The Role of Digital Transformation in Achieving Economic Well-being
the Case of Algeria
KADRI NOURIA
Department of Economic,
University of Mascara,
ALGERIA
Abstract: - The continuous and rapid development of digital technology has led to the emergence of
cyberspace, comprising the Internet and its related advanced technology and smart applications. The latter has
evolved into a conduit for the ongoing digital transformation of human life and activities across diverse sectors.
Economic advancement now hinges closely on nations' capacity to align with this swift-paced progress., which
achieves prosperity for individuals and society. Based on this basis, this research aims to study the impact of
digital transformation on economic well-being through a standardized study of two indicators, the Information
and Communication Technology Development Index (IDI) and the Economic Well-being Index (IDH) in
Algerian society. The study has shown a positive long-term impact.
Key-Words: - Digital transformation, information and communication technology, technological development
index (IDI), economic well-being, well-being index (IDH), economic prosperity, Algeria.
1 Introduction
The world is currently undergoing a revolution in
communications and information technology. This
has brought about fundamental changes in various
aspects of life, directly influencing the methods and
means of conducting economic activities. As a
result, a new type of economy known as the digital
economy has emerged, positively impacting society
as a whole. Consequently, the economy is
increasingly shifting towards this new economy,
which is built on the use of information technology
and modern communication methods. Economic
growth has become one of the primary objectives
pursued by nations, and currently, the issue of
economic growth is closely linked to a country's
readiness for digital transformation and reliance on
new means instead of traditional production
elements. This requires the establishment of
essential infrastructure for the telecommunications
and information technology sector, as well as the
legal and legislative framework required for
electronic business operations.
Information and communication technology
(ICT) has had a significant impact on all levels due
to its remarkable achievements, the most important
of which is providing the necessary information at
the right time and place, according to the principle
of efficiency in quantity and quality. This has
brought about a fundamental change in the lives of
individuals and organizations. The functions and
tasks of the latter have changed, leading them to
continuously rebuild themselves in line with rapid
developments. E-business has been adopted, leading
to significant and extensive changes in interaction
patterns, communication methods, and the provision
of necessary information for making various
decisions and delivering services. All of this is made
possible by qualified human resources with
technological literacy and information awareness,
capable of keeping up with technological
advancements and making a qualitative leap for the
organization to achieve benefits, minimize damages
and risks, and thus achieve societal well-being
From this perspective, we pose the following
problem:
What is the role of digital transformation in
achieving economic well-being in Algeria?
Therefore, the following sub-questions are raised:
- What is the concept of digital transformation?
- What are its objectives and indicators?
- What are the factors for achieving economic well-
being?
- What are its most important indicators?
- What is the current situation in Algerian society?
As an initial attempt to address the research
issue, we suggest the following hypothesis:
There is no role for digital transformation in the
economic well-being of Algeria.
Received: December 14, 2023. Revised: June 14, 2024. Accepted: July 9, 2024. Published: August 9, 2024.
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In terms of the research methodology, we
employed the descriptive analysis approach to gain
familiarity with the study variables and enhance the
theoretical aspect. Additionally, the standard
analytical method was utilized to measure the
impact of ICT on achieving economic well-being in
Algerian society.
The importance of research lies in the necessity
of adopting digital transformation through the use of
ICT in practical and scientific life. Its significance
stems from its ability to create value for businesses
by facilitating data transfer, information sharing,
and remote communication to achieve the goals of
organizations in various forms and patterns.
Moreover, the study of well-being and the analysis
of factors that can achieve the highest possible level
of psychological, material, and social stability for
individuals within a specific society have led us to
connect it with information and communication
technology. This connection has become essential in
achieving stability and well-being as it enables
access to information at the right time and place to
make various decisions, thereby improving living
conditions and eliminating poverty.
The study was divided into three primary
sections, outlined as follows:
First : The literature review of the study
Second : The study's reality in Algeria
Third: A standard study
2 The Literature Framework of the
Study
Scientific and technological advancements have
contributed to achieving individual well-being.
Among the continuous developments is digital
transformation, which refers to the advancement of
ICT. This advancement aims to integrate various
fields such as education, healthcare, and
entertainment easily while saving effort and money.
Additionally, it facilitates communication and
connection among individuals and groups in
different and distant environments, enhancing the
exchange of information between them
2.1 Concepts Related to Digital
Transformation
a- Definition of digital transformation:
Digital transformation refers to the use of computer
technology and the Internet to create economic
value more efficiently and effectively. In a broader
sense, it refers to the changes brought about by new
technology in general, including how work is done,
how interactions occur, and how wealth is generated
within this system
Previous studies have provided multiple
definitions of digital transformation. It has been
defined as a process of fundamental changes within
a company's value creation chain or internal
structure, which can be either a cause or a
prerequisite for technology utilization, [
1
].
The topic of digital transformation has been
extensively addressed with new strategic concepts,
especially digital business strategy and digital
transformation strategy. The main idea of digital
business strategy lies in understanding information
technology as a fundamental requirement for
innovation and achieving competitive advantage.
