Author(s):
Rabail Zareen, Dr. Areesha Javed*
Corresponding Author: areeshajaved5@gmail.com

Abstract:

This study examined the impact of digital infrastructure and AI readiness on SME dynamism across 153 countries during 2010–2022. Using secondary panel data from the World Bank World Development Indicators, the study constructed a complete-case dataset of 1,571 country-year observations. SME dynamism was measured through new business density, while digital infrastructure was represented through fixed broadband subscriptions and secure internet servers. AI readiness was measured through a proxy index based on secure internet servers and ICT goods exports. GDP growth and inflation were included as macroeconomic control variables. The analysis used descriptive statistics, annual mean trends, correlation and VIF diagnostics, pooled OLS, country fixed-effects regression, two-way fixed-effects regression, and robustness specifications. The descriptive results showed that SME dynamism and digital infrastructure generally increased during the study period. The correlation analysis showed a strong positive association between digital infrastructure and SME dynamism, while AI readiness had a weaker positive association. However, the regression results became more cautious after controlling for country and year effects. Digital infrastructure was positive and significant in pooled OLS and country fixed-effects models but became statistically insignificant in the two-way fixed-effects model. The AI readiness proxy remained insignificant across the main and robustness models. GDP growth showed a more consistent positive relationship with SME dynamism. The findings suggest that digital infrastructure and AI readiness may provide enabling conditions for SME activity, but they are not sufficient alone to explain SME dynamism across countries. Broader economic, institutional, and contextual conditions remain important in shaping entrepreneurial activity.

Keywords:
SME dynamism, digital infrastructure, AI readiness, new business density, panel data, fixed effects, digital transformation

Acceptance Date:
June 30, 2026

Copyright (c) 2026 Rabail Zareen, Dr. Areesha Javed. Published by Falcons Journal of Advanced Research (FJAR).

This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY 4.0) .