The Impact of Digital Skills on Economic Growth in the European Union: A Bayesian Model Averaging Approach

The accelerated growth of the digitalization process is making digital skills increasingly important in the global economy. The purpose of this research is to empirically assess the impact of digital skills on economic growth in the 27 European Union (EU) member states over the period 2017–2023. In this respect, to measure the concept of digital skills, we employed the following four indicators of the Digital Economy and Society Index (DESI): internet usage, enterprises offering information and communication technologies (ICT) training to their employees, ICT specialists, and ICT graduates, while economic growth was proxied by gross domestic product (GDP) per capita. In addition, to obtain a more nuanced analysis, we included a set of control variables likely to influence growth. In the first stage of the research, we apprised the effect and importance of each explanatory variable on the GDP per capita using the Bayesian model averaging (BMA), while in the second stage, we ran a two-step system generalized method of moments (GMM). Based on the results obtained from applying the BMA, ICT graduates, trade, the new EU countries, and the employed population are the main determinants of economic growth. In addition, the new EU countries and inflation have a negative impact on GDP per capita, and the post-COVID dummy exerts a predominantly negative effect and all remaining regressors boost the GDP per capita. Furthermore, the GMM estimations confirmed the outcomes obtained through BMA, which denotes that the research findings are robust to changes in the methodological framework and, hence, are reliable and valid. The results of this research indicate that ICT graduates and digital skills play a decisive role in driving economic growth in the EU member states, with ICT skills having a significant positive impact on GDP.