IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v49y2025i4s0308596125000333.html
   My bibliography  Save this article

Assessing digitalization and the economy: A dynamic recursive CGE modelling approach

Author

Listed:
  • Okorie, David Iheke
  • Adedeji, Adeniran
  • Ifionu, Chinedu

Abstract

Advanced economies continue to adopt and embed digitalization into their everyday activities. One may ponder; how does a significant digitalization upgrade affect developing economies? To answer this question and highlight the economic & environmental effects of digitalization in a developing economy, this study adopts the singly-country dynamic Energy and Environment Integrated computable general equilibrium model (EEICGE) with a 5-year gradual digitalization policy plan design in Nigeria, a developing economy. The shock simulation comparative statics show digitalization-driven investment opportunities in Nigeria and reveal that digitalization increases productivity and national output levels while leading to a substantial decline in the general price levels in the Nigerian economy. It further strengthens Nigeria's international trade revenue and makes its goods and services cheaper in the international (market) communities. Digitalization of the Nigerian economy also results in a structural shift and decline in on-site labour equilibrium demand/supply that is substituted mainly with capital (machines) but increases online entrepreneurial labour services such as online training sessions/classes, content creations like comedy skits, online sells & delivery services, online skill acquisition sessions etc., aimed at increasing agents' labour income. Thus, digitalization increases the economic agents' consumption, income, and welfare while availing the rich household cohorts, firms, and governments the chance to take advantage of the digitalization-driven investment opportunities financed through decreases in consumption budgets. In the end, this study presents pieces of evidence that favour and support substantial digitalization upgrades in developing economies like Nigeria.

