, Table 5 & p.15, line 454) Response 10: Thank you for your close reading and thoughtful comments Regarding the coefficient of CoCr in Table 5, We thank you for raising this important point regarding the interpretation of the coefficient of corruption control (CoCr) in Table 5. While the positive coefficient (0.6314) indicates a statistically significant positive correlation between corruption control and HDI, it is important to emphasize that a strong correlation does not necessarily imply a substantial or causal long-term effect. The coefficient reflects the strength of the statistical association at the point of estimation, but the marginal effect on HDI, especially in developing countries, may remain limited due to other structural factors and the complex nature of development processes. Therefore, our empirical results suggest that despite this positive association, the long-term impact of improved corruption control on HDI might be marginal. Regarding typographical issues (e.g., extra dot in Table 7): We appreciate your attention to detail. We have carefully reviewed the tables and corrected the noted typographical errors for clarity and consistency.

Author Response File: Author Response.docx

Reviewer 4 Report

Comments and Suggestions for Authors

I extend my congratulations to the authors for their dedicated effort and for incorporating the reviewers' suggestions. This paper makes a meaningful contribution to both theoretical discourse and policy development, and it rightfully merits the attention of the academic community as well as policymakers.

Author Response

Comment 1:  I extend my congratulations to the authors for their dedicated effort and for incorporating the reviewers' suggestions. This paper makes a meaningful contribution to both theoretical discourse and policy development, and it rightfully merits the attention of the academic community as well as policymakers.

Response 1: We sincerely thank you for your thoughtful and encouraging feedback. We are grateful for your recognition of our efforts in revising the manuscript and for your kind words regarding the paper's contribution to both theoretical and policy discussions. Your comments are deeply appreciated and have been motivating throughout the revision process.

Round 3

Reviewer 1 Report

Comments and Suggestions for Authors

Please find the attachment.

Comments for author File: Comments.pdf

Comments on the Quality of English Language

None

Author Response

I would like to express my sincere gratitude for your valuable time and thoughtful efforts in reviewing my manuscript. I deeply appreciate your insightful comments and constructive suggestions, which have been instrumental in enhancing the quality of the revised version. I hope that, after careful and thorough revisions, the manuscript now meets your high standards and expectations

2. Over-reliance on HDI as sole proxy for SD (p.8, line 312)

Comment: HDI is not really strong enough to represent SD, so you should consider changing the topic name or finding another factor to represent SD besides HDI, to increase the stability of your results.

Response :Thank you for your thoughtful comment. I agree with you that while the Human Development Index (HDI) is not fully sufficient to represent sustainable development in all its dimensions, it does aim to integrate both environmental and socioeconomic factors, with a focus on improving quality of life and aligning human needs with sustainable capacities. Human development remains a central objective of national policies, and HDI is widely used as a benchmark for assessing progress in this area. Its simple composition, well-chosen sub-indicators, and rich connotation make it one of the most referenced and useful indices in sustainability research.

Comment 3: Insufficient explanations on the negative impact of internet use and fixed capital formation on SD (p.19)

Response 3: Agree. We acknowledge that our findings, indicating a negative association between internet use, fixed capital formation, and sustainable development in developing economies, diverge from the prevailing literature, which often reports positive or neutral effects.

To address this, we have expanded the discussion in the manuscript (see p.18 line 550) to provide a more robust theoretical and contextual explanation. Specifically, we argue that in the context of many developing countries, the benefits of internet expansion and capital investment may not materialize due to weak institutional environments, inadequate digital infrastructure, low absorptive capacity and corruption or misallocation of resources. These contextual factors help explain why increased internet penetration or capital investment may not automatically translate into improved sustainability outcomes in the absence of good governance, inclusive policies, and strategic development planning.

Comment: I think the authors should build a representative index for the country’s digitalization by applying PCA to the digitalization issue representatives to get an overall view. Then, they should separate it into sub- components, and at the same time, they need to consider the effects of the sub- components in different small equations to avoid the case of multicollinearity occurring between these sub-components.

