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The Impact of Digitalization on EU Competitiveness and Economic Growth: An Econometric Perspective

Author

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  • Doroiman Maria Magdalena

    (PhD Student, Doctoral School of Economics and Business Administration, West University of Timisoara, Timișoara, Romania)

  • Sîrghi Nicoleta

    (Professor, Department of Marketing, International Business and Economy, West University of Timișoara, Timișoara, Romania)

Abstract

The impact of digitalization on economic competitiveness depends on many factors such as the structure of each economy, the maturity of public institutions, but also the alignment between technology, education, and these policies. Based on this evidence, we advocate for more targeted digital strategies across the EU, combining tech investment with stronger support for human capital and innovation ecosystems. This paper examines the impact of digital transformation on economic growth and competitiveness within the European Union, with a focus on the new technologies, during 2021-2023. Utilizing panel data from all 27 Member States, we analyze the effects of five key drivers - artificial intelligence (AI), big data use, ICT training, R&D investment, and labor productivity - on GDP dynamics and international competitiveness. Using panel data from all 27 EU Member States, the study evaluates the impact of five key drivers—AI, big data usage, ICT training, R&D investment, and labor productivity—on GDP growth and international competitiveness. The findings create a complex picture in which productivity remains the strongest and most consistent contributor to GDP growth. Big data and R&D spending play a central role in boosting general and digital competitiveness, while AI is beginning to show its potential, even though its broader economic impact remains limited for now. Surprisingly, ICT training appears to support competitiveness but may also reflect short-term inefficiencies in matching skills with labor market needs. The paper illustrates the need for public policies to integrate technology adoption with digital skills development and innovation ecosystems.

Suggested Citation

  • Doroiman Maria Magdalena & Sîrghi Nicoleta, 2025. "The Impact of Digitalization on EU Competitiveness and Economic Growth: An Econometric Perspective," Timisoara Journal of Economics and Business, Sciendo, vol. 18(1), pages 113-126.
    • Handle: RePEc:vrs:timjeb:v:18:y:2025:i:1:p:113-126:n:1006
    DOI: 10.2478/tjeb-2025-0006
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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