Improving the effectiveness of monitoring the digital economy: challenges and methodological frameworks

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Kharkiv National University named after V.N. Karazin,

Educational and Scientific Institute "Ukrainian Engineering and Pedagogics Academy"

Department of Economics and Management

Department of Statistics, Accounting and Audit

Improving the effectiveness of monitoring the digital economy: challenges and methodological frameworks

Krutova A., Dr Econ. Sci., Professor

Nesterenko O., Dr Econ. Sci., Professor

Koliyenko O., applicant PhD

Kharkiv, Ukraine

Abstract

The digital economy has emerged as a critical area of development globally, yet its assessment poses significant challenges due to varied definitions and data reliability issues, particularly in developing countries. This article explores these challenges and proposes a methodological framework to enhance the monitoring of digital economy activities. The advancement of information and communication technologies (ICT) has made the formation of a robust digital economy a priority for many countries. This article addresses these challenges by proposing a comprehensive model for assessing the development of the digital economy and society, focusing on Ukraine. The study aims to systematize the principles of the digital economy, define key concepts from its statistics, identify major sources of data, and evaluate international monitoring systems for digital competitiveness.

The digital economy, characterized by sectors such as e-commerce, online services, and digital infrastructure, intersects with traditional economic sectors, offering new opportunities for growth and innovation. Despite the absence of a unified definition, various sources emphasize the role of ICT in transforming economic interactions. This study reviews several approaches to defining the digital economy, highlighting the lack of a cohesive framework that meets statistical processing requirements.

The study highlights the importance of statistical tools in measuring digital transformation at the macro, meso, and micro levels. Various digital economy indices, such as the Digital Economy and Society Index (DESI) and the Networked Readiness Index (NRI), are discussed to provide comparative analyses of digital development. The article emphasizes the need for Ukraine to align its digital strategy with EU standards, given the country's ongoing efforts to join the DESI index.

Key words: digital economy, characteristics of the digital economy, effectiveness monitoring, digital economy development assessment.

Анотація

Підвищення ефективності моніторингу цифрової економіки: виклики та методологічні засади

Introduction

The formation of a robust digital economy is a priority for many countries, driven by advancements in information and communication technologies (ICT). However, assessing its true impact and scope remains complex due to the absence of a universally accepted definition and inadequate statistical data, especially in developing regions. This article addresses the need to develop effective monitoring systems tailored to the unique challenges and opportunities presented by the digital economy.

One of the priority areas of development for most countries of the world today is the formation of a digital economy. At the same time, many difficulties arise when assessing the scale of the digital economy and the value it creates and the benefits it provides.

There is no generally accepted definition of the digital economy. Second, there is a lack of reliable statistical data on its key components and aspects, especially in developing countries. Although a number of initiatives designed to correct this state of affairs are already being implemented, they are still not enough, and they barely keep up with the rapid development of the digital economy [1].

In light of the digital transformations that the world has witnessed in recent years, the information and communication technology sector and digitization have become one of the most sensitive topics that interest governments, as many governments rushed to take advantage of digital transformations in order to increase the levels of effectiveness of their departments, including public finance management, which is what is called Digitization of public finances [2]. Besides, developing countries face the challenge of establishing robust policies and guidelines concerning data ownership, given the strategic importance of digital data sets. It is imperative to clearly identify who has the authority to control access, usage, and deletion of data, while also defining the associated rights pertaining to data “ownership” [3]. Thus, developing countries in particular are increasingly aware of the opportunities of digital dividends and the risks of being left behind in the race of digital transformation [4].

Given that the least researched part of the assessment of the development of the digital economy is the micro level, the purpose of this study is to develop a model of digital economy and society development assessment.

In accordance with the purpose of the research, the following additional research tasks are defined:

- systematize the principles of functioning of the digital economy;

- determine the content of basic concepts from the statistics of the digital economy;

- to identify the main sources and means of forming the information base of digital competitiveness research;

- to investigate the main international systems for monitoring digital competitiveness;

- to offer a set of indicators of Ukraine's digital economy development assessment.

The digital economy encompasses sectors such as e-commerce, online services, and digital infrastructure, driven by advancements in ICT and network interactions. It intersects with traditional economic sectors, offering new opportunities for economic growth and innovation. The term “Digital Economy” appeared in 1995. at the same time, Canadian management professor D. Tapscott from the University of Toronto and American computer scientist N. Negroponte, their work “Digital Economy” was published in 1997[5; 6].

According to the concept of development of the digital economy and society of Ukraine for 2018-2020, the digital economy is an activity in which the main means (factors) of production are digital (electronic, virtual) data, both numerical and textual [7].

