International Panel Data Analysis of the Effect of Digitalization on Economic Growth

Description

The effect of digitalization on economic growth is examined with reference to a cobb-Douglas production function. So, the dependent variable is the economic growth measured by the Gross Domestic Product per capita measured at 2015 constant US dollars. To reproduce the digitalization, we consider four indicators which are : 1. Number of fixe subscriptions (per 100 people) 2. Number of mobile cellular subscriptions (per 100 people) 3. Number of broadband subscriptions (per 100 people) 4. Number of individuals using the internet (%of population) 5. Digitalization level as obtained by applying a PCA Moreover, we include several macro-economic variables as control variables which affect the relationship between Digitalization and economic growth: 6. Investment measured by gross fixed capital formation (as percentage of GDP). 7. Trade openness which is a country’s trade volume used as a proxy for the degree of openness of a country’s economy (as percentage of GDP) and which is measured as the sum of imports and exports. 8. Labor force which is the total of labor force participation rate. 9. Inflation is measured by the consumer price index (%). 10. Population 11. Consumption is the government consumption expenditure for goods and services (as a percentage of GDP).

Steps to reproduce

Countries of the data was selected based on their level of income (High/Medium and low) as specified by the World Bank classification. Using pooled panel data, Fixed telephone subscription, Mobile cellular subscription, individuals using Internet, and Fixed Broadband Subscription are used to proxy Country-Level digitalisation. These data have been used to build a composite index of digitalisation level. A set of macroeconomic variables have been collected to be used as proxies for Economic constraints related to investment, Trade Openness, Labor Force Gender Rate, Total Population, Consumers Price Index, Final Consumption Expenditure and R&D Expenditure Data has been collected from world bank website and Thomson Reuters (Refinitives), OECD Main Statistics and Technology Indicators database. Other data has been generated by authors.

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