The impact of digital transformation capacity on the human development index in Central and Central Highlands provinces

Abstract

This study examines the impact of digital transformation capacity on the Human Development Index (HDI) across provinces in Vietnam’s Central and Central Highlands regions, emphasizing spatial interdependencies among these localities. Using spatial econometric regression techniques applied to a balanced panel dataset of 19 provinces between 2016 and 2022, the analysis provides robust evidence on the drivers of human development in the context of digitalization and regional integration. The results indicate a positive and statistically significant effect of per capita income on HDI, reinforcing development theory that economic prosperity plays a foundational role in improving the quality of life. Higher income levels not only expand access to education, healthcare, and improved living conditions, but also enhance fiscal capacity for local governments to strengthen social infrastructure. Findings further reveal that the Information and Communication Technology Readiness Index exerts a strong and positive impact on HDI. This highlights digital transformation as a catalyst for accelerating socio-economic progress by improving public service delivery, promoting innovation, expanding connectivity, and fostering social inclusion. In contrast, the Provincial Competitiveness Index does not display a statistically significant effect on HDI within the study period. This result suggests that while institutional reforms and improvements to the business environment remain important for long-term development, their contribution to immediate human development outcomes may be indirect or contingent on complementary factors. Importantly, the spatial analysis identifies substantial spillover effects: gains in HDI in one province are positively associated with neighboring provinces, underscoring the relevance of regional linkages, coordinated policy frameworks, and inter-provincial cooperation. Collectively, the findings provide new empirical insights that position digital transformation capacity and spatial dynamics as critical levers for fostering inclusive and sustainable human development in transitional economies.