Digital Transformation and Inclusive Development in Saudi Arabia: Assessing the Social Consequences of an Accelerating Digital Economy

Can we conclude that rapid digital transformation leads to geographically equitable development? This research paper investigates the simultaneous and spatial dynamics of digital development and digital inclusion within the administrative regions of Saudi Arabia from 2012 to 2024. The research employs β-convergence, σ-convergence, Theil inequality decomposition techniques, and Spatial Durbin Models (SDM) to determine whether successful digital advancement results in better inclusion. The findings present a significant discrepancy between technological improvement and its results in terms of equity. The Digital Progress Index (DPI) reveals that convergence occurs at 4.71% annually, while the Digital Inclusion Score (DIS) reaches only 1.41% per year. While there is a significant reduction in the spread of digital progress, the outcome for digital inclusion inequality is only 15%, which has been stagnant after 2020. The Theil decomposition indicates that the inequality component among the regions has dropped from 69.7% to 39.8%, and the inequality gap among regions has increased. The SD estimates demonstrate that digital infrastructure has a positive influence across the regions, indicating that digital advancement also produces wider benefits. However, they are insufficient to solve the inclusion issues. The results refute the belief that rapid digitalization brings about geographically inclusive development, as the report argues that the processes of digital advancement and digital inclusion occur along separate convergence trajectories. As a result, the question raised by this research is how to migrate from infrastructure-based digitalization to place-based policies that will enable investments in digital capabilities, affordability, accessibility, and economic impediments, affecting the implementation of Vision 2030 in Saudi Arabia, among other rapidly digitalized economies.