Does digitalization improve government effectiveness ?

Evidence from developing and developed countries

Abdoul-Akim Wandaogo

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Abdoul-Akim Wandaogo. Does digitalization improve government effectiveness ? Evidence from devel-
oping and developed countries. Applied Economics, 2022, pp.1-21. �10.1080/00036846.2021.2016590�.
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Does digitalization improve government effectiveness? Evidence from developing
and developed countries

Abdoul‐Akim Wandaogoa,b

a
Université Clermont-Auvergne, CNRS, IRD, CERDI, F-63000 Clermont-Ferrand, France
b
Université Thomas Sankara, Ouagadougou, Burkina Faso

e-mail: [email protected] / [email protected]

 Abstract:

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.

Keywords: Digitalization, government effectiveness, developed countries, developing countries

JEL Codes : H1, H4, H7, O3, O5

2
 1. Introduction

The economic literature shows that governance is a key factor in economic growth, poverty
reduction, and economic development (Khan, 2009; Kaufmann et al., 2009; Kraay & Kaufmann,
2002; Scully, 1988; Barro, 1996; Knack & Keefer, 1995; Mauro, 1995). However, if governance is
so important for economic development, then the question of how to foster effective governance
arises. In this sense, Montes et al. (2019), Garcia-Sanchez et al. (2013), Adsera et al. (2003), and
Al‐Marhubi (2004) analyzed the determinants of government effectiveness. These studies reveal a
set of factors that are important in explaining the effectiveness of a government. These include
natural resources, per capita income, population, and political and social conditions.

However, digitalization is an essential factor of good governance. Effah & Nuhu (2017) and
Janssen & Estevez (2013) define digitalization as the transition from a traditional management of
procedures, bureaucracy, and paperwork to management via digital platforms. Irani et al. (2008)
argued that digitalization represents an advanced level of e-government procedures, which allows
governments to improve their effectiveness and efficiency. More broadly, digital transformation
or digitalization is the integration and promotion of information and communication
technologies (ICT) in daily activities. Thus, many researchers argue that the use of ICT by
companies, public administrations, and individuals promotes productivity gains (Brambilla &
Tortarolo, 2018; Colombo et al. 2013; Dedrick et al. 2013). For example, for several years many
public administrations have been offering services that can be accessed from a telephone or a
computer, which allows them to better manage their tasks and improve the quality of their
service offer, as well as to improve the well-being of citizens. This trend is part of the
digitalization of public administration. It would therefore be meaningless to talk about
governance today without mentioning the role of digital transformation.

There are several ways in which digitalization can promote government effectiveness. First, it
facilitates internal and external collaboration between different segments of administration (Islam
et al., 2016). For example, the transmission and treatment of documents and reports can be
performed instantaneously, whereas in a non-digitalized context, it will require a longer
transmission time with risks of loss. Second, digitalizing offers a higher storage capacity for
documents and archives, allowing more effective facility of action insofar as the storage remains
centralized (Fichman et al., 2014). Third, digitalization allows the administration to improve and
facilitate its interaction and engagement with individuals and companies while modernizing,
thereby promoting transparency, democracy, and freedom of action (Falk et al., 2017).

3
Furthermore, since the 2000s, ICT has taken an important place in the lives of individuals as well
as in the functioning of different economies (Evangelista, 2014; Van Reenen et al., 2010; Davison
et al., 2000). This could be due to the diversity of services offered and their usefulness to its
users, including individuals, enterprises, and public administrations. Through mobile phones,
tablets, the Internet, and social media, the way citizens interact with each other and their
administrations, and the way they take part in their country's governance, has changed
significantly (Smorgunov, 2019; Bird & Zolt, 2008; Fleming, 2002). Governments are realizing
the power and key roles of ICTs, in general, in advancing and transforming the public sector and
improving the quality of public service delivery and governance (Cordella & Bonina, 2012; Ndou,
2004; Davison et al., 2000). In this regard, the United Nations (UN) encourages the development
of e-government for accountable, effective, efficient, and equitable delivery of public services to
all citizens. The UN argues that this enhances public confidence and ensures a transparent,
participatory, and collaborative development process.

Digital transformation in the mode of governance is topical in public debates, among researchers
and in international institutions such as the UN, the World Bank (WB), and regional institutions.
Most of the existing studies on this issue focus on the link between ICTs and corruption or
transparency (Bhattacherjee & Shrivastava, 2018; Sturges, 2004). Dobrolyubova et al. (2019) find
that there is a positive correlation between government digitalization and the quality of public
administration in 19 European and Central Asian countries. Others are more interested in the
effect of the Internet on corruption (Kanyam et al, 2017; Elbahnasawy, 2014). Nevertheless, it is
important to note that ICT is not limited to the Internet. Chen & Aklikokou (2019) used cluster
analysis to assess the relationship between e-government and government effectiveness.
Furthermore, some studies have addressed the effect of ICTs on trust between citizens and the
government (Guriev et al., 2019; Porumbescu, 2016; Gracia & Arino, 2015; Parent et al., 2005).
However, the primary objective of public administration digitalization is not to increase citizens'
trust, but rather to increase the supply of public services, to encourage citizen participation in
decision-making, and to facilitate access to public management information. It is the achievement
of these objectives that will build and increase trust in government. As such, Welch et al. (2005)
find that the use of online services increases citizens' satisfaction, which in turn increases their
trust in government. Tolbert & Mossberger (2006) explain that the effect of e-government on
trust in government is through improved interactions with citizens and perceived responsiveness.

Given the existing literature, the objective of this paper is, with a more exhaustive measure of
digitalization, to study the effect of digitalization on government effectiveness using data on 138

4
developing and developed countries over the period 2006 to 2016. This study contributes to the
literature on government effectiveness in several ways. First, it investigates the effect of
digitalization on government effectiveness, providing an empirical analysis of the influence of
digital transformation on governance, which differs from the approach used by Dobrolyubova et
al. (2019).1 Second, unlike many studies on digitalization, it uses a different measure of
digitalization extracted from Global Information Technology Reports (GITR). This index is a
comprehensive measure of digital transformation, considering several variables related to ICT
access and use. The advantage of using an index that includes many indicators is that it captures
all digitalization dimensions and makes the index more exhaustive. In fact, the GITR allows for
measures of digitalization according to the use that is made of it. This allows us to capture
government usage, which is more appropriate for assessing the effect of ICTs on government
effectiveness. In addition, unlike Dobrolyubova et al. (2019),2 the government ICT usage from
GITR takes into consideration aspects such as the importance of ICT to government vision of
the future, government prioritization and its success in ICT promotion, which makes this index
more relevant. Third, there are heterogeneities according to several factors regarding
digitalization and governance.

Using the panel fixed-effects methodology, we find that digitalization improves the effectiveness
of government. Moreover, this effect is greater in developed countries. Moreover, the overall use
of ICT affects government effectiveness more than individual, business, or government usage
separately. These results are robust to alternative measures of digitalization, additional control
variables, and endogeneity concerns.

