Digital Connectivity, Financial Development, and Economic Performance in BRICS Economies: Evidence from Robust Panel Estimators and Distributional Dynamics

This study explores the drivers of economic growth in the BRICS economies—Brazil, Russia, India, China, and South Africa—over the period 1994–2024, focusing on the roles of digital infrastructure and financial development. Using a balanced panel, we examine how internet connectivity and access to credit shape growth, both independently and in combination, while accounting for gross fixed capital formation, urbanization, and government expenditure. Given the macro-panel structure, which exhibits heteroskedasticity, serial correlation, and cross-sectional dependence, we employ robust estimation techniques, including Driscoll–Kraay standard errors (DKSE), Feasible Generalized Least Squares (FGLS), and Panel-Corrected Standard Errors (PCSE). To capture potential heterogeneity across different growth scenarios, we further apply the Method of Moments Quantile Regression (MMQR) as a robustness check. Our findings show that both internet connectivity and financial development consistently promote economic growth across all main specifications. Importantly, the interaction between these two factors is also significant, indicating that the benefits of digital infrastructure are stronger in countries with deeper financial systems, and vice versa. Among the control variables, capital accumulation and government spending positively contribute to growth, while urbanization exhibits a negative association, reflecting the structural challenges of rapid urban expansion. MMQR results confirm that these relationships hold across low-, medium-, and high-growth periods, highlighting their broad relevance. These findings highlight the synergistic role of technological and financial development and underscore the importance of integrated policies to sustain long-term, inclusive growth in the BRICS economies. This study suggests that policymakers should adopt integrated strategies that enhance digital connectivity, deepen financial development, and support productive public investment to sustain inclusive and resilient economic growth.