Abstract
ABSTRACT This paper empirically analyzes the digital transformation process in the business sector on the economic complexity among European countries from 2011 to 2019. The digital businesses are reflected by e-Commerce, including values of selling online, e-commerce sales, and e-commerce web sales, and e-Business, including customer relationship management usage and cloud usage. Our estimation results show that digitalization in the business sector positively influences economic complexity. There is evidence on the long-term cointegration between digital business and economic complexity. Furthermore, we provide some evidence that an improvement in economic growth, financial development as well a reduction in the pervasiveness of corruption are transmission channels through which digitalization in the business sector positively impacts the performance of economic complexity. On the other hand, economic complexity also plays a critical role in accelerating the process of digitalization in the business sector. Furthermore, these effects are only evident in the long term.
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