• Uses ARDL bounds testing to examine digitalization, FDI, energy, R&D and growth. • Finds positive long-run effects of digital transformation and R&D on GDP per capita. • Detects complementarities: digitalization amplifies FDI and R&D impacts. • Discusses about digital infrastructure, R&D incentives, and energy efficiency. This study investigates the relationships between digital transformation (DIG), foreign direct investment (FDI), energy use (EN), research and development (R&D) investment, and economic growth (EG) in Canada over the period 1990–2024. DIG is proxied by the digital economy share, reflecting the contribution of digitally enabled activities to national output. Using the autoregressive distributed lag (ARDL) bounds testing approach, along with FMOLS, DOLS, and nonlinear robustness estimations, the study examines both long- and short-run dynamics among the variables. The results confirm the existence of a stable long-run relationship. DIG and R&D investment exert positive, statistically significant effects on EG, while FDI exerts a smaller, positive effect. The interaction terms reveal that digitalization strengthens the growth effects of both FDI and R&D, highlighting the complementary role of digital capabilities in enhancing innovation and technology spillovers. By contrast, the effect of EN becomes weak once digitalization and innovation variables are included, suggesting a partial decoupling between EG and aggregate energy consumption in Canada. Additional causality and structural-break analyses indicate that the DIG–growth relationship became stronger during the post-pandemic period. The findings suggest that policies promoting digital infrastructure, innovation ecosystems, and technology-oriented investment can support sustainable long-term EG in advanced economies.
Vu et al. (Fri,) studied this question.