Conference Paper
Does Digital Transformation Reduce Social Inequalities in MENA Countries?
Publisher
ERF
Date
May, 2026
Topic
D. Microeconomics
This study examines the effect of digital transformation on social inequalities in the MENA region separately and then moderated by institutional quality (government effectiveness, rule of law, regulatory quality, and political stability). A two-stage least squares regression method was used for a sample of 14 Arab MENA countries observed from 2012 to 2022. Four composite indices of social inequality were constructed using principal component analysis: health and well-being, education and economic participation, economic inequality and social inclusion, and health infrastructure and spending. Digital transformation was measured using five key indicators from the international telecommunication union. The results indicate significant positive relationships between digital transformation and the reduction of social inequalities across all dimensions. Furthermore, government effectiveness and political stability moderate this relationship; these institutional dimensions separately amplify the positive impact of digital transformation on inequality reduction. Moreover, rule of law shows no significant moderating effect, while regulatory quality demonstrates weak and inconsistent moderating effects. Splitting our sample according to country-specific features (gulf cooperation council (GCC) countries versus non-GCC countries) confirms our findings and reveals that digital transformation's inequality-reducing effects are stronger in non-GCC countries, where institutional quality moderators become far more significant. Governments and policymakers in the MENA region have to be aware of the inequality-reducing potential of digital transformation. In addition, they have to prioritize institutional quality improvements, particularly government effectiveness and political stability, when they seek to maximize the social benefits of digital transformation initiatives. This paper offers an in-depth understanding of the impact of digital transformation on social inequalities. Some recommendations on the importance of strengthening institutional frameworks are highlighted; encouraging governments to invest in both digital infrastructure and institutional capacity building to ensure that digital transformation serves as a tool for equity rather than exclusion in this region.
Authors
Naima Lassoued
Full Professor of Finance, Higher School of...
Authors
Ilyes Mekni
PhD Candidate in Finance and Adjunct Lecturer,...