Examining the Association Between ICT Usage and
Economic Growth:
Country-Level Study in European Nations
Descriptive Analysis | Data Visualization
Information and Communication Technology (ICT) is the primary and upcoming way of communication and knowledge. Due to the Covid 19 pandemic, digital spaces have become a necessity, with over three billion people in isolation. However, while the Pew Research Center identified that 93% of American adults utilized the internet in 2021, not all European countries have achieved universal access to the internet.
This research aims to examine the correlation between the widespread usage of ICT and the economic development of countries. By investigating the relationship between ICT accessibility and economic indicators, we seek to provide insights into the potential impact of digital spaces on fostering economic growth and addressing inequalities on a global scale.
Research Questions
Question 1
“What is the relationship between Gross Domestic Product (GDP) and total electricity consumption in Euro countries, and how is this relationship intertwined with factors such as population and total employment?”
Question 2
“To what extent does the correlation between higher internet access, lower poverty rates, and Gini coefficients in Euro countries indicate a socio-economic impact of digital inclusion, particularly in high GDP countries?”
Question 3
“What is the role of ICT innovation in influencing workforce dynamics and income equality within Euro countries, considering the highlighted positive correlation between total employment and population?”
Rationale
Rationale 1
“Identifying the correlation between GDP and total electricity consumption possibly provides a control variable in understanding the evolving relationship between ICT implementation and economic growth. By investigating how variations in total electricity consumption influence the observed correlation, we can discern the relative impact of ICT activities on GDP and their resilience to external factors.”
Rationale 2
“Observing correlation between internet access, poverty rates, and Gini coefficients suggests the potential socio-economic impact of digital inclusion. Investigating the implications of this correlation helps us understand the role of widespread internet access in reducing economic disparities and increasing opportunities. It also provides insights for policymakers and businesses aiming to foster inclusive digital environments.”
Rationale 3
“Exploring the impact of ICT implementation within enterprises on economic health becomes imperative, given the dynamic relationship recognized between total employment, population, and overall economic well-being. Delving into the nuanced and comprehensive perspective of ICT innovation in the workforce allows for an understanding of the factors influencing workforce dynamics and income equality.”
Data Description
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Data Size
15,876 Records -
25 countries/ 6 years/ 18 variables -
Timeframe
2015 to 2020
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Data Resource
Eurostat -
The statistical office of the European Union -
Data Normalization
Scaling to a range -
Converting values into a standard range 0 and 1 -
Platforms & Tools
Tableau - Data visualization
Excel - Data preprocessing/ normalization/ statistical model
Correlation Analysis
The correlation analysis utilizes data visualizations supported by statistical evidence, offering a clear overview of intricate relationships in the economic landscape of Euro countries. This approach is complemented by varied analytical perspectives, including temporal evaluations, overall situational assessments, and detailed analyses categorizing countries based on GDP. This multifaceted approach enriches the depth and breadth of our findings.
Total Electricity Consumption as a Control Variable in Analyzing the Relationship between GDP and ICT Implementation in Euro Countries
Purple: Gross Domestic Product (GDP) Level
Circle: Total Electricity Consumption Level
The identified robust positive correlation between Gross Domestic Product (GDP) and total electricity consumption in Euro countries indicates a normal pattern, as higher GDP tends to be associated with increased electricity consumption. Importantly, this observation highlights the significance of total electricity consumption as a crucial control variable in our subsequent correlation analysis.
In light of these findings, the research will pivot its focus over time, aiming to investigate whether the increasing level of ICT implementation is correlated with the concurrent rise in GDP. By adopting a longitudinal perspective, the study seeks to unravel the evolving relationship between ICT advancements and economic growth, offering insights into the potential long-term impacts of technology on the economic landscape of Euro countries.
Total Employment as a Fundamental Aspect in Analyzing the Relationship between Labor Force and ICT Implementation in Euro Countries
Blue: Population
Circle: Total Employment in Thousand
The positive correlation between total employment and population highlights a dynamic relationship and showcases a country's overall economic health. This recognition becomes pivotal in our subsequent correlation analysis, where we aim to adopt a more nuanced and comprehensive perspective on the impact of ICT innovation in the workforce.
Building on this correlation, we will delve into the intricate dynamics of ICT innovation, exploring factors such as accessibility to internet and online resources to assess their potential influence on skills development and income distribution. This informed approach extends our analysis beyond employment-population dynamics, allowing us to scrutinize the broader impacts of ICT advancements on household income and the level of college education.
Higher Percentage of Households With Internet Access Tend to be Link with Lower Poverty Rate & Better Income Equality
Pink: High GDP Countries/ Blue: Low GDP Countries
Countries with higher internet access tend to have lower poverty rates and Gini coefficients in the Euro region, with a more pronounced effect in high GDP countries. The statistical analysis, indicating p values smaller than 0.001 and r square values exceeding 0.45, emphasizes a strong and reliable negative correlation. Interestingly, when employment is considered as a control variable, no significant correlation is found with poverty rates or Gini coefficients.
This underscores that the observed link is specifically tied to internet access, suggesting its independent role in influencing socio-economic indicators. The findings highlight the potential socio-economic impact of digital inclusion, particularly in high GDP countries, where widespread internet access may contribute to reduced economic disparities and increased opportunities.
