Digitalization as a Sustainability Factor

A. I. Beksultanova

, R. I. Aigunova

and P. I. Jamalova

Chechen State University, Grozny, Russia

Dagestan State University, Makhachkala, Russia

Keywords: Sustainable Development, Digitalization, Factors.

Abstract: One of the most promising tools at the micro-level is the application of digitalization as a factor of sustainable

development. The modern economy is based on continuous improvement: new management models, products

and systems are being improved, upgraded and invented. Such development in recent years is directly linked

to the concept of "digitalization". Digitalization is one of the most promising tools for achieving Sustainable

Development Goals at the micro-level, so the theoretical and practical justification of the impact of

digitalization on sustainable development is becoming increasingly relevant. The paper focuses on

determining the level of development of digitalization and its impact on various aspects of social and

economic life. In the conclusion, the problems that impede ensuring sustainability and security of socio-

economic systems, as well as relevant measures to be taken by the state, are listed

1 INTRODUCTION

Over the past decade, there has been great global

interest in environmental impacts and economic and

social inequalities between certain populations and

countries. Under the auspices of the UN, international

economic, and political unions, work is carried out to

promote Sustainable Development Goals aimed at

addressing these issues at the regional and global

levels. To qualitatively implement several goals, it is

necessary to develop tools for sustainable

development, to search for new ways to address

global challenges at individual actors (regions, cities,

and companies) and countries.

The digital revolution unfolding on a global scale

increasingly plunges us into a new reality (Dynkin

and Telegina, 2020). The variety of technological

innovations changing our lives has increased

manifold over the past decade and in a wide range of

human activities (Fituni and Abramova, 2020).

Digitalization has triggered a new wave of

innovation that will profoundly impact society,

changing the relationship between citizens,

businesses, and governments. It may also lead to a

transformation of the structure of the economy and

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society. Analysis of sustainable development and

digitalization shapes the conclusion that the rapid

spread of digitalization is disrupting established

patterns of economic relations, creating both

challenges and opportunities for sustainable business,

nations, and the world as a whole. For the first time

in 2018, the number of people using the internet is

greater than half the world's population (Rezyume

zasedaniya OON, 2020)

Depending on how more and more people are

embracing digital technologies, data is becoming a

critical resource for development. Technology has a

significant impact on people's livelihoods, resource

allocation, and modes of communication. In other

words, progress in sustainable development often

depends on digital progress. Countries' ability to

access digital data increasingly determines the

effectiveness of advanced technologies in supporting

the achievement of the Sustainable Development

Goals (Tseeli ustojchivogo razvitiya OON, 2020)

Over the past ten years, there has been a continued

increase in international interest in the prospects and

challenges of digital transformation of business,

society and public administration. The latest data

sources, especially BigData, which are generated by

Beksultanova, A., Aigunova, R. and Jamalova, P.

Digitalization as a Sustainability Factor.

DOI: 10.5220/0010667100003223

In Proceedings of the 1st International Scientiﬁc Forum on Sustainable Development of Socio-economic Systems (WFSDS 2021), pages 267-272

ISBN: 978-989-758-597-5

267

digital technologies, are attracting increased interest

from statistical national institutes. They complement

official statistics and are used to analyze in more

depth the progress towards strategic goals.

Continuous statistical information will make it

possible to identify trends and establish correlations

between indicators and their groups.

This data type allows for more detailed production

planning and reduces the potential for errors in

management decision-making. Thus, the assessment

of digitalization at the global level provides an

overview of the scope and extent of the phenomenon

and is the first step in identifying the quantitative

relationships between sustainable development and

digital transformation.

Economic organizations and political associations

assess digitalization at the international level. The

study aims to try to determine the extent of

digitalization and its impact on different aspects of

social and economic life. The Organization for

Economic Cooperation and Development (OECD)

GoingDigital project is the most extensive study of

the digitalization process in data collection. The

project's main goal is to create tools for assessing

various processes in the development of the digital

economy to develop policy recommendations for

economic transformation and reform. The OECD

notes the need for uniform and consistent policies for

all countries to become digital economies (Going

Digital, 2020).

2 RESEARCH METHODOLOGY

The paper contains the results on the impact of

digitalization on sustainable development identified

in the framework of published scientific publications

indexed in the Russian Science Citation Index,

analytical reports of the National Research University

Higher School of Economics and the Russian Union

of Industrialists and Entrepreneurs, as well as

regulatory documents on the subject. The methods of

the performed research contain theoretical and

empirical parts, methods of description and supported

by graphical methods of data illustration. Statistical

analysis: the study of series of dynamics, calculation

of average values and variation indices, generalized

indices.

