Assessment of the impact of digitalization on business development in eu countries and Ukraine

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Assessment of the impact of digitalization on business development in eu countries and Ukraine

Igor Matyushenko,

Serhii HLIBKO,

Olena KHANOVA,

Denys KORYTIN,

ОЦІНКА ВПЛИВУ ЦИФРОВІЗАЦІІ НА РОЗВИТОК БІЗНЕСУ

В КРАЇНАХ ЄС ТА УКРАЇНІ

Анотація

В статті проведено оцінку перспектив розвитку підприємницької діяльності країн ЄС і України в умовах цифровізації економіки. Сформовано методичний підхід для аналізу розвитку підприємницької діяльності країн ЄС і України в умовах цифровізації економіки, який складається з трьох етапів. Акцентовано увагу, що індекси WDCR, NRI, GII об>єднують переважно інституційні, економічні та технологічні показники, що відображають розвиненість нормативно-правової та науково- дослідної бази, використання ІКТ у бізнесі, інформаційну безпеку. Індекс EGDI має більш соціальну спрямованість та відображають соціально-економічну інтеграцію - він призначений для оцінки рівня розвитку інформаційного суспільства. Проведено аналіз динаміки змін підприємницької діяльності країн ЄС та України в умовах цифровізації економіки. Встановлено, що незважаючи на нижчий рівень розвитку цифровізації в Україні у порівнянні з країнами ЄС, тренди розвитку як в цілому по ЄС, так й України поясністю співпадають. Змодельовано за допомогою кореляційно-регресійного аналізу вплив цифрової складової на розвиток підприємницької діяльності країн ЄС та України. Відмічено, що рівень цифровізації не впливає на швидкість реакції законодавчого органу з метою усунення погіршення умов підприємницької діяльності, а встановлення індикаторів індексів тільки по прийнятим нормативно-правовим актам не враховує ефективності реалізації законодавчих змін в сфері підприємницької діяльності. Зроблено висновок, що серед трьох змінних найбільший вплив розвиток підприємницької діяльності має саме Індекс розвитку електронного уряду. Найбільший прямий взаємозв'язок розвитком підприємницької діяльності, індексом розвитку цифрового уряду та цифровою конкурентоспроможністю мають Бельгія, Хорватія, Італія, Словаччина, Люксембург, Нідерланди, Угорщина.

Ключові слова: євроінтеграція, кореляційно-регресійна модель, міжнародні індекси цифрової конкурентоспроможності, розвиток підприємництва, цифровізація економіки, правове середовище, закони і бізнес.

ASSESSMENT OF THE IMPACT OF DIGITALIZATION ON BUSINESS DEVELOPMENT IN EU COUNTRIES AND UKRAINE

digitalization business economy

Abstract

The article assesses the prospects for the development of entrepreneurial activity in the EU and Ukraine in the conditions of digitalization of the economy. A methodical approach for the analysis of the development of entrepreneurial activity in the EU countries and Ukraine in the context of the digitalization of the economy has been formed, which consists of three stages. Attention is drawn to the fact that the WDCR, NRI, GII indices combine mainly institutional, economic and technological indicators that reflect the development of regulatory and legal research base, use of ICT in business, information security. The EGDI index has a more social orientation and reflects socio-economic integration - it is designed to assess the level of development of the information society. An analysis of the dynamics of changes in entrepreneurial activity in EU countries and Ukraine in the conditions of digitalization of the economy was carried out. It was established that despite the lower level of development of digitalization in Ukraine compared to the EU countries, the development trends both in the EU as a whole and in Ukraine clearly coincide. The impact of the digital component on the development of entrepreneurial activity in EU countries and Ukraine was modeled using correlation-regression analysis. It was noted that the level of digitalization does not affect the speed of the legislative body's reaction to eliminate the deterioration of the conditions of business activity, and the establishment of index indicators only according to the adopted normative legal acts does not take into account the effectiveness of the implementation of legislative changes in the field of business activity. It was concluded that among the three variables, the e-government development index has the greatest influence on the development of entrepreneurial activity. Belgium, Croatia, Italy, Slovakia, Luxembourg, the Netherlands, and Hungary have the greatest direct relationship between the development of entrepreneurial activity, the digital government development index, and digital competitiveness.

Key words: European integration, correlation-regression model, international indices of digital competitiveness, development of entrepreneurship, digitalization of the economy, legal environment, law and business.

