Home⇛International Journal of Multidisciplinary: Applied Business and Education Research⇛vol. 6 no. 8 (2025)

How Digitalization Enhances Fiscal Sustainability in Local Governments: Findings from Systematic Literature Review

Glorina C. Damong

Discipline: Economics

 

Abstract:

The study examines the impact of digitalization on fiscal sustainability in local governments to assess how digital tools influence revenue mo-bilization, public service efficiency, and governance transparency. A systematic literature review was conducted, focusing on 17 peer-re-viewed empirical studies published between 2015 and 2025. Employ-ing the PRISMA framework, the review synthesizes quantitative, quali-tative and mixed methods studies. Key findings reveal that digitaliza-tion, particularly through e-tax systems, increases tax compliance, streamlines service delivery, and reduces corruption. Commonly re-ported digitalization efforts include electronic tax filing systems, and smart governance platforms. Despite these advancements, several challenges persist such as limited technological infrastructure, data se-curity risks, institutional resistance and low digital literacy, especially in developing rural areas. A major research gap identified is the limited exploration of long-term fiscal impacts and digital inclusion. These gaps are largely due to the absence of longitudinal studies and the un-derrepresentation of low-income or geographically remote municipal-ities in existing research. To address these limitations, the study rec-ommends further investment in digital infrastructure, strengthening of cybersecurity frameworks, and expansion of digital literacy initiatives. Future research could focus on cross-country comparisons, environ-mental implications of digitalization, and long-term fiscal effects to in-form more inclusive and resilient local governance strategies.



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