Higher Percentage of Internet Related Activities Tend to be Link with Lower Poverty Rate & Better Income Equality
Pink: High GDP Countries/ Blue: Low GDP Countries
Building on the understanding that higher household internet accessibility correlates with lower poverty rates and Gini coefficients, the analysis extends to examine other individual internet activities. The results demonstrate consistent negative correlations between the percentage of the population engaged in e-government activities, general internet activities, and internet purchases, with the poverty rate and Gini coefficient.
Similar to the first analysis, the negative correlations are more pronounced in high GDP countries. Statistically, the p values remain smaller than 0.001, and r square values range between 0.3 to 0.7, indicating a substantial impact. Particularly noteworthy is the strongest correlation observed in high GDP countries, where the percentage of internet purchase exhibits an r square of 0.67, emphasizing the significance of online economic activities in influencing socio-economic indicators.
No Significant Correlation between GDP and ICT Activities among Individuals
Dark Green: Percentage of individuals Engaged in E-government
Light Green: Percentage of Individual with Internet Activities
Pink: Percentage of Individual with Internet Purchases
Grey: Total Electricity Consumption
We found that a higher percentage of population with ICT activities tends to correlate with a lower poverty rate and improved income equality. However, when assessing the impact of these ICT activities percentage of individuals engaged in e-government activities, internet purchases, and general internet activities on GDP from 2015 to 2020, a nuanced trend emerges. Within high GDP countries, these three ICT activities, along with GDP, steadily increased during this period but experienced a significant drop in 2019, attributed primarily to the COVID-19 pandemic.
While the percentages of e-government activity and internet activity rebounded slightly after 2019, GDP continued to decrease. This suggests that while GDP appears to increase with an upswing in ICT implementation, macroeconomic factors, such as the pandemic, exert a more substantial influence on GDP fluctuations compared to investments in ICT. On the other hand, within low GDP countries, despite a continuous increase in ICT activities over the six years, GDP remained steady, indicating no significant correlation between ICT implementation and economic growth over this comparable period.
No Significant Correlation between GDP and ICT Implementation among Enterprises
Dark Blue: Percentage of Enterprise with Internet Access
Brown: Percentage of Enterprise Employing ICT Specialist
Orange: Percentage of Enterprise with E-commerce Sales
Grey: Total Electricity Consumption
Extending the examination to ICT implementation in the workplace, specifically exploring variables such as the percentage of total enterprises with internet access, enterprises with ICT employment, and enterprises with e-commerce business, reveals interesting insights. Among high GDP countries, these workplace ICT implementations remained relatively stable with slight decreases over the six years, while low GDP countries witnessed a gradual increase.
Surprisingly, the trend indicates that these workplace ICT implementations do not exhibit a significant association with GDP. This finding suggests that high GDP countries may have already well-developed ICT infrastructures, resulting in minimal observable changes or impacts over the studied period. In contrast, low GDP countries, investing in ICT, may require more time to realize the results of their endeavors in the realm of information technology.
Prosperous ICT Engagement Tends to Associate with Higher Education Among Euro Countries
A clear trend indicates that a higher percentage of individuals engaged in ICT activities is associated with a higher percentage of the population holding a college or equivalent degree (colored red), suggesting a link between digital engagement and educational attainment. Notably, Germany deviates from this trend due to its unique higher education system. The emphasis on practical, industry-specific training in Germany results in a lower percentage of the population pursuing conventional higher education paths.
However, the broader implication of this trend underscores the potential for strategically investing in ICT activities to positively impact educational outcomes. Supporting and promoting ICT engagement among individuals may serve as a catalyst for boosting the overall educational attainment of the population, aligning with the observed correlation between ICT activities and higher education levels in other contexts.
Red: percentage of the population holding a college or equivalent degree
Summary
The correlation analysis of Euro countries reveals intricate relationships between economic indicators and Information and Communication Technology (ICT) implementation. Total electricity consumption and total employment emerge as crucial variables in understanding the dynamics of GDP and the labor force in the context of ICT. The positive correlation between household internet access and improved socio-economic indicators emphasizes the significance of digital inclusion. Similarly, the link between internet-related activities and better outcomes underscores the potential benefits of ICT engagement. Surprisingly, no significant correlations are found between GDP and individual or enterprise-level ICT activities, suggesting a nuanced relationship. The association between prosperous ICT engagement and higher education levels highlights the positive impact of strategic ICT investments on educational outcomes. These findings offer valuable insights for policymaking and future research, contributing to a nuanced understanding of the complex interactions between economic indicators and ICT implementation.
Implementation and Policy Recommendations
In light of the research findings, there is a need for strategic policies that leverage the positive correlation between ICT activities and economic indicators. Policymakers should focus on fostering a supportive environment for ICT innovation in the workforce, with an emphasis on skills development and inclusion. Additionally, recognizing the socio-economic impact of digital inclusion, efforts should be directed toward bridging the digital divide, ensuring widespread internet access, and promoting online economic activities. Policies should also consider the unique higher education landscape, as seen in Germany, where vocational training plays a significant role in educational attainment.
Scope and Limitations
While the research provides valuable insights into the correlations between ICT, economic indicators, and educational outcomes, certain limitations exist. The study primarily focuses on Euro countries, and extrapolating findings to a global context may require further research. Additionally, the analysis covers a specific time frame (2015-2020), limiting the assessment of long-term trends. The scope may also be expanded by exploring more granular aspects of ICT activities and their nuanced impacts on various socio-economic factors. It is crucial to acknowledge the dynamic nature of economies and the potential influence of external factors, such as global events or economic policies, which may not be fully captured in the scope of this study.