Introduction

The study of the development of entrepreneurial activity in any country is impossible without a constant rethinking of the factors that influence it and the dynamics of their changes. Such factors include global economic trends, the geopolitical situation and a number of other circumstances. Any country cannot develop in an environment of economic instability, when inflation is rising, the national currency is unstable, and there are no plans for the development of small and medium-sized businesses. The problems that affect the development of the country's business activity can only be solved at the government level, in a comprehensive manner. It is worth noting that in the context of the new industrial revolution, the importance of innovative development factors, such as the digitalization of the economy, is growing significantly. Therefore, the study of the impact of economic digitalization on the development of entrepreneurship in the country is relevant.

Theoretical framework

The research of issues and problems of development of entrepreneurial activity of countries of the world as a factor of their innovative development is devoted to the scientific works of such famous scientists as: M. Tugan-Baranovsky, M. Kondratiev, J. Schumpeter, D. Bernal, S. Kuznets, B. Twiss,

J. Bright and others. The problem of effective development of entrepreneurial activity in the EU and Ukraine, which stimulates the country's innovative development, has been studied in recent decades in the works of many scholars, in particular, J. Krauf, F. Kwiatkowski, and others. Krauff, F. Quattaro and P. Saviotti (Krauff et al., 2014), U. Kantner (Kantner, 2016), S. Winter (Winter, 2016), P. Adams,

R. Fontana and F. Malerb (Adams et al, 2016; Malebra & McKelvey, 2020; Malebra & McKelvey, 2018), S. Clapper (Klepper, 2015), M. McKelvey (Malebra & Kleper, 2015; Malebra & McKelvey, 2020), K. Lee (Lee & Malebra, 2017), M. Dorosch-Kizim, O. Dadak, M. Dorosch, L. Babych (Dorosch- Kizim et al, 2020) and others. However, the sphere of entrepreneurship development in Ukraine and the European Union in the context of economic digitalization is not described in sufficient detail, which determines the relevance of the work.

Methodology

At the first stage, the author proposes to analyze the dynamics of changes in the i ndicators of entrepreneurial activity of the EU countries and Ukraine in the context of digitalization of the economy. As characteristic indicators of business activity of countries in the context of digitalization of the economy, we have chosen:

Doing business index from the World Bank;

The World Digital Competitiveness Index (WDCI) developed by the Swiss Business School;

The E-Government Development Index (EGDI), which represents the state of e-government development in UN member states;

The Global Innovation Index (GII) ranks world economies according to their innovation capabilities.

At the second stage of the study of the impact of the digital component on the development of entrepreneurship in the EU and Ukraine, we propose to conduct a correlation and regression analysis in order to build equations of influence on the level of entrepreneurship of the level of digitalization and innovation of the economy for each of the EU countries and Ukraine. In particular, we consider:

the correlation between the Doing Business and EDGI indices of the EU and Ukraine;

the correlation between Doing Business and WDCI (World Digital Competitiveness Index);

the correlation between Doing Business and GII (Global Innovation Index) indices.

Based on the results of the calculations, an equation of influence on the level of entrepreneurial activity (in the form of the Doing Business index) is formed by three components: X1 - EDGI (E-Government Development Index); X2 - WDCI (Digital Competitiveness Index); X3 - GII (Global Innovation Index).

After that, the impact of each of these components is analyzed and the EU countries and Ukraine are classified according to the total amount of influence on the entrepreneurial activity of the digitalization of the economy.

At the third stage, the prospects for the development of entrepreneurial activity in the EU and Ukraine in the context of economic digitalization are determined.

Results

The World Bank's Doing Business Index is one of the most influential rankings of business performance.

Table 1 shows data on the Doing Business index in the dynamics from 2015 to 2021 for each of the EU countries and Ukraine.

Fig. 1. Dynamics of changes in the Doing Business index for Ukraine and the EU average (Doing Business 2015-2020; World Digital Competitiveness Ranking, 2021)

As can be seen from the figure, both in Ukraine and the EU, the level of entrepreneurial activity has a positive development trend. In Ukraine, the probability of the forecast is slightly lower than in the EU, but high - 77.5%.

The World Digital Competitiveness Index (WDCI) was developed by the Swiss Business School.

Table 1. Dynamics of changes in the Doing Business index in the EU and Ukraine

This index reflects the readiness and ability of countries to adapt to the development of the digital economy.

