Does Digitalization Have a Causal Relationship With Economic Development?

Abstract

The present study created information communication technology index (ICTI) for 109 countries during 2010-2020 using a composite Z-score method. For ICTI estimation, it used 12 different indicators associated with ICT access, ICT use and ICT skills. Statistical values of ICTI were used to explore the comparative performance across countries in digitalization. The correlation coefficient analysis was used to examine the association of digitalization with economic development and other variables. Log-linear regression model (Cobb-Douglas production function model) was employed to observe the causal relationship between economic development and digitalization using a country-wise panel data. Granger causality test was applied to observe the causal association of digitalization and economic development.