The economic impact of digital technologies in Europe

This paper analyses the economic impact of digital technologies in Europe distinguishing between different stages/domains of the digitalization process. A set of composite ICT indicators is used capturing the access to ICTs, the ability to use them and the digital empowerment of individuals in key social and economic domains. We argue that the mere accessibility to ICT facilities is only a pre-condition for moving towards a digitalized society, while the “level” and the “quality” in the use of these technologies, as well as the conditions facilitating or hampering digital empowerment, play a much more important role. Several transmission mechanisms from ICT access, usage and digital empowerment to key macroeconomic variables (namely labor productivity, GDP per capita, employment growth and the employment rate) are identified. The econometric evidence supports our hypotheses showing that the usage of ICT, and mostly digital empowerment, exert the major economic effects, especially on employment also favoring the inclusion of “disadvantaged” groups in the labor market. We conclude that digitalization may drive productivity and employment growth and that inclusive policies may effectively contribute to bridge the gap between the most favoured and the disadvantaged parts of the population, thus helping achieving the 2020 Europe targets.