Fig. 1 shows the dynamics of changes in the Doing Business index for Ukraine and the EU average.

Table 2 shows data on the WDCI index in the dynamics from 2016 to 2021 for each of the EU countries and Ukraine.

Table 2: Dynamics of changes in the WDCI index in the EU and Ukraine

Systematized by (World Digital Competitiveness Ranking, 2016-2020, E-Governmental Index, 2022)

Fig. 2 shows the dynamics of changes in the WDCI index for Ukraine and the EU average.

As can be seen from the figure, in both Ukraine and the EU, the World Digital Competitiveness Index has a positive development trend (the indicator has the opposite meaning, the lower the number, the better). In Ukraine, the probability of the forecast is low - 23%, which indicates a lack of digital development, while in the EU it is average - 67%, which indicates a steady development of digitalization processes, without rapid growth.

The E-Government Development Index (EGDI) presents the state of e-government development in UN member states. Along with an assessment of a country's website development patterns, the

E-Government Development Index includes access characteristics such as infrastructure and education levels to reflect how a country is using information technology to promote access and engagement of its people.

Fig. 2. Dynamics of changes in the WDCI index for Ukraine and the EU average (World Digital Competitiveness Ranking, 2016-2020, E-Governmental Index, 2022)

Table 3 shows data on the EGDI index in the dynamics from 2015 to 2021 for each of the EU countries and Ukraine.

As can be seen from the figure, both Ukraine and the EU have a positive trend in e-government development. In Ukraine, the probability of the forecast is slightly lower (84%) than in the EU (95%).

The Global Innovation Index (GII) ranks world economies according to their innovation capabilities. It consists of 80 indicators grouped by input and output innovation resources and reflects various aspects of innovation.

Fig. 3 shows the dynamics of changes in the EGDI index for Ukraine and the EU average

Table 3. Dynamics of EGDI index changes in the EU countries and Ukraine

As can be seen from the figure, in both Ukraine and the EU, the level of innovation potential development in the EU is much higher than in Ukraine. It should be noted that there is a negative trend in the development of innovation potential both in the EU and in Ukraine.

To study the impact of the digital component on the development of entrepreneurship in the EU and Ukraine, it is proposed to conduct a correlation and regression analysis in order to build equations of influence on the level of entrepreneurship of the level of digitalization and innovation of the economy for each of the EU countries and Ukraine.

Fig. 4. Dynamics of changes in the GII index for Ukraine and the EU average (Global Innovation Index 2016-2021)

Table 4. Dynamics of changes in the GII index in the EU countries and Ukraine

Systematized by (Global Innovation Index 2016-2021)

Let us consider the relationship between the Doing Business and EDGI indices, Fig. 5.

Fig. 5. Results of correlation analysis between Doing Business and EDGI indices of EU countries and Ukraine (Doing Business 2015-2020; World Digital Competitiveness Ranking 2016-2021; E-Governmental Development Index, 2022)

Consequently, the level of entrepreneurial activity in many EU countries and Ukraine has a direct high connection with the e-government development index, that is, entrepreneurial activity in these countries directly depends on the development of digital infrastructure and the level of education, the degree of use of information technology to facilitate access and involvement of its people.

Countries such as Bulgaria, Germany, Ireland, Latvia, Portugal and Poland, on the contrary, have a low feedback, which on the one hand may be due to the still insufficient level of digitalization of the business environment, and on the other, as in Germany, be a consequence of the fact that the level of digitalization is not one of the main factors in the formation of a favorable business environment in the country.

Consider the relationship between the Doing Business (Business Activity Index) and WDCI (Digital Competitiveness Index), Fig. 6.

Fig. 6. Results of correlation analysis between Doing Business and WDCI indexes of EU countries and Ukraine (Doing Business 2015-2020; World Digital Competitiveness Ranking 2021; EGDI Methodology, 2022; Global Index, 2015)

Consequently, the level of entrepreneurial activity in many EU countries and Ukraine has a direct high connection with the digital competitiveness index, that is, entrepreneurial activity in these countries directly depends on the development of digital infrastructure and the level of introduction of information technology into the economy. Although the degree of dependence is much less compared to the e-government development index.

