Digital Economy in Europe: Evaluation of Countries' Performances

Abstract

The accelerated expansion of the Internet as a communication tool, the mobile internet, and the social networks and commercial platforms, commonly observed as digitalisation, have greatly affected the functioning of the economy and with it also businesses, public institutions, and individuals. This paper investigates how the on-going digital transformation and Information and Communications Technologies (ICT) are manifesting in the economies across Europe. We have collected the publically available data on digital economy indicators in countries of European Union (EU) and used them to perform a multivariate statistical analysis on countries' performances. Using the Composite I-distance Indicator (CIDI) methodology, we have created a multivariate indicator that can serve as a measurement of digital economy performances. Digitalisation makes information and knowledge easy to store, access, and modify, which links all parts of social and economic life, but EU businesses are still not taking full advantage of these advanced technologies or the innovative business models offered by digitalisation. The state of the digitalisation of business and industry varies between EU countries and regions. Each economy struggles to keep up with digitalisation in order to keep their productivity and achievement on a high level. In this research, we used CIDI methodology to evaluate and rank 28 countries in European Union (EU-28), based on their digital performances. We made an in-depth comparative analysis of countries in Europe, providing each economy with information on where they currently stand in terms of digital economy and what steps they need to undertake to improve and boost up their position in an overall world of digitalisation.