Suggested Citation

  • Okorie, David Iheke & Adedeji, Adeniran & Ifionu, Chinedu, 2025. "Assessing digitalization and the economy: A dynamic recursive CGE modelling approach," Telecommunications Policy, Elsevier, vol. 49(4).
    • Handle: RePEc:eee:telpol:v:49:y:2025:i:4:s0308596125000333
    DOI: 10.1016/j.telpol.2025.102936
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596125000333
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.telpol.2025.102936?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Burfisher,Mary E., 2017. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9781107584686, June.
    2. Xing, Wan & Ye, Xuan & Kui, Lv, 2011. "Measuring convergence of China's ICT industry: An input-output analysis," Telecommunications Policy, Elsevier, vol. 35(4), pages 301-313, May.
    3. Huub Meijers, 2014. "Does the internet generate economic growth, international trade, or both?," International Economics and Economic Policy, Springer, vol. 11(1), pages 137-163, February.
    4. Rohman, Ibrahim Kholilul & Bohlin, Erik, 2010. "On the ICT Economy in the European Countries: Investigating the Contribution of the ICT Sectors Using the Input-Output Model," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 29, International Telecommunications Society (ITS).
    5. Burfisher,Mary E., 2017. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9781107132207, June.
    6. Simon Abendin & Duan Pingfang & Etse Nkukpornu, 2022. "Bilateral Trade in West Africa: Does Digitalization Matter?," The International Trade Journal, Taylor & Francis Journals, vol. 36(6), pages 477-501, November.
    7. Yeo, Yeongjun & Jung, Sungmoon, 2024. "Assessing the economy-wide impacts of digital transformation in the Korean economy: A social accounting matrix multiplier approach," Telecommunications Policy, Elsevier, vol. 48(10).
    8. Abdul Ganiyu Iddrisu & Bei Chen, 2022. "Economic growth through digitalization in Africa: does financial sector development play a mediating role?," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 19(10), pages 3111-3138, December.
    9. Okorie, David Iheke & Wesseh, Presley K., 2023. "Climate agreements and carbon intensity: Towards increased production efficiency and technical progress?," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 300-313.
    10. Habibi, Fateh & Zabardast, Mohamad Amjad, 2020. "Digitalization, education and economic growth: A comparative analysis of Middle East and OECD countries," Technology in Society, Elsevier, vol. 63(C).
    11. Camille da Piedade, 2022. "Digital connectedness and exports upgrading: Is Sub-Saharan Africa Catching Up?," Post-Print hal-03819047, HAL.
    12. Okorie, David Iheke, 2025. "Making hay while the sun shines: Energy security pathway for Africa," Energy Policy, Elsevier, vol. 198(C).
    13. Balsmeier, Benjamin & Woerter, Martin, 2019. "Is this time different? How digitalization influences job creation and destruction," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    14. Wen, Huwei & Wen, Changyong & Lee, Chien-Chiang, 2022. "Impact of digitalization and environmental regulation on total factor productivity," Information Economics and Policy, Elsevier, vol. 61(C).
    15. Loo, Becky P.Y. & Ngan, Y.L., 2012. "Developing mobile telecommunications to narrow digital divide in developing countries? Some lessons from China," Telecommunications Policy, Elsevier, vol. 36(10), pages 888-900.
    16. David Iheke Okorie, 2017. "Testing the Existence of Cobb-Douglas and CES Production Functions in Nigeria," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(3), pages 270-297, March.
    17. Mr. Balazs Csonto & Yuxuan Huang & Mr. Camilo E Tovar Mora, 2019. "Is Digitalization Driving Domestic Inflation?," IMF Working Papers 2019/271, International Monetary Fund.
    18. Zi Hui Yin & Chang Hwan Choi, 2023. "Does digitalization contribute to lesser income inequality? Evidence from G20 countries," Information Technology for Development, Taylor & Francis Journals, vol. 29(1), pages 61-82, January.
    19. Abdoul‐Akim Wandaogo, 2022. "Does digitalization improve government effectiveness? Evidence from developing and developed countries," Applied Economics, Taylor & Francis Journals, vol. 54(33), pages 3840-3860, July.
    20. Karyne B. Charbonneau & Alexa Evans & Subrata Sarker & Lena Suchanek, 2017. "Digitalization and Inflation: A Review of the Literature," Staff Analytical Notes 17-20, Bank of Canada.
    21. Njangang, Henri & Beleck, Alim & Tadadjeu, Sosson & Kamguia, Brice, 2022. "Do ICTs drive wealth inequality? Evidence from a dynamic panel analysis," Telecommunications Policy, Elsevier, vol. 46(2).
    22. Nina Czernich & Oliver Falck & Tobias Kretschmer & Ludger Woessmann, 2011. "Broadband Infrastructure and Economic Growth," Economic Journal, Royal Economic Society, vol. 121(552), pages 505-532, May.
    23. Baumüller, Heike & Addom, Benjamin K., 2020. "The enabling environments for the digitalization of African agriculture," IFPRI book chapters, in: 2020 Annual trends and outlook report: Sustaining Africa's agrifood system transformation: The role of public policies, chapter 13, pages 159-173, International Food Policy Research Institute (IFPRI).
    24. Matthess, Marcel & Kunkel, Stefanie, 2020. "Structural change and digitalization in developing countries: Conceptually linking the two transformations," Technology in Society, Elsevier, vol. 63(C).
