Modernization as a Condition for Sustainable Economic Development

Abstract

Purpose: The authors objective is to identify the applied features of modernization as conditions for sustainable economic development in developed and developing countries and to determine the Paretooptimality for each of these categories of countries. Design/methodology/approach: The top 8 developed and top 8 developing countries that demonstrated the highest level of digitalization in the IMD digital competitiveness rating for 2019 were selected as the objects for this research. The methodology of this research is based on the method of regression and scenario analysis, as well as the optimization method. Findings: It was revealed that in developed countries it is possible to simultaneously comply with all criteria for the sustainability of the economy, but this requires a slowdown in the pace of modernization, that is, moderate digitalization. This puts the interests of sustainable development in sharp contradiction to the interests of economic growth and global competitiveness, impeding the practical implementation of the identified Pareto-optimal. In developing countries, it is impossible to simultaneously meet all the criteria for economic sustainability—the identified Paretooptimality leads to a decrease in the average value of sustainability indicators, eliminating the need for optimization. At the same time, the general logic implies a more active modernization, that is, accelerated digitalization of the economy in developing countries. Originality/value: It has been proved that modernization, currently carried out on the basis of digitalization, is a condition for the sustainable development of the economy. However, at the same time, all criteria for sustainable development are difficult to meet in modernization. The results offer an opportunity for more accurate modelling and planning of public economic policies, taking into account the specificities of developed and developing countries, and also prove the variability of economic modernization for its sustainable development.