Response: Thank you for your thoughtful suggestion. While we acknowledge the value of constructing a representative digitalization index, such as through Principal Component Analysis (PCA) or entropy-based methods, we respectfully disagree with implementing this approach in the current study. Our primary objective is to examine the direct and intersecting impacts of selected digitalization-related variables on sustainable development. We choose to disaggregate indicators to maintain transparency and avoid potential subjectivity in index construction. While we agree that building a composite digitalization index could offer a broader perspective, such an approach would shift the focus of the current study. Instead, we consider this suggestion to be an excellent avenue for future research, particularly in studies aiming to develop a more holistic measure of digitalization or to address potential multicollinearity by aggregating highly correlated variables.

Comment 4: Contradictory Interpretation of Corruption Indicators (p.15, line 454 & p.19, line 576)

H2 posits a negative impact of corruption on SD. Yet, the empirical results suggest that the effect of corruption on SD is weak/marginal in developing countries. This raises the question: Does corruption really hinder development in these countries as expected?

Response 4: We thank you for highlighting the apparent contradiction between Hypothesis 2 and the empirical findings. While H2 posits that corruption negatively impacts sustainable development (SD), our results show only a marginal effect in developing countries. We interpret this in light of contextual factors: in many developing economies, corruption may be deeply institutionalized, reducing its observable marginal impact. Additionally, the perception-based nature of corruption indices may limit their sensitivity to sector-specific effects on SD. We have revised the manuscript (see p.15 line 465) to incorporate this nuanced explanation and clarified that while corruption remains theoretically detrimental, its measurable impact may be context-dependent and indirect in certain settings.

Comment: I think you need to reconsider using both CPI and COCOR in your research model because both variables are proxies for national corruption (different in measurement). Moreover, it is clear that studies in developing countries emphasise corruption as an issue that these countries have to deal with, while in developed countries, this issue is almost negligible. So, your current results - it may cause controversy when compared to developed countries; the impact of corruption on the SD of developing countries is lower.

Response: Thank you for this pertinent observation. We agree that CPI (Corruption Perceptions Index) and COCOR (Control of Corruption from the Worldwide Governance Indicators) are both proxies for national corruption, albeit constructed using different methodologies and data sources. While they may appear redundant, we intentionally included both indicators to enhance the robustness and comparability of our findings.

CPI is perception-based and widely recognized for its cross-country comparability, drawing from expert assessments and business surveys. COCOR, on the other hand, reflects institutional quality and governance capacity, and is constructed through a broader framework encompassing multiple data sources. By using both, we aimed to capture different dimensions and nuances of corruption in developing countries, CPI more closely reflects public perception, while COCOR indicates governance effectiveness in controlling corruption. Furthermore, it is important to recognize that the impact of corruption on sustainable development (SD) may vary across levels of national development. In developed countries, corruption tends to be less visible or institutionally managed, whereas in developing countries, it is a more direct barrier to institutional performance and public service delivery. Interestingly, our findings suggest a weaker marginal impact of corruption on SD in developing countries. This should not be interpreted as corruption being less important in these contexts, but rather as an indication that other fundamental development constraints may mask or mediate its effects.

Comment 5: Lack of clarity in methodological choices (p.17, line 497) 

What makes the Arellano-Bond method more appropriate than alternatives? The justification should be more rigorous

Response 5: Agree. We have revised the manuscript (see p.18 line 526) to provide a clearer justification for our use of the Arellano–Bond (1991) two-step GMM estimator. This method is particularly appropriate given the dynamic nature of our model, the likely endogeneity of key regressors (e.g., internet use, corruption, capital formation), and the short time dimension of our panel. The estimator also addresses unobserved heterogeneity via first-differencing and employs internal instruments to reduce bias. Diagnostic tests (AR (2), Sargan) confirm the model’s validity.

Comment: Although you have made some arguments regarding why you should use GMM, I still think that you have not thoroughly addressed the issue that I raised. Specifically, you need to demonstrate that the endogeneity problem is inherent in the research model, as well as the necessary tests to show that autocorrelation and heteroscedasticity exist. Because besides GMM, 2SLS still solves the endogeneity problem well.