The remainder of this paper proceeds as follows. In Section 2, the data and identification
strategies are described. The main results are presented in section 3. Section 4 focuses on further

1 To analyze the effect of government digitalization on the quality of governance, Dobrolyubova et al. (2019) first
performed a correlation test and then a Granger causality test. The limitations of this approach are that, first,
correlation does not necessarily explain the existence of an effect or causality. This is confirmed by the causality test
carried out by the author, which shows an absence of causality between digitalization and the quality of governance.
Correlation measures the strength of the link between the variables. Furthermore, Granger causality does not test for
a true cause-and-effect relationship; it tests the order of arrival of one variable relative to another in the time series.
Thus, Granger causality does not necessarily imply a causal relationship in the real sense. Finally, although these two
methods allow the identification of a possible correlation as well as a causal link, it is impossible to determine the
extent of the effect of a factor on another. Therefore, despite having the same objective as our study, this study is
limited by the methodologies used.
2 It should also be noted that Dobrolyubova et al. (2019) also consider the government digitalization, using E-

government development, Online Service, and E-participation indexes, along with the proportion of citizens using
the Internet to submit completed forms via government websites.

5
analysis and robustness checks of the results. Finally, in Section 5, we present our conclusions
and the policy implications.

2. Data and methodology

2.1. Variables and data description

To assess the effect of digitalization on government effectiveness, this study uses data from 138
countries, including 88 developing (low-income countries, lower-middle-income countries, and
upper-middle-income countries) and 50 developed (high-income countries) countries based on
the World Bank income group for 2019-20203 over 11 years from 2006 to 2016. The dependent
variable is government effectiveness according to the Worldwide Governance Indicators (WGI),
and the main explanatory variable is the government use of ICT collected from the Global
Information Technology Report (GITR).4 The time period and countries were chosen based on
the availability of digitalization and government effectiveness data. Following the existing
literature on the determinants of government effectiveness (Duho et al., 2020; Montes &
Paschoal, 2016; Garcia-Sanchez & Cuadrado-Ballesteros, 2016, 2013; La Porta, 1999), a set of
control variables (GDP per capita, population size, stability, and absence of violence) are applied.
The institutional variables used in this study are taken from the International Country Risk Guide
(ICRG) and the WGI, while the other variables are mainly from the World Development Index
2020 (WDI).

Government effectiveness: According to Kraay et al. (2010), it refers to the perception of the
quality of public services, the quality of the civil service and its degree of independence from
political pressure, the quality of policy formulation and implementation, and finally, the credibility
of the government's commitment to these policies. The values of the indicator range from -2.5 to
2.5 (-2.5 meaning the country is very ineffective, while 2.5 meaning it is very effective).

ICT usage: ICT usage is a subindex of the network readiness index (NRI) from the GITR. The
NRI measures the ability of countries to profit from ICTs to increase their competitiveness and
well-being, but also the trends in innovation in recent years. The NRI is an indicator composed
mainly of four subindexes (the environment for ICT, the readiness of a society to use ICT, the

3A list of countries with income group is provided in Appendix A.

4Dutta et al. (2007, 2008, 2009, 2010, 2011, 2012, 2015, 2016) ; Bilbao-Osorio et al. (2013, 2014). The report was
published with a one-year delay before 2012. However, from 2012 onwards, each report covers the year of its
publication. Because of the lack of data for 2011, we have estimated it by using the average of 2010 and 2012.

6
actual use of all key stakeholders, and, finally, the impacts that ICT generates in the economy and
society). Each subindex is composed of pillars constructed using indicators. The ICT usage
subindex includes the individual, government, and business usage pillars.5 The indexes,’
subindexes,’ and pillar’s values are ranked from 0 to 7, with 7 being the best score. This study
focuses on the pillars of ICT use by governments. The research hypothesis is that the use of ICT
by the government has a positive effect on its effectiveness.

GDP per capita: This is the ratio of annual gross domestic product divided by the number of
inhabitants at midyear. It is used to capture the level of development of a country and its wealth.
The more developed a country is, the more effective the government appears to be. Moreover,
development tends to be accompanied by greater involvement in public management. Therefore,
it is reasonable to expect a positive effect of GDP per capita on government effectiveness.

Total population: The total population estimates the number of people living legally in the
territory of a country in the middle year. A large population means that more people are satisfied
through the provision of public goods and services, and more work for the government. In
addition, it will be difficult for it to take individual preferences into account when adjusting the
supply of public goods and services. Therefore, it may be difficult for it to satisfy an abundant
population. Otherwise, when the population increases, the government will find it difficult to be
effective. Nevertheless, large populations can motivate policymakers to improve the supply and
quality of services and simplify procedures, which will improve their effectiveness. Therefore, it is
not evident to anticipate this variable effect on government effectiveness.

Political Stability and Absence of Violence/Terrorism: It reflects the degree of stability and
the absence of insecurity and violence in a country. Indeed, in a country plagued by violence and
instability, development efforts are doomed to fail. Adsera et al. (2003) also argue that the
ineffectiveness of government increases with political instability. Therefore, the priority will be to
create a climate of peace and stability. Political stability and peace are prerequisites for economic
development. It is only under such conditions that the government can be economically effective.
Therefore, this variable is expected to have a positive effect on the effectiveness of a
government.6

2.2. Representation of information

5Appendix B.1 presents the ICT variables uses for each usage sub-index.
6 Appendix B.2 presents definitions and sources of all variables used in this study, while Appendix B.3 gives
summary statistics.

7
Figure 1 shows the evolution and level of government effectiveness for developed and
developing countries during the research period. This indicates that government effectiveness is
negative in developing countries. In contrast, in developed countries, the level of effectiveness is
better when the index is greater than zero. The graph also indicates that the gap between
government effectiveness in developed and developing countries is remarkably high. However,
this gap tends to narrow over time as the level of effectiveness in developing countries gradually
improves.

Figure 1: Average effectiveness by country group

Source: Author construction with WGI data

The descriptive analysis also showed that the level of effectiveness is a matter of development.
The high-income countries had the highest effectiveness scores. On average, these countries have
an effectiveness index of 1.75, while they are negative for countries in other groups ( -0.116, -
0.563, and -0.823, respectively).

Regarding digitalization, a trend graph of ICT use and its sub-indices was constructed (Figure 2).
In general, the overall use of ICT and its sub-indexes is increasing. However, government and
business ICT use was higher in the early years of the study. In recent years individual use has
exceeded business and government use.

When analyzing government ICT usage by income group, we found that digitalization correlates
to income level. Indeed, we observe that the higher the income level, the higher the average ICT

8
usage score. In fact, the average score is 4.57 for high-income countries, 3.64 for upper-middle
income countries, while it is 3.43 and 3.21 respectively for lower-middle and low-income
countries, respectively.