3 RESEARCH RESULTS

The research explores both the negative aspects of

digitalization and its positive consequences. The

benefits include innovation incentives, improved

efficiency and quality of services, and sustainable,

vigorous growth of the wealth of societies and

economies. From the experts' point of view, the

negative aspects of digitalization are job cuts, lack of

digital skills and education, and security and privacy

(Going Digital, 2019). Consequently, the

digitalization assessment in the GoingDigital project

is not the final goal of the work but only a tool for the

next steps. The purpose of the study is not to rank

countries or to develop composite indicators - the

Organisation for Economic Co-operation and

Development plans to collect data and provide

analysts and policymakers with basic indicators and

link them to relevant policy instruments. The first

phase of the project, aimed at identifying global

digitalization trends, forming a methodology, and

collecting information, ended with the publication of

the guidebook "Digital Transition: Shaping Policy,

Improving Lives and Measuring Digital

Transformation".

The European Commission offers a different

approach to the study of digitalization trends, whose

experts have developed the International Digital

Economy and Society Index (I-DESI). The index

shows an overall assessment of where the EU stands

in its progress towards the digital economy compared

to non-EU economies. As I-DESI is a compilation of

data on 24 indicators and is calculated for 45

countries, the release of the final bulletin has a time

lag of 2 years. Consequently, the data published in

2018 reflects digital development as of 2016

(International Digital Economy and Society Index,

2018).

The I-DESI compares the average non-EU

member states with 17 countries using a similar

methodology to the DESI index. "The Digital

Economy and Society Index" is a composite index

published since 2014 by the European Commission

that measures the progress of EU countries in the

digital economy and society. It assesses the

development of digitalization of various socio-

economic spheres and connects a set of relevant

indicators of the current European digital policy

framework only among the EU member states. Both

indices measure performance in five dimensions:

 degree of network development (I1) - broadband

infrastructure deployment and quality: Internet,

4G and mobile broadband coverage,

connectivity costs. The average score of EU

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member states in 2016 in this dimension was

62.9. Only six states that were not part of the

European Union scored higher;

 human capital (I2) - the skills needed to exploit

the opportunities offered by the digital society.

For example, I-DESI compares the number of

graduates in ICT or the Internet, the

employment rate in knowledge-intensive

industries. The average score in 2016 across the

EU was 58. Of the seventeen countries, nine

non-EU countries earned higher scores, with the

EU as a whole performing better than the United

States;

 citizens' use of Internet services (I3) - this area

compares various activities that take place

online: extent of use of social networks, use of

online content, number of online transactions

performed (banking transactions, shopping),

and devices. In 2016, the average score of EU

member states on this dimension was 59.7,

higher than the average for the 17 non-EU

countries. Seven non-EU states, including

Japan, South Korea and the United States,

exceeded this figure;

 integration in the business of digital

technologies (I4) - evaluation of digitalization of

business and development of online sales (e-

commerce). In 2016, nine of the 17 non-EU

countries scored higher than the EU average.

The least developed indicator among the EU

member states is the use of social media for

business communication. However, in terms of

the degree of uptake of inter-corporate Internet

and technology, the figure for the EU exceeds

other countries;

 development of digital public services (I5) -

assesses the degree of development of digital

medicine (eHealth) and e-Government (e-

Government). In 2016, nine non-EU countries

scored higher than the EU average

(International Digital Economy and Society

Index, 2018).

Figure 1 summarizes the 2016 International

Digital Economic and Society Index, with values for

17 leading economies applied for comparison with

EU member states.

Figure 1: Value of the "International Digital Economy and Society Index" in 2016.

Digitalization as a Sustainability Factor

269

Figure 2: "Digital Adoption Index" (top 40 countries) for 2016.

The data for the EU is represented by three

indicators: the average of the top 4 countries, the

average of all 28 countries, and the average of the 4

lagging countries. All of the countries that lead the

index are fully harnessing the power of the digital

economy to drive inclusive economic growth, boost

productivity in traditional industries, expand and

diversify trade, and create new markets and services.

The data presented indicates that as of 2016, the

leader in digitalization development was South

Korea, with an index score of 75.2.

