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№ 1/2024

Nauk. pr. NDFI 2024 (1): 102–111https://doi.org/10.33763/npndfi2024.01.102

FINANCIAL AND ECONOMIC REGULATION

SINKOVSKYI Mykola ¹

¹SESE “The Academy of Financial Management”

The impact of digital transformation on the economies of countries with developing markets

Introduction. Digital transformation is driving economic development. The digital transformation has important implications for the economy in terms of how much government support should be provided to encourage digitalisation and the development of artificial intelligence (AI). Problem Statement. The potential benefits of digital transformation can be even greater if governments invest more in the development of innovative technical advances and the adoption of AI in various companies and sectors. The significant impact of AI on Middle Eastern economies can be explained by considering AI as a new factor of productivity, adding to the traditional factors of labour, land, capital and entrepreneurship. However, certain industries that are digitally transforming production, despite creating new jobs, are prone to workforce reductions due to the replacement of humans with artificial intelligence machines. Purpose. The purpose of the study is to determine the relationship between digital transformation, economic development, employment and productivity in developing countries. Methods. The article uses general scientific and special methods of cognition: analysis, synthesis, grouping, least squares method, coefficient analysis, comparison, modelling, generalisation. Results. The most commonly used indicators of digital transformation are the Enabling Digital Index (EDI), the Digital Economy Index (DEI), and the Digital Adoption Index (DAI). The relationship between the selected indices of digital transformation and economic development, labour productivity and employment is determined using econometric analysis. The analysis showed that the relationship is positive. This indicates that countries with a higher level of digital transformation have a higher level of GNI per capita. The position of countries is similar across all three indices: Malaysia, Chile, and Saudi Arabia in the upper right corner of the chart have high levels of both digital transformation and economic development. Whereas Algeria, Bangladesh, Bolivia and Cameroon in the lower left corner of the chart have low levels of both indicators. It is also worth noting the consistency between the three digital transformation indicators. Despite the differences in the method of calculation and the dimensions each index covers, the correlation with the three indicators indicates that countries with a higher level of digital transformation have a higher level of labour productivity. The ranking of countries is also close to the previous indicator. Conclusions. The results of the study showed a positive relationship between the digital transformation index and macroeconomic indicators: economic development (GNI per capita), labour productivity and employment. Employment growth is explained by the positive relationship between digital transformation and employment. New occupations are expected to benefit more from the digital transformation that developing countries are experiencing. However, in order for developing countries to reap the expected benefits of digital transformation, a number of constituent elements need to be taken into account. These include: the quality of institutions and the institutional environment, the country's digital infrastructure, the demand for new technologies, and legislative support for digital transformation.

Keywords:digital transformation, employment, labour productivity, artificial intelligence, emerging markets, economic development

JEL: O11, O29, O33

Sinkovskyi M. . The impact of digital transformation on the economies of countries with developing markets / M. Sinkovskyi // Наукові праці НДФІ. - 2024. - № 1. - C. 102-111.

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