Figure 2: Trend of ICT usage by component from 2006 to 2016

4,75

4,25
ICT usages

3,75

3,25

2,75

2,25
2006 2008 2010 2012 2014 2016
Average usage Individual usage

Source: Author construction using data from GITR

Figure 3: Scatter plot between ICT usage and government effectiveness

Source: Author construction using data from WGI and GITR

In figure 3, the scatter plot and the correlation line between ICT use by governments and their
effectiveness are presented. There is a positive correlation between digitalization and government

9
effectiveness. Furthermore, Figure 4 shows a positive relationship between the average level of
ICT use and the average effectiveness of government. Therefore, a positive effect of ICT use on
government effectiveness can be expected. However, this graph does not confirm this because
correlation does not necessarily indicate a significant effect.

Figure 4: Trend in government effectiveness in relation to government use of ICT

Government uses of ICTs

-0,3
3,5625 3,7115 3,7774 3,7775 3,8470 3,8794 3,9866 3,9907 4,0848 4,0872 4,1099
-0,31

-0,32
Government effectiveness

-0,33

-0,34

-0,35

-0,36

-0,37

-0,38

-0,39

-0,4
Source: Author construction using data from WGI and GITR

2.3. Identification strategy

To assess the effect of ICT usage on government effectiveness in developed and

developing countries, a panel model with fixed effects was specified. The model is presented in
equation (eq.1) below, where GEE is government effectiveness. In the right size, ICTit indicates
government digitalization for country i in year t. In addition, , , Xit, and refer to country-
and time-fixed effects, set of control variables, and error term, respectively. Moreover, is the
constant term of the model and represents the coefficient of ICT usage.

(eq.1)

3. Empirical results

Table 1 presents the impact of digitalization on government effectiveness. In column 1, we

estimated the effect using only the government's use of ICT as an explanatory variable. The

10
results show a positive and significant effect of digitalization on government effectiveness at the
one percent level. However, this specification suffers from an omission variable bias. We then
iterated the model using additional explanatory variables that may affect government
effectiveness based on the literature. The random-effects results in column 2 show a positive
effect of digitalization on government effectiveness. Nevertheless, since each country has its own
individual characteristics that may or may not influence the predictors, we added country fixed
effects to control for this. In addition, we applied the time-fixed effect. The effect of
digitalization on government effectiveness remains positive and significant at the conventional
level (columns 3 & 4).

To choose the best estimation strategy, we proceeded with specification tests. First, the Hausman
specification test (Hausman, 1978) allowed us to determine the appropriate model by comparing
the random effects model (column 2) and the fixed effects model (column 3). Second, for the
time fixed effects (columns 4 & 5), we used a parametric test for time-fixed effects to determine
whether it is necessary to consider the time-fixed effects.

The probability of the Hausman specification test (Prob > chi2 = 0.0000) was less than one
percent. Therefore, the null hypothesis of no correlation between errors and regressors is
rejected. The fixed-effect model is preferred over the random-effect model. The time fixed
effects test is a joint test that assesses whether the dummy variables for all years are equal to zero.
If they are zero, the time fixed effect is not required; otherwise, they are relevant to the model.
The probability value (Prob > F = 0.0069) of the test was below the conventional levels.
Therefore, H0 is rejected, and we cannot confirm that the year dummies are jointly equal to zero.
Therefore, the time-fixed effect is preferred7 and we retain the specifications in column 5 which
includes country and time-fixed effects.

The results in column 5 indicate that, on average, for the countries in the sample, an increase in
digitalization level by one point leads to an improvement of government effectiveness by 0.1
points. These results can be explained by the fact that digitalization facilitates access to certain
public services as well as the interaction between citizens and the government. Moreover, by
enabling good management of tasks and the acceleration of procedures, digitalization can save
time, considerably reduce costs, and therefore improve effectiveness.

7 See Torres-Reyna. (2007) for more details about the Hausman test and the time fixed effect test.

11
The coefficient of political stability and absence of violence and/or terrorism is positive and
significant at the one percent level. This indicates that stability and the absence of violence are
determinants of a government’s effectiveness. The results show that if stability increases by one
point, government effectiveness will be improved by approximately 0.093-points. We also found
that GDP per capita positively and significantly influenced government effectiveness. An increase
in GDP per capita of one percent is associated with an improvement in effectiveness of 0.0021
points.8 GDP per capita is generally used as a measure of a country's level of development and
economic stability. Economic stability allows for a better selection of public administration staff
and the sustainability of good government policies and practices (García-Sánchez et al. 2016 and
Lee & Whitford, 2009). Furthermore, it can be expected that citizens with higher incomes will be
less dependent on public services (such as health, education, social aid). Therefore, these services
will be more oriented towards low-income citizens. These factors can be sources of improvement
in the level of effectiveness of public administrations and/or government effectiveness. As for
the total population, the effect is not significant.

Table 1: Effect of digitalization on government effectiveness

1 2 3 4 5
Dependent variable: Government effectiveness
government ICT usage 0.1239*** 0.0749*** 0.0750*** 0.1095*** 0.1004***
(0.0149) (0.0147) (0.0152) (0.0182) (0.0187)
Political Stability and Absence of 0.1096*** 0.0963*** 0.0978*** 0.0928***
Violence/Terrorism
(0.0301) (0.0303) (0.0308) (0.0296)
log (GDP per capita) 0.3927*** 0.2260*** 0.4166*** 0.2109**
(0.0326) (0.0812) (0.0332) (0.0861)
log (Total population) -0.0256 -0.1619 -0.0053 -0.1681
(0.0247) (0.1592) (0.0242) (0.1999)
Country fixed effect No No Yes No Yes
Time fixed effect No No No Yes Yes
No. of Obs. 1437 1437 1437 1437 1437
No. of countries 138 138 138 138 138
R-Squared 0.69 0.78 0.16 0.79 0.18
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

Since the sample includes developing and developed countries, one would assume that a specific
group drives the positive and significant effect of digitalization. In addition, it would be
interesting to explore heterogeneity by level of development (as measured by income level).

8Here, the interpretation is done considering that the variable is taken in logarithm. An increase of the explanatory
variable of 1% leads to a variation of the explanatory variable of units.

12
Therefore, we have split the sample into two groups: developing and developed countries. The
results are shown in Table 2.

For both developing (column 1) and developed (column 2) countries, the results suggest that
digitalization has a positive and significant impact on government effectiveness. However, the
effect is larger in developed countries than in developing countries. Several factors may explain
this result. In fact, partial digitalization and an institutional culture of paperwork are common in
developing countries (Effah & Nuhu, 2017; Wiredu, 2012; Schuppan, 2009). This may limit their
ability to benefit fully from the effects of digitalization. Furthermore, developed countries have
more experience with digitalization. In addition, there is the issue of human capital for
digitalization, which is less qualified in developing countries.

