The economic impacts of digitalization through an extended input-output model: theory and application to Tunisia

The paper contributes to the existing literature related to the economics of technology adoption. It focuses on the impacts of digitalization on the economic growth through various channels, mainly via investment and total factor productivity. Firstly, we begin by extending the Input-Output (IO) model of Kratena (2019) to enable the simulations of the macroeconomic impacts of digitalization. Secondly, we apply the model to the Tunisian Economy. It is found that the three main priority sectors to digitalize in Tunisia are the public administration, the education, and the construction sectors. Their full digitalization costs 1.8% of the GDP over 2021-2026 and leads to the same gain in terms of GDP growth, and to the creation of about 23 000 jobs per year over the same period. Besides, from 2027 and beyond and under the (restrictive) assumption of no extensive growth of the digitalized sectors, the productivity gains leads to 0.4% additional GDP growth and to the destruction of jobs equivalent to 0.64% of the active population, yearly.