The Effect of Cybercrime on Digital Economy Growth: A Global Analysis

Abstract

The rapid expansion of the digital global economy in the modern digital era has delved led re-conceptualized global relations, unleashing a seldom-before-seen competition, innovation and interactivity. But this extraordinary growth is countered by the equally accelerated growth in cybercrime which undermines trust in digital infrastructures, exudes costs in the operation framework and threatens unsustainable economic growth. It is in this context that the current paper has sought to delve into the global implications of cyber criminality on the development pattern of digital economies thus sealing a respected gap in the current academic literature that has focused its study to regional or industrial levels. Using cross nation repositories such as the World Bank, the IMD Digital Competitiveness Index, ITU, UNODC, and the Global Cyber security Index, the analysis illustrates serious economies of scale to measure the correlation between cybercrime events and the economic performance in digital space through rigorous econometric methods, including, panel regression enhanced by Generalized Method of Moments (GMM). It is found that a negative relationship is statistically robust, with negative impacts over-represented in developing economies that have weaker institutional resilience and suboptimal cyber security readiness. Banking and e- commerce are also identified as specifically vulnerable and they may receive more emphasis due to a nuanced breakdown of sectors; a burden of the costs and lack of customers confidence. However, the evidence highlights that the negative significance of these effects can be reduced by applying strategic investment in the cyber security innovation; thus, enhancing the resilience and restoring digital trust. The theoretical work is found in both the application of the Solow growth model and the Becker crime model to the online realm, and the empirical knowledge generates policy usefulness in the hands of policy makers. Recommendations promote reinforcement of legal systems of the world, increased cross-border collaboration, and raising cyber security to higher levels of development. After all, the challenge of cybercrime is presumed to be not only a security need but, to inclusive digital expansion, an undeniable economic necessity.