Table 2: Effect of digitalization on government effectiveness by income groups

1 2
Developed Developing
Countries Countries
Dependent variable: Government effectiveness
government ICT usage 0.1368*** 0.0647***
(0.0273) (0.0233)
Political Stability and Absence of Violence/Terrorism 0.1352** 0.0908***
(0.0512) (0.0308)
log (GDP per capita) 0.2665 0.1996**
(0.1640) (0.0931)
log (Total population) 0.0337 -0.6417***
(0.2467) (0.1920)
Country fixed effect Yes Yes
Time Fixed effect Yes Yes
No. of Obs. 542 895
No. of countries 50 88
R-Squared 0.19 0.22
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

4. Further analysis

4.1. Addressing reverse causality issue

First, a possible reverse causal effect between digitalization and government effectiveness was
suspected. Here, we assume that digitalization impacts government effectiveness. On the other
hand, an effective government will tend to increase the use of ICT to provide online services or
improve its effectiveness and service quality. This is a source of reverse causality and, therefore,

13
endogeneity. To deal with this potential reverse causality, following Datta and Agarwal (2004), we
estimated one, and then two lags in the digitalization variable.

Table 3 presents the results with lags in government ICT usage. The effect of digitalization on
government effectiveness remains positive and significant at the conventional level. According to
Datta and Agarwal (2004), this means that the impact of digitalization on government
effectiveness is not only due to two-way causality. This result also shows that the effect of the
level of digitalization in a given year can extend over several more years.

Table 3: Effect of digitalization on the effectiveness with lags in digitalization

Developed Developing
Full sample
countries countries
1 2 3 4 5 6

Dependent variable: Government effectiveness

government ICT usage (t-1) 0.065*** 0.089*** 0.033**

(0.019) (0.031) (0.015)
government ICT usage (t-2) 0.047** 0.060* 0.026
(0.020) (0.033) (0.026)
pve 0.097*** 0.099*** 0.114** 0.110* 0.097*** 0.101***
(0.032) (0.035) (0.054) (0.057) (0.015) (0.038)
lngdp 0.260*** 0.341*** 0.320* 0.436** 0.276*** 0.311***
(0.088) (0.091) (0.187) (0.210) (0.063) (0.103)
-
lnPop -0.218 -0.269 0.023 -0.049 0.683*** -0.639**
(0.226) (0.203) (0.308) (0.302) (0.126) (0.252)

No. of Obs. 1308 1174 495 446 813 728

No. of group 138 138 50 50 88
R-Squared 0.150 0.151 0.116 0.099 0.206 0.206
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

Second, reverse causality could arise from wealth and the absence of political violence and/or
terrorism. Indeed, an effective government is expected to be able to avoid political crises and
social tensions and enable wealth creation. In addition, government efficiency is expected to
improve the supply and quality of healthcare services. This could lead to a decrease in mortality
rates (infant, maternal, and total) and an increase in life expectancy, thus affecting the population
size. Therefore, we assumed a possible endogeneity for all control variables and to addresses this

14
endogeneity issue, we utilized a two-step system GMM (Blundell and Bond, 1998).9 The collapse
option was applied to overcome instrument proliferation bias (Roodman, 2009). To correct the
finite sample bias, we used Windmeijer's (2005) standard errors.

Third, government effectiveness also tends to be persistent, since the country's current
effectiveness may depend on the previous year's effectiveness. If this consideration is not taken
into account, the regressions may suffer from the serious problem of a lack of relevant
explanatory variables. Therefore, in line with the literature on the dynamic model, we included
the one-period lagged value of the dependent variable as an explanatory variable to deal with the
potential dynamic issue of government effectiveness. Therefore, the model can be written as
follows:

(eq.2)
The results of the GMM estimation are presented in Table 4. The AR(2) and the Hansen test p-
values support the validity of the results as the p-values are higher than all conventional levels.
Furthermore, the high and significant coefficient on the lagged dependent variable validates the
relevance of the specified system GMM model and confirms that government effectiveness is
persistent. This result suggests the existence of a dynamic in government effectiveness.
Therefore, a given government's effectiveness level can be explained by that of previous years. As
for the effect of digitalization, it remains positive and significant at the conventional level (Table
4, columns 1 to 3).

Table 4: Two-step system GMM estimation results

2 3
1
Developed Developing
Full sample
countries countries

Dependent variable: Government effectiveness

Government effectiveness (t-1) 0.832*** 0.819*** 0.812***
(0.034) (0.085) (0.051)

Government ICT usage 0.039** 0.054* 0.047*

(0.019) (0.029) (0.025)

Political Stability and Absence of Violence/Terrorism 0.098*** 0.078* 0.072**

(0.022) (0.040) (0.028)

Log (GDP per capita) 0.045*** 0.054 0.042***

(0.014) (0.039) (0.012)

9 We also consider digitalization and the lag of dependent variables as endogenous in the system GMM.

15
 Log (Total population) 0.032** 0.009 0.024
(0.014) (0.006) (0.019)

Time fixed effect Yes Yes Yes

No. of Obs. 1287 496 795

No. of countries 138 50 88

Instruments 33 42 53
AR1-pvalue 0.000 0.000 0.000
AR2-pvalue 0.478 0.838 0.455
Hansen-P-value 0.13 0.35 0.14
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

4.2. Sensitivity analysis

To test the sensitivity of the results, we added more variables to explain government
effectiveness. They are education, control of corruption, the rule of law, representation and
accountability, regulatory quality, stability, government size, and the proportion of women in
parliament.10 After adding these new variables (Table 5, columns 1 to 9), the effect of
digitalization on government effectiveness remains positive and significant at the one percent
level, confirming the robustness of the results. Regarding additional variables, the results suggest
that better control of corruption, rule of law, regulatory quality (columns 2 to 4), and government
stability (column 6) all improve government effectiveness. The effect of these variables on
government effectiveness was positive and significant. This indicates that the quality of
institutions is an important contributor to the explanation of government effectiveness. As for
education (column 1), voice and accountability (column 5), the size of government, and the
proportion of women in parliament (columns 8 and 9), their effects on government effectiveness
are not significant at conventional levels.

In addition, greater natural resource revenue negatively impacted government effectiveness

(column 7). This negative effect of natural resources on government effectiveness is consistent
with the results of Isham et al. (2005), Bulte et al. (2005), and Sala-i-Martin and Subramanian
(2003). This can be explained by the “natural resource curse.” Indeed, Clark (1997) and Gause
(1995) explained that governments, through revenues from natural resources, can finance security
in order to undermine people's aspirations for quality government institutions and services.
Following Busse and Gröning (2013), the negative effect of resource revenues can also be

10To capture the size of government, the final consumption of government relative to GDP Is used, while the
proportion of women in parliament is used to capture the gender composition of government.

16
explained mainly through three channels. First, with abundant resource revenues, the government
will tend to tax taxpayers less than necessary. Second, resource revenues can be used to ease
tensions and sow corruption among the population. Finally, these funds can be used to prevent
the creation of pressure groups that defend the rights of the population. Thus, without pressure
groups or with a repressed population, aspirations for democracy, governance, and quality
institutions will be undermined. In addition, a low-taxed population will have a low demand for
international quality and public goods. In addition to these explanations, abundant natural
resource revenues can be wasteful through excessive, inappropriate, inefficient, and ineffective
spending.11

11For more details on the literature on the effect of natural resources on the quality of governance and institutions,
see Busse and Gröning (2013).

