Assessing the economy-wide impacts of digital transformation in the Korean economy: A social accounting matrix multiplier approach

Abstract

This study assesses the economic impact of digital transformation (DT) in Korea by utilizing a Social Accounting Matrix to explore interconnections across various datasets. Through a social accounting matrix multiplier analysis, this study empirically identifies the production inducement, income inducement, and income distribution effects driven by DT-related infrastructure investments. We analyze how DT influences production, income, and income distribution through infrastructure investments, focusing on its effects on the labor market and household income. The findings indicate that DT accelerates economic growth, favoring digital capital-intensive industries and high-skilled labor, potentially increasing employment polarization and exacerbating income inequality. This study highlights the need for dual approach as to enhance national competitiveness and inclusiveness in an economy driven by DT technologies. This approach involves two key components that work synergistically to maximize the benefits of DT while addressing its potential challenges, suggesting that industrial and innovation policies should be reconstructed to align with the demands of a DT-driven economy.