Digital competence rating and economic development in the EU

Abstract

Diffusion of information and communication technologies (ICT) in different areas has accelerated the growth of the global economy. It has large impact to the business by transforming processes, creating new services, industries. ICT development requires new technologies and new approaches to innovate and integrate. The European Commission stated: "The Internet and digital technologies are transforming the lives we lead, the way we work – as individuals, in business, and in our communities as they become more integrated across all sectors of our economy and society". The access to high-speed digital infrastructures, skills of the effective usage of highly developed digital technologies represents the prerequisite productivity and the social inclusion in the digital economy. Development of new technologies and applications demands respective skills and competences of the citizens. That also leads to problems related to measurement of the level of digitization of the economy. There are several institutions that evaluate digital competences. The Digital Economy and Society Index (DESI), developed by the European Commission, is a composite index that summarises relevant indicators on Europe’s digital performance and tracks the evolution of EU member states in digital competitiveness. The aim of the paper is an empirical verification of the assumption that ICT factors (measured by DESI components) affect national economic development. This study uses statistical and econometrical methods to examine the relationship between ICT factors, digital competence indicators and economic development in the EU through statistical evidence. A panel data analysis confirmed significant linkage between ICT factors (infrastructure, competence, investment and trade size) and economic growth in the EU countries. Taking into consideration the digitalization trends, could be stated that there is still a huge potential for progress and growth.