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This study aims to analyze the effect of digitalization on government effectiveness in developing and developed countries. It uses a panel methodology with data from 138 countries between 2006 and 2016. The results suggest that a government’s use of information and communication technologies (ICT) improves its effectiveness in both developing and developed countries. However, this effect is stronger in developed than in developing countries. Moreover, we find that the effect of aggregate ICT use by individuals, businesses, and government on overall government effectiveness is greater than that of individual use by each individually. The results are robust after several tests (reverse causality, dynamic effect, sensitivity analysis, heterogeneities, and alternative measurements). These results highlight the fact that governments could fully benefit from digitalization by adopting policies that promote access to and use of ICT at all levels of the economy, that is, the government itself, businesses, and individuals.

Does digitalization improve government effectiveness? Evidence from developing and developed countries