This study developed an information and communication technology evolution index (ICTEI) to explain the comparative performance of digitalization across 109 countries during 2010 – 2020. Composite Z-score and principal component analysis was used to create ICTEI. ICTEI was an integration of 16 different indicators associated with ICT access, ICT use, and ICT skills. Thereupon, ICTEI and per capita GDP were used as representative variables for digitalization and economic development, respectively to perceive a causal relationship among them. The empirical results revealed that economic development and digitalization have a positive and causal relationship. Trade openness, inflation, foreign direct investment, employment to population ratio, labour force participation rate, population growth, access to electricity, science and technological development, gross capital formation, and market exchange rate showed a diverse impact on economic development and digitalization in the different income groups countries.
TopIntroduction
Digitalization is a process in which a country uses digital technologies, and information and communication technologies (ICTs), digital device and digital platform in production activities to be a green economy or digital economy (Jyoti & Singh, 2023). ICTs is a diverse combination of toots, technologies, methods and ways which help to disseminate and storge information, and exchange the information across communities. Digital technologies and ICTs are the significant drivers to create product and services, and helpful for a country to be digital economy (Benjamin & Woerter, 2019). Subsequently, any technology and device which enhance or create or develop an online platform for doing something known as digitalization. Digitalization helps to increase the productivity and efficiency of workers and firms (Dahlman et al., 2016), skills of workers, and create new livelihood opportunities for the people. Digital technologies also reduce transaction cost, and improve skills and knowledge of people (Nguyen, 2021). Digital technologies are positive to develop digital economy that produce positive influence on economic growth (Ma & Zhu, 2022; Li & Gospodarik, 2021; Jyoti & Singh, 2023). Furthermore, digital technologies have a vital contribution to increase scientific research outcome, create jobs and increase economic growth (Ogloblina et al., 2020; Dahmani et al., 2022; Singh et al., 2023d). Digital technologies are also potential to increase green economy and help to increase human well-being as sustaining the quality of ecosystem and natural resources. Thereupon, digitalization also creates a digital platform which may be supportive for producers and consumers to search desire information with minimum cost and time. Digitalization helps to increase the productivity, investment and growth of all sectors (Dahmani et al., 2022). Digitalization will be positive to reduce marginal cost and increase productivity of financial sector (Carbo-Valverde, 2017; Jyoti & Singh, 2023; Verma et al., 2023). ICT, artificial intelligence, digital device, GIS and weather forecasting software are useful for farmers to avoid the climate change risk and increase the production of agricultural sector (Singh et al., 2023e). In service sector, ICTs are also positive to increase quality of services and create opportunities for entrepreneurs and consumers (Aleksandrova et al., 2022). ICTs and digitalization also work as a significant driver to increase industrial development.