Efficiency Measurement of Digitalization on EU Countries: A Study Based on Data Envelopment Analysis

Abstract

Purpose: The current research aims to identify the countries that have transformed digitalization into their growth and employment rates in the European Union countries between 2015 and 2019 and to measure the performances of the relevant countries.

Study design/methodology/approach: In the study, the five dimensions of the DESI index, Connectivity, Human Capital, Use of Internet, Integration of Digital Technology and Digital Public Services were used as input, while GDP Growth Rate and Employment Rate belonging to EU-28 countries between the years 2015-2019 were used as output. In the analysis, the VRS-Input Oriented DEA method was used to calculate the maximum output with the available inputs.

Findings: In countries such as Bulgaria, Cyprus, Hungary and Romania, it can be stated that the effective use of DESI indicators, which are considered a measure of digitalization, has a one-on-one effect on the GDP and ER values included in the model as output. DESI indicators are not used effectively in GDP and ER values of countries such as Denmark, Finland and Spain. In general, in terms of digitalization, it has been revealed that developing countries use digitalization more effectively in terms of economic growth and job creation..

Originality/value: This article is a pioneering study that explores the identification of EU countries by data envelopment analysis, which translates digitalization into growth and employment rates. In this context, current research is valuable in terms of closing a significant gap in the literature.