In international practice, there is no unambiguous definition of the digital economy. Most foreign sources emphasize the use of information technologies and their impact on the ways of interaction of economic agents, sometimes mentioning specific technologies or changes in economic processes [8]. Often, the definition of the digital economy is replaced by a list of directions of its influence on the economy and society. Ukraine also does not have a unified concept of the digital economy that would satisfy the requirements for statistical processing of the data produced by it. Let's consider the most common approaches to the interpretation of the term "digital economy" (Table 1).

Table 1

Approaches to defining the concept of "digital economy"

The general approach to defining the digital economy is to consider its constituent parts, in particular the International Organization of the OECD (Organization for Economic Co-operation and Development) identifies three main components of the digital economy:

- supporting infrastructure (hardware and software, telecommunications, networks, etc.);

- electronic business, or e-business (conducting business activities and any other business processes through computer networks);

- electronic commerce, or e-commerce (distribution of goods via the Internet).

Thus, the digital economy is based on the use of information and communication technologies and network interaction. Sectors of the digital economy include, but are not limited to, industries such as e-commerce, online payments, social networks, cloud services, online media, artificial intelligence technologies, blockchain and cryptocurrencies. These technologies intersect with various branches of the economy, which creates new opportunities for business and the development of the economy as a whole.

Don Tapscott identified 12 main characteristics of the digital economy:

1. Knowledge. They are becoming the most important factor of production in the digital economy, significantly displacing traditional factors: land, labor and capital.

2. Digitization. Data represented by a set of bits can be quickly and cheaply distributed worldwide.

3. Virtualization. Unlike the real world, where real assets require the presence of buildings and means of production, in the virtual world an individual can create a business with a simple technical device and connect with potential customers around the world online 24 hours a day, 7 days a week.

4. Molecularization - creation of such a system in which the organization can easily adapt to any dynamic changes in the external environment.

5. Creation of network structures in which the performance of auxiliary functions is transferred to other companies.

6. Exemption from intermediaries and transition to direct transactions between sellers and buyers.

7. Convergence of three mandatory components of successful business under the new realities: 1) computerization as a basis for processing large amounts of information, 2) communication lines as an infrastructure for data transmission and conclusion of agreements, 3) essence of services provided by the company.

8. Innovativeness. In the Internet environment, any innovations are easily copied, therefore, constant innovation, creation of new goods and services, building activities based on continuous learning is a necessary condition for maintaining the competitiveness of companies.

9. Involvement of consumers in the process of development, production and development of a product or service.

10. Direct interaction with a potential buyer. Because the costs of switching to another seller in the Internet environment are very low, companies must be highly sensitive to their individual needs in order to retain a potential buyer.

11. Globalization, the essence of which is the destruction of borders in space and time, the transformation of society into a single virtual community of sellers and buyers.

12. The inconsistency of the transformations taking place with the usual realities, which can provoke consequences that are difficult to predict and neutralize in advance [5].

In general, digital economy statistics is a systematized set of tools, techniques, and procedures for collecting, systematizing, and analyzing information about the economy based on the use of digital technologies and products. source data digital economy competitiveness ukraine

The main tasks of digital economy statistics are:

- collection, analysis and interpretation of data on the development of digital technologies and their impact on the economy and society as a whole;

- quantitative measurement of the level of digitization of national economies at the macro, meso, and micro levels, as well as the digital transformation of countries with different levels of economic and social development;

- carrying out relevant international comparisons, the results of which make it possible to obtain rating distributions of countries according to the level of their digital transformation and to evaluate the effectiveness of this process, including from the point of view of the possibility of achieving global social development goals.

The most common methods of assessing the state of development of the digital economy are the formation of rating indexes.

The main rating indexes of digitization include:

- digital economy and society index (Digital Economy and Society Index - DESI);

- index of network readiness (Networked Readiness Index - NRI);

- index of digital evolution (Digital Evolution Index - DEI);

- digitalization adoption index (Digital Adoption Index - DAI);

- index of development of information and communication technologies (ICT Development Index - IDI);

- global innovation index (Global Innovation Index - GII);

- index of digitization of the economy (Boston Consulting Group - e-Intensity);

- index of global digital competitiveness (IMD World Digital Competitiveness Index - WDCI).

Let's consider the methodological approaches and statistical indicators used in the calculation of the most common indices.

The European Commission has developed the Digital Economy and Society Index (DESI), which is a complex framework of digital indicators of key aspects of the information society in Europe [14]. The index is an international tool for assessing the competitiveness of EU member states in the field of digital economy and society.

