The Structural Relationship Between Ict and the Development Profiles of European Countries

Abstract

The application of information and communications technologies (ICTs) in all spheres of human activities has a significant impact on the development of each country. A better understanding of the relationship between these phenomena can contribute to the policy of a more balanced and long-term sustainable development on the national level. In this regard, the aim of the paper is to investigate the link between ICT and development profiles, taking the European countries as an example. We use several composite indexes (i.e., the ITU ICT development index, the global competitiveness index [GCI], and the Legatum prosperity index [LPI]) to investigate these countries’ profiles and find a common structure among their respective relationships. We applied the partial least squares regression (PLS-R) model and included a new welfare index – the prosperity index, which integrates all the key dimensions of country development (economic, social, and environmental). Our main finding is that PLS-R models successfully extract important information on common structure vis-à-vis the observed countries’ ICT and development profiles. Certain ICT indicators – namely, Use of ICT and Price of ICT services – can be considered predominant indicators, given their impact on a set of competitiveness and prosperity features within a country. These ICT indicators influence certain competitiveness attributes - Technological readiness, Business sophistication, Institutions, and Innovation, and certain prosperity attributes - Governance, Economic quality, and Personal freedom of the observed countries. These observations may be of great importance, as policy-makers can leverage them when designing the appropriate ICT and development strategies at national level.