Countries such as Austria, Greece, Ukraine, Denmark, Cyprus, France, Estonia and Slovenia, on the contrary, have a low feedback, which on the one hand may be due to the still insufficient level of digitalization of the business environment, and on the other, as in Estonia, which is the world leader in digitalization, be a consequence of the fact that the level of digitalization is not one of the main factors in the formation of a favorable business environment in the country.

Consider the relationship between the Doing Business (Business Activity Index) and GII (Global Innovation Index), Fig. 7.

Fig. 7. Results of correlation analysis between Doing Business and GII indexes of EU countries and Ukraine (Doing Business 2015-2020; World Digital Competitiveness Ranking 2021; Global Innovation Index 2016-2021)

Consequently, the level of entrepreneurial activity in many EU countries and Ukraine mostly does not have a direct high connection with the global innovation index. Only Ireland and Poland have a high degree of relationship between entrepreneurship and innovation.

According to the results of calculations, an equation of influence on the level of entrepreneurial activity (in the form of the Doing Business index) was formed into three components, table 3.1:

X1 - EDGI (E-Government Development Index);

X2 - WDCI (Digital Competitiveness Index);

X3 - GII (Global Innovation Index).

There is no country that has a high influence on the development of entrepreneurship of all three variables, but countries such as Italy, Luxembourg, the Netherlands, Slovakia, Hungary and Croatia have a high flow of two variables of digitalization on entrepreneurial activity.

Consider the pain in detail the results of the calculations obtained.

Table 6. shows the grouping of countries in relation to the level of relationship between Doing Business and EDGI of EU countries and Ukraine.

Table 7. shows the grouping of countries in relation to the level of relationship between Doing Business and WDCI countries of the EU and Ukraine

Systematized by the authors for (Doing Business 2015-2020; World Digital Competitiveness Ranking 2021; E-Governmental Index, 2022; EGDI Methodology, 2022)

Table 8 shows the grouping of countries in relation to the level of relationship between Doing

Table 5. Variable matrix by EU countries and Ukraine The impact of digitalization on entrepreneurial activity

Table 6. Levels of relationship between Doing Business and EDGI indices EU countries and Ukraine

Business and GII countries of the EU and Ukraine

Table 7. Levels of relationship between Doing Business and WDCI indices EU countries and Ukraine

Systematized by the authors for (Doing Business 2016-2020; World Digital Competitiveness Ranking 2016-2021; E-Governmental Index, 2022; EGDI Methodology, 2022)

Systematized by the authors for (Doing Business 2016-2020; World Digital Competitiveness Ranking 2016-2021; E-Governmental Index, 2022; EGDI Methodology, 2022; Global Innovation Index, 2015-2021).

Table 8. Levels of relationship between Doing Business and GII indices EU countries and Ukraine

Systematized by the authors for (Doing Business 2016-2020; World Digital Competitiveness Ranking 2021; Global Innovation Index, 2016-2021).

Since the greatest impact on the development of entrepreneurial activities have EDGI (End Government Development Index) and WDCI (Digital Competitiveness Index) - Figure 8 shows the correlation field of relationships between business development, digital government development index and digital competitiveness.

Fig. 8. Correlational field of relationships between business development, digital government development index and digital competitiveness of EU countries and Ukraine (Doing Business 20162020; World Digital Competitiveness Ranking 2016-2021; E-Governmental Index, 2022; EGDI Methodology, 2022; Global Innovation Index, 2015).

According to Figure 8, Belgium, Croatia, Italy, Slovakia, Luxembourg, the Netherlands, Hungary have the greatest direct relationship between the development of entrepreneurial activity, the digital government development index and digital competitiveness.

Fig. 9. distribution of EU countries and Ukraine by the total amount of influence on the underintensive activities of the processes of digitalization of the economy (Doing Business 2016-2020; World Digital Competitiveness Ranking 2016- 2021; E-Governmental Index, 2022; EGDI Methodology, 2022; Global Innovation Index, 2015-2021).

Summarizing the results of the calculations, we can conclude, Fig. 9, that only Hungary and the Netherlands can be singled out according to the total amount of influence on the sub-economic activities of the processes of digitalization of the economy. All other EU countries and Ukraine have either a minor link between these processes or an inverse relationship.

Discussion

Considering the factors of political and economic instability, the development of corruption, the growth of inflation, military operations, and low values of indices, Ukraine needs changes and active actions to improve the business climate. Individual factors were studied in a number of works by Ukrainian authors. Thus, in his work, M. Kyzym (Kyzym, 2011) investigated the problems of as...