Assessing the pattern between economic and digital development of countries

Abstract

This paper analyzes the digital development of 110 countries and its relationship with economic development. Using factor analysis, we combined seven ICT-related variables into a single measure of digital development. This measure was then used as the dependent variable in an OLS model that allows non-linear effects, with the GDP per capita of countries as the explanatory variable. Our findings are substantive in that the correlation between economic and digital development was found to be not linear, being much stronger in poorer countries, a finding not commonly seen in the literature. As a result, future studies that focus on the relationship between economic and digital developments may benefit from our findings, by postulating this type of relationship. In our model we were able to explain 83 % of the variation in the digital development of countries, compared to just 72 % if considering only a linear relationship.