European Efficiency or Inefficiency in Economic Growth Through Digital Transformation

Authors

  • Mircea Radu Georgescu Alexandru Ioan Cuza University of Iaşi, Faculty of Economics and Business Administration
  • Anca Elena Lungu Alexandru Ioan Cuza University of Iasi, Faculty of Economics and Business Administration
  • Ioana Andreea Bogoslov Lucian Blaga University of Sibiu, Faculty of Economic Sciences Sibiu
  • Eduard Alexandru Stoica Lucian Blaga University of Sibiu, Faculty of Economic Sciences Sibiu

DOI:

https://doi.org/10.47743/saeb-2023-0010

Keywords:

digitalization, economic growth, European Union

Abstract

The current global changes bring to the fore the importance of the innovation and digital transformation for economic development. Under the previous assumption, an objective evaluation of the economic growth discrepancies, considering the digitalization process, is required. The main goal of the present research is to analyse the economic growth of the European countries, based to the digitalization process, by using an input-output method. Under these circumstances, a Data Envelopment Analysis (DEA) was performed, considering the digitalization dimensions of DESI Index as input and the economic growth (annual %) as output. Based on the proposed model, the results highlighted the bidirectional relationship between economic growth and digitalization. Consistent with the research results, the European countries can be divided in two main categories: the efficient and the inefficient. On one hand, we can find the relatively efficient European states in terms of achieving the economic growth through digitalization (Ireland, Romania, Croatia and Greece). On the other hand, there is a numerous list of the inefficient ones, including important countries like Finland, Germany or France. Obviously, a remarkable aspect related to their situation is that, considering the national available inputs, an output maximization will be possible. According to the proposed model, the efficient countries can serve as peers or optimal benchmarks for solving the issue of relative inefficiency, by adapting and implementing their good practices.

References

Aker, J., & Mbiti, I. (2010). Mobile phones and economic development in Africa. Social science electronic publishing. The Journal of Economic Perspectives, 24(3), 207-232. http://dx.doi.org/10.1257/jep.24.3.207

Aly, H. (2020). Digital transformation, development and productivity in developing countries: is artificial intelligence a curse or a blessing? Review of Economics and Political Science, 7(4), 238-256.

Barefoot, K., Curtis, D., Jolliff, W., Nicholson, J. R., & Omohundro, R. (2018). Defining and measuring the digital economy. Retrieved from https://www.bea.gov/research/papers/2018/defining-and-measuring-digital-economy

Benítez, R., Coll-Serrano, V., & Bolós, V. (2021). deaR-Shiny: An Interactive Web App for Data Envelopment Analysis, 6774. Sustainability (Basel), 13(12), 6774. http://dx.doi.org/10.3390/su13126774

Bughin, J., Hazan, E., Labaye, E., Manyika, J., Dahlström, P., Ramaswamy, S., & Cochin de Billy, C. (2016). Digital Europe: Pushing the frontier, capturing the benefits. McKinsey & Company.

Charnes, A., Cooper, W., & Li, S. (1989). Using data envelopment analysis to evaluate efficiency in the economic performance of Chinese cities. Socio-Economic Planning Sciences, 23(6), 325-344. http://dx.doi.org/10.1016/0038-0121(89)90001-3

Charnes, A., Cooper, W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2(6), 429-444. http://dx.doi.org/10.1016/0377-2217(78)90138-8

Charnes, A., Cooper, W., & Rhodes, E. (1981). Evaluating Program and Managerial Efficiency: An Application of Data Envelopment Analysis to Program Follow Through. Management Science, 27(6), 668-697. http://dx.doi.org/10.1287/mnsc.27.6.668

Cheng, C., Chien, M., & Lee, C. (2021). ICT diffusion, financial development, and economic growth: An international cross-country analysis. Economic Modelling, 94(1), 662-671. http://dx.doi.org/10.1016/j.econmod.2020.02.008

Cooper, W., Seiford, L., & Zhu, J. (2011). Handbook on Data Envelopment Analysis (2 ed.). New York: Springer. http://dx.doi.org/10.1007/978-1-4419-6151-8

Dahlman, C., Mealy, S., & Wermelinger, M. (2016). Harnessing the digital economy for developing countries. OECD Development Centre Working Papers(334).

