IDEAS home Printed from https://ideas.repec.org/a/bal/gbadej/2661-51692023432.html
   My bibliography  Save this article

Impact Of Digitalisation On Productivity Growth In Eu Member States

Author

Listed:
  • Valeriya Balashova

    (Ivan Franko National University of Lviv, Ukraine)

Abstract

Recent economic studies on the relationship between digitalisation and economic growth show some ambiguity in the results due to the use of different methods, measures, country samples and time periods. The purpose of this article is to theoretically substantiate, build and econometrically test the model of the impact of digitalisation and other important factors on the growth of total factor productivity in the countries of the European Union for the period of recent years for which data are available. Methodology. The regression analysis of panel data with fixed effects was conducted. The regression estimation of the model is done for 27 EU countries and the entire European Union for the available periods 2017-2022. The robustness of the model to the choice of alternative regression methods, heterogeneity, autocorrelation and random effects is also tested. The model is based on the principles of the endogenous growth theory. The author substantiates and models the relationship of productivity growth with digitalisation, exports, imports, use of intellectual property rights, research and development, foreign investment, human capital and institutions; calculates the indicator of total factor productivity (TFP) based on the Cobb-Douglas function; the European Commission's Digital Economy and Society Index (DESI) is chosen as a measure of digitalisation. Regression results. It is proved that digitalisation is an important factor in productivity growth in the countries of the EU sample, which has a positive and significant impact on total factor productivity (a 1% increase in the digitalisation index leads to an increase in TFP by about 0.1%). Trade openness (exports and imports) was confirmed to remain a key factor affecting productivity. Income from the use of intellectual property rights has a positive, statistically significant impact on TFP growth, although the magnitude of this impact is rather small compared to the impact of digitalisation and trade. It has been found that the quality of institutions can be important for productivity growth, which is an argument for relevant reforms at the level of the government and local communities. The impact of research and development, foreign direct investment, and human capital on TFP growth is difficult to interpret due to the lack of statistical significance of these parameters, which requires further research.

Suggested Citation

  • Valeriya Balashova, 2023. "Impact Of Digitalisation On Productivity Growth In Eu Member States," Green, Blue & Digital Economy Journal, Publishing house "Baltija Publishing", vol. 4(3).
    • Handle: RePEc:bal:gbadej:2661-5169:2023:4:3:2
    DOI: 10.30525/2661-5169/2023-3-2
    as

    Download full text from publisher

    File URL: http://www.baltijapublishing.lv/index.php/gbdej/article/view/2184/2184
    Download Restriction: no
    File URL: http://www.baltijapublishing.lv/index.php/gbdej/article/view/2184
    Download Restriction: no
    File URL: https://libkey.io/10.30525/2661-5169/2023-3-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    2. Bart van Ark, 2016. "The Productivity Paradox of the New Digital Economy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 31, pages 3-18, Fall.
    3. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lederman, Daniel & Saenz, Laura, 2005. "Innovation and development around the world, 1960-2000," Policy Research Working Paper Series 3774, The World Bank.
    2. Hartwell, Christopher A., 2014. "The impact of institutional volatility on financial volatility in transition economies : a GARCH family approach," BOFIT Discussion Papers 6/2014, Bank of Finland, Institute for Economies in Transition.
    3. Garth Frazer & Johannes Van Biesebroeck, 2010. "Trade Growth under the African Growth and Opportunity Act," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 128-144, February.
    4. Harashima, Taiji, 2017. "Should a Government Fiscally Intervene in a Recession and, If So, How?," MPRA Paper 78053, University Library of Munich, Germany.
    5. Diego A. Cerdeiro & Andras Komaromi, 2021. "Trade and income in the long run: Are there really gains, and are they widely shared?," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 703-731, September.
    6. Eleanor Doyle & Inmaculada Martínez-Zarzoso, 2006. "Relating Productivity and Trade 1980-2000: A Chicken and Egg Analysis," Ibero America Institute for Econ. Research (IAI) Discussion Papers 147, Ibero-America Institute for Economic Research.
    7. Andrés Rodríguez-Pose & Roberto Ganau, 2022. "Institutions and the productivity challenge for European regions," Journal of Economic Geography, Oxford University Press, vol. 22(1), pages 1-25.
    8. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
    9. repec:zbw:bofitp:2017_002 is not listed on IDEAS
    10. Marta Santagata & Enrico Ivaldi & Riccardo Soliani, 2019. "Development and Governance in the Ex-Soviet Union: An Empirical Inquiry," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 157-190, January.
    11. Mehraj Ahmad Sheikh & Mushtaq Ahmad Malik, 2021. "The Nexus of Trade Openness, Institutions and Economic Growth: An Empirical Investigation of BRICS Countries," Foreign Trade Review, , vol. 56(2), pages 206-215, May.
    12. Berhanu Nega, 2011. "Short Changing the Value of Democracy for Economic Development in Africa," Forum for Social Economics, Springer;The Association for Social Economics, vol. 40(3), pages 313-334, October.
    13. Christian Volpe Martincus & Andrés Gallo, 2009. "Institutions and Export Specialization: Just Direct Effects?," Kyklos, Wiley Blackwell, vol. 62(1), pages 129-149, February.
    14. Sarra Ben Yahmed & Sean Dougherty, 2012. "Import Competition, Domestic Regulation and Firm-Level Productivity Growth in the OECD," OECD Economics Department Working Papers 980, OECD Publishing.
    15. Mamoon, Dawood, 2001. "What May Constitute an Equal Society? Addressing Externalities of Globalization:," MPRA Paper 77335, University Library of Munich, Germany.
    16. Rodríguez-Pose, Andrés & Ketterer, Tobias, 2016. "Institutions vs. ‘First-Nature’ Geography – What Drives Economic Growth in Europe’s Regions?," CEPR Discussion Papers 11322, C.E.P.R. Discussion Papers.
    17. Herzer, Dierk, 2013. "Cross-Country Heterogeneity and the Trade-Income Relationship," World Development, Elsevier, vol. 44(C), pages 194-211.
    18. Axel Dreher & Pierre-Guillaume Méon & Friedrich Schneider, 2014. "The devil is in the shadow. Do institutions affect income and productivity or only official income and official productivity?," Public Choice, Springer, vol. 158(1), pages 121-141, January.
    19. Berhanu Nega, 2011. "Short Changing the Value of Democracy for Economic Development in Africa," Forum for Social Economics, Taylor & Francis Journals, vol. 40(3), pages 313-334, January.
    20. Hakimi, Abdelaziz & Hamdi, Helmi, 2016. "Trade liberalization, FDI inflows, environmental quality and economic growth: A comparative analysis between Tunisia and Morocco," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1445-1456.
    21. Dawood Mamoon, 2011. "Relative Factor Return Gaps in Labour Markets and Global Integration," Economics Bulletin, AccessEcon, vol. 31(1), pages 969-988.

    More about this item

    Keywords

    economic growth; productivity; total factor productivity; digitalisation; Digital Economy and Societies Index (DESI); European Union; regression analysis;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bal:gbadej:2661-5169:2023:4:3:2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anita Jankovska (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.