THE IMPACT OF THE DIGITAL ECONOMY ON URBAN POVERTY IN ARAB COUNTRIES: EVIDENCE FROM MENA USING ARDL AND NARDL

In the Arab urban context, poverty remains a constant burden, defined by house informality and limited access to basic services. Rapid digitalisation, especially mobile connectivity, is often promoted as a bridge to inclusion, yet its influences on poverty may be nonlinear and asymmetric. Using the log-log Autoregressive Distributed Lag (ARDL) and Nonlinear ARDL (NARDL), this paper analyses the link between digital connectivity and urban poverty in Morocco and Tunisia from 2000 to 2019. Urban poverty is proxied by the percentage of urban population living in slums, while mobile cellular subscriptions per 100 people proxy the digital economy. ARDL bounding tests confirm co-integration in both countries, showing stable long-run relationships. Long-run elasticities indicate that higher mobile connectivity reduces urban poverty, with effects of -0.286 (Morocco) and -1.099 (Tunisia). Error-correction suggests gradual adjustment towards equilibrium (14%/year in Morocco, 7% in Tunisia). NARDL estimates reveals strong asymmetry in Morocco, where negative digital shocks have stronger long-run effects than positive expansions; Tunisia is less asymmetric and cannot survive a conservative inference. Therefore, when digitalisation can help alleviate urban poverty, policies must build resilience to negative digital shocks, and ensure connectivity growth is accompanied by inclusive urban development.