European Commission. (2022a). DESI by components. Retrieved from https://digital-agenda-data.eu/charts/desi-components#chart={%22indicator%22:%22desi%22,%22breakdown-group%22:%22desi%22,%22unit-measure%22:%22pc_desi%22,%22time-period%22:%222022%22}

European Commission. (2022b). Digital Economy and Society Index (DESI). Retrieved from https://digital-strategy.ec.europa.eu/en/policies/desi

European Commission. (2022c). Digital Economy and Society Index (DESI) 2022 - Country profile: Finland. Retrieved from https://ec.europa.eu/newsroom/dae/redirection/document/88746

European Commission. (2022d). Digital Economy and Society Index (DESI) 2022 - Country profile: Ireland. Retrieved from https://ec.europa.eu/newsroom/dae/redirection/document/88707

European Commission. (2022e). Digital Economy and Society Index (DESI) 2022 - Country profile: Romania. Retrieved from https://ec.europa.eu/newsroom/dae/redirection/document/88758

Ficarra, M., Rückert, D., Virginie, A., & Weiss, C. (2021). Digitalization in Europe 2020-2021. Evidence from the EIB Investment Survey: EIB.

Lábaj, M., Luptáčik, M., & Nežinský, E. (2014). Data envelopment analysis for measuring economic growth in terms of welfare beyond GDP. Empirica, 41(May), 407-424. http://dx.doi.org/10.1007/s10663-014-9262-2

Myovella, G., Karacuka, M., & Haucap, J. (2020). Digitalization and economic growth: A comparative analysis of Sub-Saharan Africa and OECD economies. Telecommunications Policy, 44(2), 101856. http://dx.doi.org/10.1016/j.telpol.2019.101856

Pan, W., Xie, T., Wang, Z., & Ma, L. (2022). Digital economy: An innovation driver for total factor productivity. Journal of Business Research, 139(1), 303-311. http://dx.doi.org/10.1016/j.jbusres.2021.09.061

Quah, D. (2002). Technology dissemination and economic growth: Some lessons for the new economy.

Sabbagh, K., Friedrich, R., El-Darwiche, B., Singh, M., & Koster, A. (2013). Digitization for economic growth and job creation: Regional and industry perspectives. The global information technology report. Volume The Global Information Technology Report, 2013, 35-42. Retrieved from https://www3.weforum.org/docs/GITR/2013/GITR_Chapter1.2_2013.pdf

Stavytskyy, A., Kharlamova, G., & Stoica, E. A. (2019). The analysis of the digital economy and society index in the EU. TalTech Journal of European Studies, 9(3), 245-261. http://dx.doi.org/10.1515/bjes-2019-0032

Varlamova, J., & Larionova, N. (2020). Labor Productivity in the Digital Era: A Spatial-Temporal Analysis. International Journal of Technology, 11(6), 1191-1200. http://dx.doi.org/10.14716/ijtech.v11i6.4429

Yuan, S., Musibau, H. O., Genç, S. Y., Shaheen, R., Ameen, A., & Tan, Z. (2021). Digitalization of economy is the key factor behind fourth industrial revolution: How G7 countries are overcoming with the financing issues? Technological Forecasting and Social Change, 165(April), 120533. http://dx.doi.org/10.1016/j.techfore.2020.120533

Downloads

Published

2023-02-06

How to Cite

Georgescu, M. R. ., Lungu, A. E., Bogoslov, I. A. . ., & Stoica, E. A. . . (2023). European Efficiency or Inefficiency in Economic Growth Through Digital Transformation. Scientific Annals of Economics and Business, 70(SI), 19–31. https://doi.org/10.47743/saeb-2023-0010