The Impact of Digitization on Regional Economic Growth: Trends, Challenges, and Policy Implications

Abstract

The Rapid increase in digital technologies has been changed the economic environment throughout the globe, providing regions with unparalleled possibilities to develop, and at the same time increasing the number of inequalities. The article discusses the complex effects of digitization on the economic development of the region, both on the opportunities that digital transformation opens and enhances the speed of the development process, and on organizational barriers to the fair allocation of digital dividends. Based on the recent empirical evidence on a variety of geographical settings, the proposed work presents three key channels of a digital impact, which include productivity improvement via enterprise digital transformation, labor-market restructuring, and the development of innovation ecosystems. Nevertheless, there are still some serious obstacles, such as the digital divide, lack of infrastructure, and skills gaps. The evidence-based policy recommendations at the end of the article focus on supporting the inclusive digital economic development, and the authors state that it is necessary to have coordinated governance frameworks that would consider the connectivity, computation capacity, and contextual data governance and development of competence.

Keywords: digitalization, regional economic development, digital divide, digital transformation, inclusive development, economic inequality