Digitalization of economies of low and middle income countries in the context of digital transformation

Abstract

The article aims to quantify the relationship of the introduction of digital technologies on innovation, structural transformation of low- and middle-income economies through the correlation analysis of indicators of technological development (productivity of sectors) and structural transformation of Uzbekistan and Ukraine ( share of value-added and employment of sectors of the economy) for 1991-2019 to assess the relationship between technology and structural shifts through the channels of value-added and employment. It is revealed that Ukraine and Uzbekistan have undergone structural transformations of the economy in favor of the service sector, while the agricultural and industrial sectors produce less and less. If Uzbekistan remains the industrial-agrarian country with an aggregate share of the added value of these sectors 59% in 2019, Ukraine transits to the post-industrial type of economy where the added value of the service sector in GDP grows (55% compared to agrarian and industrial sectors at 42%).

Digital transformation and ICT sector performance in EU countries

“…Other authors quantify the relationship between the adoption of digital technologies in innovation and the structural transformation of lowand middle-income economies. They state that such countries introduce digital transformation first in the service sector (Kulinich et al, 2022). In terms of the investigation, as a starting point for the current state of research, there have been relevant publications dealing with the economy digitalization issue in EU countries.…”

Contemporary Features and Challenges of Digital Economy Development in Ukraine

“…Specifically, the challenges in the development of the digital economy in Ukraine are currently shaped by external factors such as: complex administrative procedures and bureaucracy (which can hinder the establishment and growth of businesses, especially startups [2]); a shortage of skilled workforce (in the context of armed conflict, there is already a deficit of highly qualified IT specialists in certain specialized areas [2]); cybersecurity (due to the increasing number of cyberattacks and cybersecurity threats that can jeopardize data security and business infrastructure [3]); infrastructure and internet access issues (related to the consequences of the war, leading to deteriorating infrastructure and limited internet access in affected areas [6]); prolonged political and economic instability (creating uncertainty for digital businesses and investors [2]).…”