17
 Table 5: Sensitivity analysis

1 2 3 4 5 6 7 8 9
Dependent variable: Government effectiveness
Government ICT usage 0.0744*** 0.0823*** 0.0741*** 0.0768*** 0.1003*** 0.1077*** 0.0994*** 0.0990*** 0.0975***
(0.0199) (0.0178) (0.0158) (0.0169) (0.0184) (0.0192) (0.0187) (0.0192) (0.0191)
Political Stability and Absence of
0.0991*** 0.0787*** 0.0351 0.0575** 0.0933*** 0.0683** 0.0906** 0.1056*** 0.0938***
Violence/Terrorism
(0.0337) (0.0292) (0.0264) (0.0270) (0.0295) (0.0302) (0.0383) (0.0347) (0.0305)
Log (GDP per capita) 0.3032*** 0.1372* 0.1080 0.0642 0.2135** 0.1627* 0.1704* 0.2508*** 0.2374***
(0.0950) (0.0817) (0.0714) (0.0810) (0.0856) (0.0874) (0.0899) (0.0950) (0.0903)
Log (Total population) -0.4671*** 0.1303 0.1479 0.1729 0.1710 0.1512 -0.1895 -0.1732 -0.1624
(0.1572) (0.1735) (0.1556) (0.1679) (0.2002) (0.2100) (0.2134) (0.2104) (0.2061)
log (Education) 0.0109
(0.0373)
Control of Corruption 0.2622***
(0.0496)
Rule of Law 0.4340***
(0.0473)
Regulatory Quality 0.3153***
(0.0534)
Voice and Accountability 0.0290
(0.0712)
Government Stability 0.0247***
(0.0051)
Natural resources revenue -0.0045***
(0.0015)
Government size 0.0043
(0.0035)
Women in parliament 0.0015
(0.0013)
Country fixed effect Yes Yes Yes Yes Yes Yes Yes Yes Yes
Time Fixed effect Yes Yes Yes Yes Yes Yes Yes Yes Yes
No. of Obs. 1099 1437 1437 1437 1437 1261 1310 1369 1373
No. of countries 128 138 138 138 138 120 130 133 133
R-Squared 0.19 0.24 0.30 0.26 0.18 0.21 0.16 0.18 0.19
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

18
 4.3. Heterogeneity

We also performed heterogeneity analyses to test whether the effect of digitalization on

government effectiveness differs across geographic regions or effectiveness levels. For this
purpose, we divided the database into sub-samples according to each country's continent 12
or government effectiveness score.

4.3.1. By geographic region

In this section, we analyze the effect of digitalization by geographical group. The results displayed
in Table 6 show that digitalization positively and significantly affects government effectiveness in
African (column 1), Asian, and European countries (columns 3 and 4). However, the effect is not
significant for American countries, although it is positive (column 3).13 The coefficient is highest
for European countries (column 4), suggesting that European countries benefit most from
digitization.14

Table 6: Geographical heterogeneity

1 2 3 4
Africa America Asia Europa
Dependent variable: Governement effectiveness
Government ICT usage 0.1043*** 0.0312 0.0915** 0.1155***
(0.0345) (0.0384) (0.0347) (0.0328)
Political Stability and Absence of Violence/Terrorism 0.1363*** 0.0989** 0.0363 0.0526
(0.0369) (0.0450) (0.0478) (0.0648)
Log (GDP per capita) 0.0441 0.5773** 0.4096** 0.4386**
(0.1769) (0.2292) (0.1566) (0.1651)
Log (Total population) 0.4304 0.5459 0.3515 -1.2000***
(0.5100) (0.6587) (0.2723) (0.4145)
Country fixed effect Yes Yes Yes Yes
Time Fixed effect Yes Yes Yes Yes
No. of Obs. 365 273 318 459
No. of countries 37 26 31 42
R-Squared 0.32 0.26 0.20 0.29
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

12 For African and European countries, the geographical grouping has been assigned according to the football
confederation to which they are affiliated. This allows to easily classify countries that straddle two continents or
belong to a region different from their continent. There are two countries in Oceania (namely Australia and New
Zealand) that are not considered in this heterogeneity analysis due to the small number of observations. However,
the result does not change if they are added to the group of Asian countries.
13 When disaggregating South and North American countries, the effect remains positive and non-significant for

North American countries (there are 15 countries and islands, including the USA and Canada), while it becomes
significant for South American countries. Therefore, it is likely that the non-significant effect comes from North
American countries.
14 We perform an additional geographic analysis based on the WB region groups. The results are presented in the

Appendix C

19
 4.3.2. By level of effectiveness

To constitute the effectiveness subgroups, we calculated the average effectiveness rate per
country. Next, this value was compared to the median effectiveness value of the entire sample.
Countries with an average effectiveness below the median are considered the least effective;
otherwise, they are effective.

The results in Table 7 suggest that government effectiveness is positively and significantly
affected by digitalization, regardless of the level of effectiveness. The results imply that an
additional increase in digitalization of one unit has an average impact on government
effectiveness of 0.048 for the least effective group (column 1) and 0.145 for the most effective
group (column 2). This result is explained by the same reasons as for developed and developing
countries (i.e., experience, technological advancement, and quality of human capital in ICT are
higher in developed countries) because the group of least effective countries is mostly composed
of developing countries.

Table 7: Heterogeneity by effectiveness level

1 2
Low High
effectiveness effectiveness
Dependent variable: Government effectiveness
Government ICT usage 0.0484* 0.1447***
(0.0254) (0.0239)
Political Stability and Absence of Violence/Terrorism 0.0731** 0.1685***
(0.0322) (0.0489)
log (GDP per capita) 0.2474** 0.2415**
(0.1211) (0.1189)
log (Total population) -0.6167** -0.0765
(0.2332) (0.2449)
Country fixed effect Yes Yes
Time fixed effect Yes Yes
No. of Obs. 702 735
No. of countries 70 68
R-Squared 0.20 0.23
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

4.4. Additional ICT usage Indexes

20
While there is evidence that government digitalization has a positive effect on government
effectiveness, this effect appears to be only partial. Indeed, ICT use by the government alone
could only affect its internal effectiveness, particularly in terms of management and current
activities. However, the use of ICT by other actors, such as individuals and businesses, can also
improve government effectiveness. For example, suppose that the government makes it possible
for individuals to conduct their administrative procedures online to reduce delays and ease
procedures. However, some individuals do not use this alternative or do not have access to a
connection device or the Internet and prefer physical procedures. Therefore, we believe that this
is only possible if everyone (government, business, and individuals) have access to and use ICT.
To investigate this question, we evaluate the effect of ICT use by individuals, businesses, and the
entire society on the effectiveness of the government.

