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H1: DIG has a positive impact on SDG.
H2: The Internet improves SDG.
H3: Fintech promotes sustainable development through financial inclusion.
H4: Econ has a nonlinear impact on SDG.

Figure 3. The model of digital economy factors affecting sustainable development
Source: Compiled by the author
DIG Factor: This factor is developed based on Paul Romer’s (1990) endogenous
growth theory, which argues that technology is an endogenous factor determining long-
term growth. Digitalization enhances productivity, generates technological spillovers, and
reduces transaction costs. DIG is considered an expanded form of technological capital
that affects all three pillars of the SDGs. Joseph Schumpeter’s (1942) innovation theory
also provides the theoretical foundation of “Creative Destruction,” in which technological
innovation drives growth. Digitalization creates new business models, platform
economies, and startup ecosystems. Innovation thus has a positive impact on sustainable
growth.
Internet Factor: This factor is grounded in Network Effects theory, which suggests
that the Internet creates increasing value as the number of users grows, thereby
promoting knowledge diffusion and market connectivity. Network effects explain why the
Internet can improve economic growth, expand access to education, and enhance
information transparency. Social capital theory also argues that the Internet strengthens
social connections, promotes financial inclusion, improves governance transparency, and
enhances access to public services, aligning with SDGs 9, 10, and 16. This theory
originated with Jeffrey Rohlfs (1974), was further developed by Michael Katz and Carl
Shapiro (1985), and later extended to the digital economy by Joseph Farrell and Garth
Saloner (1985–1986), along with Metcalfe’s Law (1980s).
Econ Factor: This factor is based on Robert Solow’s (1956) neoclassical growth
theory, which identifies capital and technology as determinants of output. A higher level
of economic development increases resources available for environmental investment
and social welfare improvement. Simon Kuznets’ (1955) Environmental Kuznets Curve
theory suggests that in the early stages of growth, pollution increases; however, in later
stages, pollution declines. Therefore, Econ may have a nonlinear impact on SDGs.
Fintech Factor: This factor is derived from Ross Levine’s (1997) finance–
development theory, which posits that a developed financial system promotes growth

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