Features and Factors of Digitalization in the Modern Economy

Abstract

The article presents the main conclusions from an investigation of the ways in which factors involved in digitalization stimulate the processes required for digital transformation. Despite the central place that digitalization occupies in modern economic research, neither the factors that contribute to digitalization nor how they affect the dynamics of digital transformation have been sufficiently elucidated. Such an examination would apply neoclassical growth theory (production functions) to identify the factors in digitalization in order to highlight how capital and innovation are the main driving forces behind digital processes. The article carries out a correlation analysis using the pair correlation method on officially published statistical data from 127 countries. The results fall into four phases of digital development and enable an assessment of the varying impact of digitalization factors on the digital transformation process in accordance with these phases. The resulting analysis indicates that capital is less important for digitalization than innovation, while the impact of both those factors decreases as digital development progresses. On the assumption that digitalization is currently slowing down among the leaders in digital advancement, Russia (like many countries that have the necessary potential) has an opportunity to improve the relative standing of its digital economy. In order to achieve that goal, this research would suggest increasing the country’s network readiness and developing human capital while also harnessing innovation as the main driver of digital transformation. This research topic is relevant to evaluating and enhancing Russia’s prospects for socio-economic development.