The DESI Index (I-DESI) covers four main criteria: human capital (skills and skills needed to take advantage of the opportunities offered by the digital society); communication (broadband Internet access infrastructure deployment and its quality); integration of digital technologies (digitalization of business and development of online sales); digital public services (digitalization of public services (e-government)). Within these components, I-DESI combines 32 indicators and uses a rating system to rank each country based on its digital indicators for the purpose of comparative analysis of the development of the digital economy and society.

According to the Association Agreement between Ukraine and the EU, which was signed in 2014, Ukraine undertook to bring its legislation into line with EU standards. In order to join the Digital Economy and Society Index (DESI), Ukraine has important prerequisites. The Concept and Action Plan for the development of the digital economy and society in Ukraine were adopted, but a more modern digital strategy is needed that would correspond to the latest EU strategies.

The stages of creating an integrated digital information space in the economy of a commercial organization are different and defined as following: statutory regulation, personnel and education, information infrastructure, information security. The directions of digital informatization of management control system are suggested, which include the digitalization of the following subsystems: planning and forecasting, management organization, control and accounting [15].

Despite the fact that Ukraine is currently not a member of the European Union, work is underway to join it to the DESI index. In January 2020, the Ministry of Digital Transformation of Ukraine started the implementation of the project "EU support for e-government and digital economy in Ukraine", during which a meeting was held with representatives of the State Statistics Service of Ukraine, the National Commission for State Regulation in the Field of Communications and of Informatization (NKRZI) and the Ministry of Economy of Ukraine. From 2021, in Ukraine, in accordance with the updated methodology, which takes into account the requirements of Commission Regulation (EU) No. 2019/1910 of 07.11.2019 regarding the use of ICT and electronic commerce, the calculation of indicators on the number and share of enterprises that used information and communication technologies, is carried out for the year in which the state statistical observation "Usage of information and communication technologies at enterprises" is conducted.

Taking into account those approved by the Committee on Improving the Methodology and Reporting Documentation of the State Statistics Service (protocol dated June 5, 2020 No. KPUM/10-20), we offer a model for assessing the development of the digital economy and society (Fig. 1).

Fig. 1. Indicators of assessment of the development of the digital economy

According to the results of the state statistical monitoring of legal entities with the number of employed workers of 10 or more, statistical information is formed according to the following sections:

- Use of information and communication technologies at enterprises: electronic trade;

- Use of information and communication technologies at enterprises: use of the Internet, social media, cloud computing services;

- Use of information and communication technologies at enterprises: ecommerce, analysis of "big data", experts and skills in the field of ICT, use of 3D printing;

- Use of information and communication technologies at enterprises: use of the Internet, cloud computing services, robotics.

All DSS data are collected at the general level of the country and are divided by types of economic activity according to the grouping of sections/groups/subdivisions of KVED. At the same time, enterprises are classified by the number of employees as follows: from 10 to 49 people, from 50 to 249 people, 250 people and more.

These categories are defined in Commission Regulation (EU) No. 2019/1910.

A combination of methods is used to carry out the DSS, namely, conducting a survey directly of the DSS units using the method of discontinuous study of the population - a sampling method, as well as using data from other DSS. The unit of the DSS is the enterprise.

The formation of the population of DSS units, which will be directly investigated, is carried out in accordance with the Methodology for the formation of a sample population for conducting a survey on the use of information and communication technologies at enterprises and the distribution of its results to the general population, which is posted on the website State Statistics Office at the link. The total volume of the sample does not exceed 20% of the base of the sample. In order to ensure the quality of the data obtained by direct collection of information from respondents, an analysis of the level of compliance of the reports provided by the respondents is carried out, and the reasons that may explain the inconsistency of these reports are studied.

Conclusion

Enhancing the effectiveness of monitoring the digital economy is essential for informed policymaking and strategic investments. By addressing the outlined challenges and implementing the proposed strategies, Ukraine can strengthen its capacity to measure and capitalize on the opportunities presented by the digital economy. The developed model can be the basis of the methodological provisions of the organization of state statistical monitoring regarding the use of information and communication technologies by business entities and will contribute to the development of the digital economy in Ukraine. A statistical assessment of the digital economy in Ukraine will allow companies and other interested parties to understand how digital technologies affect various aspects of life and economic development, from employment and social policy to the creation of business models and changes in production processes. At the macro level, the application of the proposed methodology will help to solve issues related to the development and implementation of strategies for the development of the digital economy, as well as ensuring effective regulation in a certain industry.

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