Digital Business and Economic Complexity

ABSTRACT

This paper empirically analyzes the digital transformation process in the business sector on the economic complexity among European countries from 2011 to 2019. The digital businesses are reflected by e-Commerce, including values of selling online, e-commerce sales, and e-commerce web sales, and e-Business, including customer relationship management usage and cloud usage. Our estimation results show that digitalization in the business sector positively influences economic complexity. There is evidence on the long-term cointegration between digital business and economic complexity. Furthermore, we provide some evidence that an improvement in economic growth, financial development as well a reduction in the pervasiveness of corruption are transmission channels through which digitalization in the business sector positively impacts the performance of economic complexity. On the other hand, economic complexity also plays a critical role in accelerating the process of digitalization in the business sector. Furthermore, these effects are only evident in the long term.

KEYWORDS:

• Digital business
• economic complexity
• short-term and long-term effects
• European countries

Acknowledgments

We would like to thank the Editor and the anonymous Reviewers for providing very professional and competent comments and suggestions towards the improvement of this manuscript in many ways, both theoretically and empirically.

Author contributions

Le Thanh Ha was equally contributed to all stages of preparing, drafting, writing and revising this review article. All authors listed have made a substantial, direct, and intellectual contribution to the work during different preparation stages. All authors read, revised and approved the final version of this manuscript.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

Data available on request due to privacy/ethical restrictions

Notes

¹ For further check on this relation, we also use a structural equation modeling (SEM) analysis. In this analysis, we used the STATA code xtdpml developed by Williams and Alison (2021). Please note that since our data spanning is limited, these estimation results are for reference purpose only. The results reported in Table A3 in Appendix confirm the existence of the nexus between digitalization and economic complexity.

Additional information

Funding

This paper did not receive any financial support.