      Response: Thank you for your thoughtful and constructive comment. We agree that addressing the potential endogeneity problem is essential to the reliability of our empirical findings. In the revised manuscript, we have included an additional table presenting key diagnostic tests. These tests assess potential issues such as endogeneity, autocorrelation, and heteroscedasticity.

We have elaborated on this justification in the methodology section and added a new table summarizing the diagnostic test results Table 11) (see p.17, Line 520). We hope this provides sufficient clarity regarding our choice of estimator and demonstrates the robustness of our model.

Comment 7: Lack of theoretical rationale or literature for including macroeconomic explanatory variables in the model (TOP, PGR, PUBC, GFCF) (p.9)

 

That the explanatory variables are included without clear justification might lead to the question of whether they are appropriate or meaningful in the context of analysis, in some cases, even undermining confidence in the validity and interpretability of the regression results.

Response 7: We appreciate your concern regarding the theoretical justification for including the macroeconomic explanatory variables. These variables have been widely used in the sustainable development literature due to their well-documented roles in influencing economic growth, resource distribution, and institutional capacity, which are fundamental components of sustainable development as proxied by the Human Development Index (HDI).

These variables are thus not only theoretically relevant but empirically validated in prior studies examining determinants of HDI or broader sustainable development indicators

 Comment: I have not seen any theoretical basis or empirical evidence to include macro variables in your study. Because including variables without any basis can cause spurious regressions – a common problem when analyzing ECM/VECM models. So, I think you need to add more theories or at least some empirical studies to support the fact that the macro variables you include significantly impact SD.

    Response: Thank you once again for your helpful comment and for pointing out the need to provide stronger theoretical and empirical support for the inclusion of macroeconomic variables in our model. We have revised the manuscript accordingly to address this gap (see P. 8 Line 304).

GMM results: I think you need to review the results in Table 11 regarding GMM because your Sargan test has a p-value that is too high (close to 1) or even too low (close to 0). This can cause spurious regressions since you may use more instruments than the number of countries you analyse. So you need to provide me with the number of instruments you used. Also, if the Sargan p-value = 0.0000, it implies that the instruments do not address endogeneity, leading to inappropriate GMM results. Besides, regarding GMM, the second-order autocorrelation test, AR(2), is more necessary than the first-order one. So, you need to add the AR(2) test results.

Response: Thank you for your insightful observation concerning the Sargan test results. You are

absolutely right to be cautious about the Sargan test and its implications, especially when the p-value is either very high (close to 1) or very low (close to 0).

We sincerely apologize for the error we made while reproducing the results of Table 11 in the latest manuscript version. Unfortunately, we did not pay close enough attention and mistakenly wrote the numbers marked in green instead of the values colored in yellow. We are grateful for your observation and will make the necessary corrections in the Table 12 by substituting green values by yellow variables.

Sargran	1.624493/109		61012.016245		14.5581	289.0876
Significance	1.0000		0.0000		0.8966	0.0000
Auto-correlated Errors Test in difference equation
m2		0.8077		0.1502	0.6979		0.1599
LB=Q		1409.031 (0.000000)		6.975 (1.000000)	559.756 (0.000000)		3.005 (1.000000)

 ( see p.18, line 549)

Reminder that the null hypothesis H0 of the Sargan test is that all overidentifying restrictions or instruments are valid and the alternative hypothesis H1 is: Invalid overidentifying restriction condition in model estimation. The key to overcoming endogeneity in the difference GMM model is using valid instruments. Instruments are variables that are correlated with the endogenous regressors but uncorrelated with the error term. Validating instruments through tests like the Sargan test is crucial to ensure the reliability of the GMM estimator.

As reported in Table 12, the Sargan test yields a p-value of 0.1502, which exceeds the 0.05 significance level. Consequently, we do not reject the null hypothesis, indicating that the overidentifying restrictions are valid under the two-step estimation approach for the case of developing countries. Similarly, in the context of developing countries, the Sargan test result show that the value of Prob = 0.1599 > 0.05 and thus did not reject H0 confirming the appropriateness of the two-step estimation method.

Please see attachement

Author Response File: Author Response.docx