The results displayed in Table 8 suggest that use of ICT by individuals (column 1), businesses
(column 2), and overall (column 3) increases government effectiveness. In addition, the effect of
ICT use in society is higher, with a coefficient of 0.166, while that of business use is 0.04, and
that of individual use is 0.065 (note that the coefficient of government use is around 0.1). This
underlines the importance of facilitating access to ICT for all and promoting their use to make
the most of digitalization. The effects of these variables on government effectiveness for both
developed and developing countries were also compared. The impact is still positive and
significant for both groups, except for business usage in developed countries. This result
supports the baseline results, as the effect is larger in developed countries than in developing
countries. The effect of overall usage remains higher for each group, suggesting that it is more
helpful in promoting digitalization at all levels.15

Table 8: Effect of other type of ICT usage on government effectiveness

1 2 3
Dependent variable: Government effectiveness
Individual ICT usage 0.0652***
(0.0182)
business ICT usage 0.0404**
(0.0201)
Overall usage 0.1655***
(0.0301)
0.1113*** 0.1047*** 0.0968***
Political Stability and Absence of Violence/Terrorism
(0.0305) (0.0295) (0.0288)
Log (GDP per capita) 0.3102*** 0.2836*** 0.2545***
(0.0829) (0.0864) (0.0837)
Log (Total population) -0.0797 -0.1157 -0.1368
(0.1839) (0.2035) (0.1713)
Country fixed effect Yes Yes Yes
Time Fixed effect Yes Yes Yes

15 The results are displays in appendix D.1 and D.2, for developed and developing countries, respectively.

21
No. of Obs. 1437 1437 1437
No. of countries 138 138 138
R-Squared 0.1516 0.1309 0.1855
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

4.5. Alternative measurements

We now consider alternative measures of digitalization according to the E-Government

Development Index (EGDI) from the United Nations e-Government Survey. The EGDI is a
composite indicator that consists of the online services index, telecommunications index, and
human capital index. The e-participation index is also considered.16 These indices are equally
weighted and cover a wide range of topics relevant to e-government.17

Table 9: Alternative digitalization indexes effect on government effectiveness

1 2 3
Dependent variable: Government effectiveness
E-Government 0.4706***
(0.1752)
E-Participation 0.1347**
(0.0531)
Online Service 0.1899**
(0.0847)
Political Stability and Absence of Violence/Terrorism 0.1001*** 0.0991*** 0.0984***
(0.0302) (0.0303) (0.0305)
Log (GDP per capita) 0.3543*** 0.3376*** 0.3364***
(0.0903) (0.0921) (0.0937)
Log (Total population) -0.1123 -0.1075 -0.1400
(0.1929) (0.1917) (0.1953)
Country fixed effect Yes Yes Yes
Time Fixed effect Yes Yes Yes
No. of Obs. 1492 1489 1492
No. of countries 136 136 136
R-Squared 0.1603 0.1533 0.1536
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

The results displayed in Table 9, columns 1 to 3, show that all considered indicators positively
and significantly affect government effectiveness. They suggest that the increase in government
effectiveness following ICT usage does not change with the ICT measures. The results for both
groups are presented in Appendices E.1 and E.2. They reveal that e-government, e-participation,

16A definition of these indicators is given in appendix B.2.

17As EGDI is available over two years, we replaced data for gap year by the mean of the year after and the year
before.

22
and online services positively affect government effectiveness. Nevertheless, this effect is not
significant for developing countries.18

5. Conclusion

This study investigates the impact of digitalization on government effectiveness using panel data
methodology. It considered a dataset of 88 developing and 50 developed countries from 2006 to
2016. The results suggest that digitalization has a significant and positive effect on government
effectiveness. This effect is greater for developed countries than for developing countries. This
effect is more important when considering the overall use of ICT. It remains relevant when
sensitivity to several political, institutional, and macroeconomic conditions is tested.
Furthermore, it appears that the average effect by geographical group remains significant and
positive, apart from the American countries where the effect is non-significant.

The findings of this study highlight how country governments can improve their effectiveness
through digital transformation, especially in developing countries. In addition, to reap the full
benefits of digitalization, they should adopt policies that would promote the use of ICT at all
levels of the economy, that is, the government itself, businesses, and individuals. These policies
should focus more on increasing the coverage of ICT and the Internet among the population and
in all sectors of activity. This could include building and improving the technological
infrastructure, particularly in developing countries. They should also adopt policy reforms to
modernize public administration. Furthermore, they could offer more online services and
dematerialize most administrative procedures as much as possible. They should also promote
engagement and collaboration through participatory governance via ICT. Beyond all these policy
recommendations, there is a need for a strong political will from policymakers to promote
digitalization and to be more effective.

18 Several reasons may explain this effect in developing countries. First, most of these countries are in the beginning
stages of using these services (e-government, e-services, and e-participation), therefore it takes time for users to
adapt and take full advantage of them. Furthermore, Jacobin et al. (2019) and Brun et al. (2019) explain that
experience matters in the use of digital services. Second, the implementation of these services needs to be supported
by policies to promote and sustain them, and thus by political will. Third, most developing countries face either
technical difficulties and/or user reluctance. Thus, even if the services exist, the expected effects will not be
achieved. Finally, Dobrolyubova et al. (2017) argue that the insignificant effect of EGID indices can be explained by
the fact that in addition to not reflecting the actual level of digitalization, they do not capture all dimensions of
digitalization.

23
 Conflict of interest

The author declares that he has no known competing financial interests or personal
relationships that could have influenced the work reported in this paper.

24
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Appendices
Appendix A: Countries list

No. Country Region Income group No. Country Region Income group
1 Australia Oceania High income 70 Cambodia Asia Lower middle income
2 Austria Europe High income 71 Cameroon Africa Lower middle income
3 Bahrain Asia High income 72 Cape Verde Africa Lower middle income
4 Barbados North America High income 73 Cote d'Ivoire Africa Lower middle income
5 Belgium Europe High income 74 Egypt, Arab Rep. Africa Lower middle income
6 Brunei Darussalam Asia High income 75 El Salvador North America Lower middle income
7 Canada North America High income 76 Ghana Africa Lower middle income
8 Chile South America High income 77 Honduras North America Lower middle income
9 Croatia Europe High income 78 India Asia Lower middle income
10 Cyprus Asia High income 79 Indonesia Asia Lower middle income
11 Czech Republic Europe High income 80 Kenya Africa Lower middle income
12 Denmark Europe High income 81 Kyrgyz Republic Asia Lower middle income
13 Estonia Europe High income 82 Lesotho Africa Lower middle income
14 Finland Europe High income 83 Mauritania Africa Lower middle income
15 France Europe High income 84 Moldova Europe Lower middle income
16 Germany Europe High income 85 Mongolia Asia Lower middle income
17 Greece Europe High income 86 Morocco Africa Lower middle income
18 Hong Kong Asia High income 87 Nicaragua North America Lower middle income
19 Hungary Europe High income 88 Nigeria Africa Lower middle income
20 Iceland Europe High income 89 Pakistan Asia Lower middle income
21 Ireland Europe High income 90 Philippines Asia Lower middle income
22 Israel Asia High income 91 Senegal Africa Lower middle income
23 Italy Europe High income 92 Swaziland Africa Lower middle income
24 Japan Asia High income 93 Timor-Leste Asia Lower middle income
25 Kuwait Asia High income 94 Tunisia Africa Lower middle income
26 Latvia Europe High income 95 Ukraine Europe Lower middle income
27 Lithuania Europe High income 96 Vietnam Asia Lower middle income
28 Luxembourg Europe High income 97 Zambia Africa Lower middle income
29 Malta Europe High income 98 Zimbabwe Africa Lower middle income
30 Netherlands Europe High income 99 Albania Europe Upper middle income
31 New Zealand Oceania High income 100 Algeria Africa Upper middle income
32 Norway Europe High income 101 Argentina South America Upper middle income
33 Oman Asia High income 102 Armenia Europe Upper middle income
34 Panama North America High income 103 Azerbaijan Europe Upper middle income
35 Poland Europe High income 104 Bosnia and Herzegovina Europe Upper middle income
36 Portugal Europe High income 105 Botswana Africa Upper middle income
37 Puerto Rico North America High income 106 Brazil South America Upper middle income
38 Qatar Asia High income 107 Bulgaria Europe Upper middle income
39 Saudi Arabia Asia High income 108 China Asia Upper middle income
40 Singapore Asia High income 109 Colombia South America Upper middle income
41 Slovak Republic Europe High income 110 Costa Rica North America Upper middle income
42 Slovenia Europe High income 111 Dominican Republic North America Upper middle income
43 Spain Europe High income 112 Ecuador South America Upper middle income
44 Sweden Europe High income 113 Gabon Africa Upper middle income
45 Switzerland Europe High income 114 Georgia Europe Upper middle income
46 Trinidad and Tobago North America High income 115 Guatemala North America Upper middle income
47 United Arab Emirates Asia High income 116 Guyana South America Upper middle income
48 United Kingdom Europe High income 117 Iran, Islamic Rep. Asia Upper middle income
49 United States North America High income 118 Jamaica North America Upper middle income
50 Uruguay South America High income 119 Jordan Asia Upper middle income
51 Benin Africa Low income 120 Kazakhstan Europe Upper middle income
52 Burkina Faso Africa Low income 121 Lebanon Asia Upper middle income

