Measuring the Effect of the Digitalization

14 Pages Posted: 21 Feb 2020

See all articles by Elvin Mammadli

Elvin Mammadli

University of Tartu

Vsevolod Klivak

Tartu University, School of Economics and Business Administration

Date Written: January 24, 2020

Abstract

Digitalization has changed the rules both in the private and public sectors of the economy. Therefore, the study of its effects has become more relevant. In previous studies, authors mainly focused on the definition of the term, its boundaries and the creation of indexes. The main downside of such papers devoted to this topic is the lack of a quantitative approach. The impacts of digitalization on economic indicators have not been quantitatively investigated in depth. This paper studies the impact of digitalization on the economy, and more specifically on GDP. The first part consists of creating a synthetic index, the Index of Digitalization (ID), which reflects the state of digitalization at the country level. The second part is dedicated to validating the ID using a Panel Data Model, where GDP in previous years is set as a dependent variable that defines a direct connection.

Keywords: Digitalization, Panel Data Analysis, OECD countries

JEL Classification: O33, O57

Suggested Citation

Mammadli, Elvin and Klivak, Vsevolod, Measuring the Effect of the Digitalization (January 24, 2020). Available at SSRN: https://ssrn.com/abstract=3524823 or http://dx.doi.org/10.2139/ssrn.3524823

Elvin Mammadli (Contact Author)

University of Tartu ( email )

Estonia

Vsevolod Klivak

Tartu University, School of Economics and Business Administration ( email )

Estonia

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