IMPACT OF DIGITALIZATION ON FIRMS’ PRODUCTIVITY

Abstract

Employing Enterprise Survey data that comprises 1276 firms from four Central Asian countries, this study focuses on the impact of digitalization as well as human capital on firms’ productivity. We have found that digitalization improves firms’ productivity by 44-52 percent on average, statistically significant at 1%. Moreover, analysis shows that the impact is heterogenous, with large and statistically significant effects for firms in retail, nonmetal, and, especially, textile industries. These results imply that digitalization is crucial in improving firms’ productivity and the government could implement policies that encourage and help firms with this regard.