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 53 Burundi Africa Low income 122 Libya Africa Upper middle income
54 Chad Africa Low income 123 Malaysia Asia Upper middle income
55 Ethiopia Africa Low income 124 Mauritius Africa Upper middle income
56 Gambia, The Africa Low income 125 Mexico North America Upper middle income
57 Guinea Africa Low income 126 Montenegro Europe Upper middle income
58 Haiti North America Low income 127 Namibia Africa Upper middle income
59 Madagascar Africa Low income 128 Paraguay South America Upper middle income
60 Malawi Africa Low income 129 Peru South America Upper middle income
61 Mali Africa Low income 130 Romania Europe Upper middle income
62 Mozambique Africa Low income 131 Russian Federation Europe Upper middle income
63 Rwanda Africa Low income 132 Serbia Europe Upper middle income
64 Tajikistan Asia Low income 133 South Africa Africa Upper middle income
65 Tanzania Africa Low income 134 Sri Lanka Asia Upper middle income
66 Uganda Africa Low income 135 Suriname South America Upper middle income
67 Yemen, Rep. Asia Low income 136 Thailand Asia Upper middle income
68 Angola Africa Lower middle income 137 Turkey Europe Upper middle income
69 Bangladesh Asia Lower middle income 138 Venezuela, RB South America Upper middle income

Appendix B.1: List of variables for ICT usage indexes

Government Usage index Individual usage index Business usage index

Importance of ICT to government vision of
the future Mobile phone subscription Firm-level technology absorption
Government prioritization of ICT Individual using internet Capacity for innovation
Patent Cooperation Treaty (PCT)
Government success in ICT promotion Household with personal computer application
ICT impact on new services and
E-Participation Index Household with internet access products
ICT impact on new organizational
Government online services Fixed broadband internet subscription models
Mobile broadband subscription High-tech export
Prevalence of foreign technology
Cellular subscription with data licensing
Internet access in school Business-to-business internet uses
Uses of virtual social network (e.g., Facebook, Twitter,
LinkedIn) Business-to-consumer internet uses
Extent of staff training

30
 Appendix B.2: Variable descriptions

Variables Description Source

Perceptions of the quality of public services, the quality of the civil
service and the degree of its independence from political pressures,
Government effectiveness
the quality of policy formulation and implementation, and the
credibility of the government's commitment to such policies.
Perceptions of the likelihood that the government will be
Political Stability and Absence of
destabilized or overthrown by unconstitutional or violent means,
Violence/Terrorism
including politically motivated violence and terrorism.
Perceptions of the extent to which a country's citizens can
Voice and Accountability participate in selecting their government, as well as freedom of
expression, freedom of association, and a free media." Worldwide Governance
Indicators (WGI) by World
"Perceptions of the ability of the government to formulate and Bank
Regulatory Quality implement sound policies and regulations that permit and promote
private sector development.
Perceptions of the extent to which agents have confidence in and
abide by the rules of society, and in particular the quality of contract
Rule of Law
enforcement, property rights, the police, and the courts, as well as
the likelihood of crime and violence.
Perceptions of the extent to which public power is exercised for
Control of Corruption private gain, including both petty and grand forms of corruption, as
well as "capture" of the state by elites and private interests.
The assessment is both an evaluation of the government's ability to
the International Country
Government Stability carry out its programmed(s) as declared and its ability to stay in
Risk Guide (ICRG)
office.
GDP per capita is the gross domestic product divided by the mid-year
GDP per capita (constant 2010 USD) population. It is used to measure a country's level of wealth, and also
its level of development.
It represents all residents regardless of their legal status or
Population, total
citizenship, estimated at mid-year.
They include all current expenditure by the general government on
World Development
purchasing goods and services and compensation of employees. They
Government size Indicators (WDI)
also include most national defense and security expenditure but
exclude general government military expenditure.
It measures the percentage of parliamentary seats held by women in
Women in parliament
a single or lower house.
Ratio of total enrolment, regardless of age, to the population of the
School enrolment, secondary (% gross)
age group that officially corresponds to the level of education shown.
The International Centre for
Total Resource Revenue (% GDP) Tax revenues from natural resources
Tax and Development (ICTD)
The E-Government Development Index presents the state of E-
Government Development of the United Nations Member States.
Along with an assessment of the website development patterns in a
E-Government Index country, the E-Government Development index incorporates the
access characteristics, such as the infrastructure and educational
levels, to reflect how a country is using information technologies to
promote access and inclusion of its people. UN E-Government Survey
The e-Participation Index (EPI) focuses on the use of online services 2020 - United Nations
to facilitate the provision of information by governments to citizens
E-Participation Index (e-information Sharing), interaction with stakeholders (e-
Consultation), and participation in decision-making processes (e-
Decision-making).
The Online Services Index assesses the availability and the quality of
Online Service Index
online government service delivery.
Assesses the level of ICT adoption by a society’s main stakeholders:
ICT usage (overall)
government, businesses, and individuals.
Measures the extend of selected ICTs diffusion among a country's
Individual ICT usage
population. It takes into account social networks uses
Captures the extent to which businesses in a country use the internet
for business-to-business (B2B) and business-to-consumer (B2C) Global Information
Business ICT usage Technology Report (GITR)
operations and their efforts to integrate ICTs in their operations. It
also includes internet uses for Business-to-government operations.
Assesses the leadership and success of the government in developing
and implementing strategies for ICT development, as well as in using
Government ICT usage
ICTs, as measured by the availability and quality of online
government services
Source: Author construction with data from GITR, ICTD, ICRG, WDI, WGI, and UN

