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A Better Proxy for Technology Determinant of Economic Growth: The International Digital Economy and Society Index

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  • Elif Asoy

    (Istanbul Aydin University, Anadolu BIL Vocational School, Business Management Program, Istanbul, Turkiye)

Abstract

The importance of information communication technology in fueling economic growth is widely acknowledged. In the current digital era, the International Digital Economy and Society Index (I-DESI) offers a more precise depiction alternative to the ICT indicators by serving as a better proxy for changes in the factors of production. It monitors the advancement of ICT in the EU27 and 14 non-EU nations, highlighting their strides towards a technologydriven economy. The objective of the study was to evaluate the influence of the I-DESI on economic growth through the utilization of the panel data method. Hence, gross domestic product (GDP) measured at constant prices was utilized as the dependent variable in the analysis, while the Index of Digital Economy and Society Integration (I-DESI), calculated by the European Commission, served as the independent variable. However, it’s important to note that the described index is current and limited at present. In line with this constraint, only four years of data, spanning from 2015 to 2018, were available. To ensure the accuracy of the model, diagnostic tests were conducted, and the Driscoll-Kraay standard error model was employed to assess the outcomes. Two models were constructed to achieve this goal, with the initial one revealing the relationship between the I-DESI and economic growth. The second model aimed to pinpoint the dimensions of the I-DESI that had the greatest impact on growth. According to findings obtained from the analysis, I-DESI and certain subdimensions which are digital skills, use of internet, integration of digital technology, and digital public services affect economic growth positively and significantly. A one percent increase in I-DESI results in a one percent increase in GDP. Similarly, each subdimension mentioned, where meaningful relationships have been identified, possesses explanatory power for GDP. Furthermore, evaluating the coefficient of these independent variables, changing the weight of dimensions can be considered.

Suggested Citation

  • Elif Asoy, 2024. "A Better Proxy for Technology Determinant of Economic Growth: The International Digital Economy and Society Index," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(74-1), pages 225-251, June.
    • Handle: RePEc:ist:journl:v:73:y:2024:i:1:p:225-251
    DOI: 10.26650/ISTJECON2023-1327567
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
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    More about this item

    Keywords

    Digital economy; Economic growth; Technology; International digital economy and society index; Driscoll-Kraay model JEL Classification: O14 ; O33 ; O47;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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