    25. Wang, Jing & Xu, Yubing, 2023. "Digitalization, income inequality, and public health: Evidence from developing countries," Technology in Society, Elsevier, vol. 73(C).
    26. Gomez-Plana, Antonio & Latorre, María C., 2015. "The impact of foreign multinationals in ICT sectors: A CGE evaluation," Conference papers 332605, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    27. Abdoul-Akim Wandaogo, 2022. "Does digitalization improve government effectiveness ? Evidence from developing and developed countries," Post-Print hal-03620113, HAL.
    28. Cariolle, Joel & Piedade, Camille da, 2022. "Digital Connectedness and Exports Upgrading: Is Sub Saharan Africa Catching Up?," Working Papers 43ba6211-24c3-4e6a-a491-5, African Economic Research Consortium.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pan, Maomao & Bai, Min & Ren, Xiaoxiao, 2022. "Does internet convergence improve manufacturing enterprises’ competitive advantage? Empirical research based on the mediation effect model," Technology in Society, Elsevier, vol. 69(C).
    2. Partnership for Market Readiness, 2021. "Beyond Mitigation," World Bank Publications - Reports 35624, The World Bank Group.
    3. Huang, Jie & Lu, Hongyang & Du, Minzhe, 2025. "Can digital economy narrow the regional economic gap? Evidence from China," Journal of Asian Economics, Elsevier, vol. 98(C).
    4. Marcus Roller, 2023. "Estimation of direct net effects of events," Tourism Economics, , vol. 29(6), pages 1577-1597, September.
    5. Ullah, Assad & Dogan, Mesut & Pervaiz, Amber & Ather Bukhari, Azaz Ali & Akkus, Hilmi Tunahan & Dogan, Husna, 2024. "The impact of digitalization, technological and financial innovation on environmental quality in OECD countries: Investigation of N-shaped EKC hypothesis," Technology in Society, Elsevier, vol. 77(C).
    6. World Bank, 2024. "Cross-Country Empirical Analysis of GovTech Platforms on Citizen Engagement," Policy Research Working Paper Series 10716, The World Bank.
    7. Diamantis Koutsandreas & Evangelos Spiliotis & Haris Doukas & John Psarras, 2021. "What Is the Macroeconomic Impact of Higher Decarbonization Speeds? The Case of Greece," Energies, MDPI, vol. 14(8), pages 1-19, April.
    8. Yu Hao & Yunxia Guo & Haitao Wu, 2022. "The role of information and communication technology on green total factor energy efficiency: Does environmental regulation work?," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 403-424, January.
    9. Huwei Wen & Yupeng Liu & Yutong Liu, 2024. "Impact of Digitalization on Investment and Productivity of Manufacturing Industry: Evidence from China," SAGE Open, , vol. 14(3), pages 21582440241, September.
    10. Bekkers, Eddy & Orlov, Daniil, 2020. "The impact of macroeconomic closures on long run trade projections and trade policy experiments," Conference papers 333154, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Ndubuisi, Gideon & Otioma, Chuks & Tetteh, Godsway Korku, 2021. "Digital infrastructure and employment in services: Evidence from Sub-Saharan African countries," Telecommunications Policy, Elsevier, vol. 45(8).
    12. Martin Stepanek, 2022. "Sectoral Impacts of International Labour Migration and Population Ageing in the Czech Republic," Computational Economics, Springer;Society for Computational Economics, vol. 60(2), pages 375-400, August.
    13. Wei Jiang & Ke-Liang Wang & Zhuang Miao, 2024. "How does internet development affect urban eco-resilience: evidence from China," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-40, April.
    14. Niu, Meng & Wang, Zhenguo & Zhang, Yabin, 2022. "How information and communication technology drives (routine and non-routine) jobs: Structural path and decomposition analysis for China," Telecommunications Policy, Elsevier, vol. 46(1).
    15. M. Yu. Ksenofontov & A. A. Shirov & D. A. Polzikov & A. A. Yantovskii, 2018. "Assessing Multiplier Effects in the Russian Economy: Input-Output Approach," Studies on Russian Economic Development, Springer, vol. 29(2), pages 109-115, March.
    16. Yang Zhan & Chuangyin Dang, 2018. "A smooth path-following algorithm for market equilibrium under a class of piecewise-smooth concave utilities," Computational Optimization and Applications, Springer, vol. 71(2), pages 381-402, November.
    17. Jacques Simon Song & Georges Ngnouwal Eloundou & Fabrice Bitoto Ewolo & Blaise Ondoua Beyene, 2024. "Does Social Media Contribute to Economic Growth?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8349-8389, June.
    18. Fahad Fahimullah & Yi Geng & Bradley Hardy & Daniel Muhammad & Jeffrey Wilkins, 2019. "Earnings, EITC, and Employment Responses to a $15 Minimum Wage: Will Low-Income Workers Be Better Off?," Economic Development Quarterly, , vol. 33(4), pages 331-350, November.
    19. Sergey Nikolaevich Silvestrov & Sergey Alekseevich Pobyvaev & Stanislav Borisovich Reshetnikov & Dmitrii Vladimirovich Firsov, 2022. "Management of the Russian Interregional Investment Distribution Using the Autonomous Expenditure Multiplier Model," Economies, MDPI, vol. 10(2), pages 1-18, February.
    20. Awad, Atif & Albaity, Mohamed, 2022. "ICT and economic growth in Sub-Saharan Africa: Transmission channels and effects," Telecommunications Policy, Elsevier, vol. 46(8).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:telpol:v:49:y:2025:i:4:s0308596125000333. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.