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 Appendix B.3: Summary statistics

Number of Stdard
Variables Mean Min Max
Observations. Deviation

Governement effectiveness 1437 0.1931506 0.9464555 -2.078492 2.436975

Political Stability and Absence of
1437 -0.0285954 0.9020166 -2.810035 1.525453
Violence/Terrorism
Voice and Accountability 1437 0.0924449 0.9188504 -1.951152 1.737975

Regulatory Quality 1437 0.2410341 0.8979762 -2.232313 2.260543

Rule of Law 1437 0.1189995 0.9757775 -1.916324 2.100273

Control of Corruption 1437 0.0992537 1.025483 -1.616931 2.469991

Government Stability 1261 7.746897 1.48141 4.041667 11.5

GDP per capita 1437 16027.71 20181.22 219.9615 111968.3

Population, total 1437 4.89e+07 1.63e+08 277477 1.38e+09

Government size 1373 20.00763 11.01528 0 63.75

Women in parliament 1369 15.76746 5.330143 2.047121 41.88798

School enrollment, secondary 1099 85.21118 27.6707 14.13834 163.9347

Total Resource Revenue 1310 3.824984 10.09095 0 72.35043

E-Government Index 1415 0.5160066 0.1948272 0 0.91928

E-Participation Index 1412 0.3363908 0.2640916 0 1

Online Service Index 1415 0.4609137 0.2318458 0 1

Overall ICT usage 1437 3.68309 0.9697118 1.99 6.07

Individual ICT usage 1437 3.417053 1.511046 1 6.9

Business ICT usage 1437 3.740884 0.9306428 2.06 6.22

Government ICT usage 1437 3.893114 0.8617827 1.8 6.3

Appendix C: Geographic heterogeneity: WB region groups

1 2 3 4 5 6 7
Europe & Latin Middle East
Sub-Saharan East Asia & North
Central America & & North South Asia
Africa Pacific America
Asia Caribbean Africaa
Dependent variable: Government effectiveness
Government ICT usage 0.1137*** 0.0680* 0.0447 0.1531*** 0.0875** 0.0358 0.0450
(0.0355) (0.0381) (0.0425) (0.0431) (0.0347) (0.0648) (.)
Political Stability and Absence of
0.0323 0.1145*** 0.0946** 0.1247* 0.1470** 0.1242 -0.1629
Violence/Terrorism
(0.0638) (0.0380) (0.0447) (0.0638) (0.0635) (0.1546) (.)
Log (GDP per capita) 0.5462*** 0.2689 0.5363** 0.0819 0.1948 0.9914 -1.8627
(0.1454) (0.3007) (0.2425) (0.2029) (0.1343) (0.9896) (.)
Log (Total population) -1.1019*** 0.2411 0.5477 0.2383 -1.6963*** 2.5731 5.9094
(0.3258) (0.5568) (0.6713) (0.2603) (0.5511) (5.4723) (.)
Time fixed effect Yes Yes Yes Yes Yes Yes Yes
Observations 457 314 251 167 160 44 22
Number of countries 42 32 24 17 15 4 2
R-Squared 0.28 0.21 0.27 0.42 0.44 0.60 0.90
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

32
Appendix D.1: Effect of other types of ICT usage on government effectiveness: developed
countries

1 2 3
Dependent variable: Government effectiveness
Individual ICT usage 0.0633**
(0.0254)
business ICT usage 0.0088
(0.0282)
Overall usage 0.2031***
(0.0503)
Political Stability and Absence of Violence/Terrorism 0.1301** 0.1220** 0.1307**
(0.0551) (0.0543) (0.0545)
Log (GDP per capita) 0.3642** 0.3812** 0.2903*
(0.1595) (0.1587) (0.1582)
Log (Total population) 0.1414 0.2358 -0.0061
(0.2261) (0.2286) (0.2239)
Country fixed effect Yes Yes Yes
Time Fixed effect Yes Yes Yes
No. of Obs. 542 542 542
No. of countries 50 50 50
R-Squared 0.1063 0.0828 0.1658
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

Appendix D.2: Effect of other types of ICT usage on government effectiveness: developing
countries

1 2 3
Dependent variable: Government effectiveness

Individual ICT usage 0.0481*

(0.0279)

business ICT usage 0.0657**

(0.0297)

Overall usage 0.1305***

(0.0414)

Political Stability and Absence of Violence/Terrorism 0.1057*** 0.0958*** 0.0943***

(0.0324) (0.0302) (0.0307)

Log (GDP per capita) 0.2651*** 0.2428** 0.2114**

(0.0899) (0.0964) (0.0891)

Log (Total population) -0.5484** -0.6973*** -0.5325***

(0.2149) (0.1897) (0.2000)

Country fixed effect Yes Yes Yes

Time Fixed effect Yes Yes Yes

No. of Obs. 895 895 895

No. of countries 88 88 88

R-Squared 0.213 0.213 0.233

Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

33
Appendix E.1: Effect of alternative ICT indexes on government effectiveness in developed
countries

1 2 3
Dependent variable: Government effectiveness
E-Government 0.7093**
(0.2663)
E-Participation 0.1682**
(0.0691)
Online Service 0.3246***
(0.1036)
Political Stability and Absence of Violence/Terrorism 0.1528*** 0.1569*** 0.1458***
(0.0520) (0.0550) (0.0474)
Log (GDP per capita) 0.3374** 0.3333** 0.3501**
(0.1670) (0.1627) (0.1631)
Log (Total population) 0.1085 0.1612 0.1180
(0.2360) (0.2147) (0.2206)
Country fixed effect Yes Yes Yes
Time Fixed effect Yes Yes Yes
No. of Obs. 528 528 528
No. of countries 48 48 48
R-Squared 0.1237 0.1144 0.1307
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

Appendix E.2: Effect of alternative ICT indexes on government effectiveness in developing

countries

1 2 3
Dependent variable: Government effectiveness
E-Government 0.2704
(0.2168)
E-Participation 0.0321
(0.0744)
Online Service 0.0671
(0.1172)
Political Stability and Absence of Violence/Terrorism 0.0878*** 0.0868*** 0.0867***
(0.0325) (0.0328) (0.0327)
Log (GDP per capita) 0.3949*** 0.3966*** 0.3904***
(0.1148) (0.1196) (0.1220)
Log (Total population) -0.5549*** -0.5967*** -0.6060***
(0.1894) (0.1936) (0.1855)
Country fixed effect Yes Yes Yes
Time Fixed effect Yes Yes Yes
No. of Obs. 964 961 964
No. of countries 88 88 88
R-Squared 0.2181 0.2123 0.2134
Note: Robust standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01

34