The Effect of Information and Communication Activities in European Countries’ Gross Domestic Product

During the last decades, the rise of digitalization across sectors has given shape to the ‘Digital Economy’, significantly influencing national economic indicators. This research employs the Information and Communication Activities (ICA) index and investigates its contribution to the Gross Domestic Product (GDP) in nine European countries. The selection of these countries is based on their financial characteristics and geographical location. The methodology used is time series analysis. Results support a great increase in the ICA index from 1995 to 2022 for all nine EU members. These outcomes claim the constantly higher contribution of the digital economy to national GDPs over time and the great support of the growth of national economies. The impact of digitalization is most significant in European islands (Cyprus, Malta, Ireland), then in Northern European countries (Finland, Sweden, Estonia) and finally in South-eastern European countries (Bulgaria, Romania, Croatia). These results can be justified as the economies of the employed islands are consisted mainly by multinational companies in comparison with the other two groups which have more multidimensional economies. Furthermore, the development of the ICA index is sharper in most of the employed countries during the last years of the research, mainly because of the Covid-19 crisis. Policy makers can use the multidimensional ICA index for monitoring the performance of the digital economy and incorporate digitalization into macroeconomic planning to support the development of national economies and the fact that the digital sector can be used as a strategic economic pillar for sustainable growth.