Digital readiness and economic growth : Analyzing the Impact of DESI Scores on GDP in European Countries

Almeida de Figueiredo, Sara (2024) Digital readiness and economic growth : Analyzing the Impact of DESI Scores on GDP in European Countries. ECONOMY AND FINANCE: ENGLISH-LANGUAGE EDITION OF GAZDASÁG ÉS PÉNZÜGY, 11 (3). pp. 282-300. ISSN 2415-9379

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Abstract

This study investigates the relationship between digital readiness and economic growth within the European Union, employing the Digital Economy and Society Index (DESI) as a comprehensive metric to evaluate the impact of digital integration on economic indicators. Through a detailed analysis incorporating factors such as human capital, connectivity, digital technology integration, and digital public services, alongside control variables including industrial production, employment, inflation, and investment, the research offers a nuanced understanding of how digital readiness influences GDP growth across 22 European countries over a six-years period. The findings highlight the significant role of human capital and technology integration in driving economic development, suggesting that investments in digital skills and business adoption of digital technologies are crucial for enhancing productivity and fostering innovation. Contrarily, digital public services showed a marginal negative association with GDP growth, indicating the need for optimization to fully realize their economic benefits. The results underscore the importance of strategic investments in digital readiness to leverage digitalization for sustainable economic growth, urging policymakers to consider both digital and traditional economic factors in their strategies. This research enriches the discourse on digital transformation’s economic implications, offering insights for policymakers, economists, and business leaders to foster economic resilience and prosperity in the digital age. Nevertheless, it acknowledges limitations due to the recent inception of DESI scores since 2017, and the potential for delayed effects of digital public services investments on economic growth, highlighting the need for future studies with more extensive data to fully understand the long-term implications of digital readiness on economic development.

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