Modeling the Development of the Digital Economy in Eastern European Countries: Comprehensive Assessment, Grouping, and Identification of Determinants

Abstract

The paper examines issues in determining the specifics of the digital economy's development in Eastern European countries. The relevance of the study stems from the growing role of digitalization in economic growth and the significant disparities in digital development across countries in this region. The purpose of the study is to form a conceptually and empirically consistent approach to assessing the development of the digital economy in the countries of the EE region based on the technology of complex comprehensive assessment of digital development and the tools of multidimensional economic and statistical modeling, with subsequent clustering of countries by similarity of digital profiles. The study's information base comprises data from the World Bank, Eurostat, and other international sources for 2023. A set of indicators has been developed for analyzing the infrastructure and human-innovation aspects of digitalization. The use of comprehensive assessment technology allowed the construction of partial comprehensive indices of digital infrastructure and digital innovation potential, as well as a generalized indicator of digital development. To reduce the index space and identify latent factors, the principal component analysis and multidimensional scaling methods were used. The paper presents the results of grouping countries based on partial comprehensive indicators, principal components, and MDS latent axes. The results of the study showed significant differences among countries in levels of digital development. They allowed the distinction of groups of countries with high, medium, and catching-up levels of digitalization. There is consistency in the results obtained by different techniques. The practical significance of the results lies in their potential to inform a differentiated digital transformation policy to overcome digital divides and improve the efficiency of economic development across countries.