At present, two periods of observations are

available for most countries: 2014 and 2016, due to

time lags in the publication of information by national

statistical offices, periods of data collection, and

calculation of the "Digital Adoption Index". Data on

SCI are published in the World Bank's "World

Development Report 2016: The Digital Dividend".

As of 2016, Singapore, Luxembourg, and Austria

were the leaders in terms of the value of the SCI

(Figure 2). South Korea, which topped the EU index

(I-DESI) in 2016, has a high index value. The chart

shows the top 40 digital economies in the world

according to the Digital Adoption Index. Due to the

fact that the index consists of three components, it is

possible to assess the impact of each and understand

what makes a country lag behind. Thus, in the case of

Russia, which ranked 54th in 2016, there is a low

indicator of digital accessibility for the population

and businesses, and in the area of public

administration, the indicator is comparable with the

leading countries of the Digital Adoption Index. This

picture is typical of most countries in the digital

economy stage - all the key changes occur in the

public administration sector and then spread to other

areas.

4 DISCUSSION OF RESULTS

In general, the highest values of the index are

characteristic of the most developed countries in

terms of public administration. Thus, digitalization

leaders among the EU countries are the states with

high values of the "Sustainable Country Development

Index (SDG Index)". Sweden, Denmark, and Finland

have achieved these positions largely due to

digitalization development, as the Sustainable

Development Index takes into account infrastructure

development, level of education, and level of

innovative development, i.e., the aspects of life that

depend on digital technologies (sustainability

Development Index, 2018).

By measuring the relative adoption of digital

technologies, the DAI can help states develop

strategies to promote digitalization among different

user groups. The proliferation of advanced

technologies, such as data analytics, artificial

intelligence, and blockchain, is transforming business

models and challenging governments to maximize the

impact of digital transformation at regional, national,

and global levels. The strategy should focus on

creating an enabling environment for innovation,

developing effective governance mechanisms,

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planning for the future, and ensuring institutional

flexibility. This requires a flexible legal framework.

International best practices demonstrate the need to

promote digital innovation in the economy by

strengthening the innovation ecosystem, developing

balanced incentive and competition policies,

providing financing, and creating new competencies

in the digital world, subject to adequate provision of

national security, privacy, protection of consumer

interests and rights to intellectual property results.

Countries where leadership invests in advanced

technologies in the context of a supportive business

environment, a skilled workforce, and a strong culture

of innovation can reap digital dividends in the form

of faster economic growth, new jobs, and improved

services. With the right enabling environment in

place, advanced, technology-savvy companies

transform operational processes, adopt new business

models, and deliver innovative and personalized

products and services to customers. Summarizing the

trends of digitalization at the global level, it is

important to note that the current challenge for the

global community is not to create a certain set of

indicators that will help assess the degree of digital

transformation but to develop a unified

methodological approach that can dynamically

change depending on the information available at a

certain point in time. First, the main trend in the

development of digitalization, in terms of all the

studied projects, is the existence of an established

public policy. Weak governance and strategy,

inadequate legal and regulatory frameworks, and

insufficient institutional and human capacity result in

a lack of impact from digital innovation. In such an

economy, investment does not accelerate prosperity,

productivity, or reduce economic and social

development inequalities. The challenge for

governments is to continuously respond to the

accelerating pace of change and work effectively with

the private sector to enable the adoption and

development of advanced technologies. Secondly,

experts note the need to revise outdated laws and

regulations that impede digital penetration, cross-

border business, new business models, and services.

The government should create an environment in

which there are no regulatory and tax barriers to the

development of digitalization. The presence of

competition in the digital market is the main incentive

for development. Thirdly, experts from international

organizations note the importance of providing

network access to the entire population and enhancing

digital education. Without human capital

development, there can be no development of

digitalization and the conditions for sustainable

development of countries. Businesses should be

guided to adopt advanced technologies, and

government should support business growth to create

new workers and ensure information security (EABR,

2018). Fourth, there is a need at all levels to improve

tools for measuring the impact of the digital economy

on business, society, and the state as a whole.

5 CONCLUSION

Thus, we can conclude that digitalization is

penetrating all spheres of social and economic life,

transforming the processes of interaction between

economic actors. Advanced technologies bring

significant adjustments to companies' business

processes, to value creation at all stages and become

a competitive advantage. An analysis of global

digitalization research practices has shown that all

developed countries seek to use digital technologies

to achieve the Sustainable Development Goals, invest

in increasing accessibility of communications,

develop digital skills among the population, and

improve the quality of public services.

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