Many studies have defined digital transformation as
a process aimed at improving entities and
institutions through significant changes in their
characteristics using a set of information
technology, computing, and communication
techniques. In light of these efforts, there are
internal and external users of digital services that
must be included in digital transformation efforts
through four aspects, [
2
].
- Dynamic capabilities as a prerequisite for digital
transformation.
- User participation in the design of digital
services.
- Co-production and co-creation to enhance the
legitimacy of digital services.
- Collaborative creation with open records to
improve the delivery of digital services.
Furthermore, digital transformation is a
requirement for institutions and companies,
particularly those facing challenges and barriers
when seeking innovative business models and their
implementation for digital transformation,
considering their experiences. They are often forced
to deal with conflicts and trade-offs between current
and new ways of conducting business.
Hence, it revolves around adopting disruptive
technologies to increase productivity and create
value and social well-being. Many national
governments and multi-stakeholder organizations
have presented foresight studies and long-term
policy adoption strategies. A study addressed the
goals of digital transformation at the social and
economic levels in the following points, [
3
]:
- Enhancing the development of more innovative
and collaborative technological systems and
financial culture at the institutional and societal
levels.
- Changing the education system to provide new
skills and guide individuals towards achieving
excellence in digital work and society.
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- Establishing and maintaining the infrastructure
for digital communications, ensuring its
management and accessibility, and achieving a
balance between service quality and delivery
costs.
- Enhancing the protection of digital data,
transparency, ensuring independence
requirements, and building trust.
- Improving accessibility to services and
establishing controls and mechanisms for the
quality of digital services provided to the
community.
- Implementing new and innovative business
models and improving the regulatory framework
and technical standards.
b- The importance of digital transformation
in society:
Economic institutions operating in a dynamic
environment need to adopt modern and advanced
technology to maintain their position, achieve
excellence, and ensure the well-being of their
members. From this perspective, economists and
experts in the field of technology have attempted to
define digital transformation due to its strategic
importance for business organizations in various
activities and fields.
In all fields, the changes instigated by
globalization have expanded the scope of media and
communication, where media, with its advanced
technologies, has emerged as the catalyst for
transformations in politics, economy, ideology, art,
and culture. It has had the power to shape
knowledge, create new standards, and destroy
previous traditional value systems, [
4
].
Scientific and technological advancements have
contributed to the well-being of individuals, and
among the ongoing developments are those related
to ICT, which achieve goals for both institutions and
individuals, including achieving integration in
various areas such as education, healthcare, and
entertainment with ease and cost-effectiveness. It
also facilitates communication and connectivity for
individuals and groups in different and distant
environments, facilitating exchange processes
between them.
The latter contributes to economic development
by providing information and communication,
allowing information to be available at the right
time and place without any hassle.
ICT also helps in sharing and collaboration
among communities, including marginalized,
isolated, and sometimes shadowed areas, regardless
of social classes and levels. In addition to its role in
enhancing various types of development, including
human, economic, social, and cultural, due to its
greater efficiency and effectiveness compared to
traditional communication methods, [
5
].
c- Characteristics of information and
communication technology:
The characteristics of ICTs include the
following, [
6
]:
- Interactivity: It is defined as the future of this
technology can be both sender and receiver at
the same time, as participants in the
communication process can exchange roles,
allowing for a type of interaction between
individuals and institutions.
- Asynchronization: The ability to receive
messages or information at any time, as
participants are not required to use the system
simultaneously.
- Decentralization: The property that allows for
the independence of ICT, such as the internet, to
ensure its continuous operation. No entity can
disable the internet globally. As there is no
single computer controlling it, a single or
multiple nodes may malfunction without
jeopardizing the entire internet.
- Compatibility: The ability to connect various
communication devices regardless of their
manufacturer, irrespective of the company or
country of origin.
- Mobility: It represents the benefits users have
from its services while on the move, i.e., in any
location.
- Connectivity: The ability to transfer information
from one medium to another, converting an
audible message into a printed or electronic
readable message, also known as electronic
reading.
- Demassification: The ability to direct
communication messages to an individual or
specific group instead of necessarily targeting a
large audience. This means having control over
the message, which reaches the consumer
directly from the producer.
- Ubiquity and proliferation: The expandability of
this network to encompass increasingly larger
and unlimited areas of the world. It gains
strength from the systematic proliferation of its
flexible system.
- Universality and globality: Allowing capital to
flow electronically, meaning that its
decentralized nature has made the global
environment its working environment,
especially considering the ease of cross-border
commercial transactions driven by
informational capital.
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d- ICT Indicators:
The total number of experts in the field of ICT was
announced in a report related to the measurement
indicators (EGTI : Expert Group on
Telecommunication ICT Indicators) during the 51st
session, which is renewed annually to collect and
modify these indicators per the data collected and
obtained from statistics and updated reports for each
year and according to the data of each country. The
International Telecommunication Union (ITU) has
defined the framework for ICT indicators according
to the stages that any economy goes through in the
transition towards a knowledge society, and it
defines them in three stages as follows, [
7
]:
- Readiness, which is determined by the network
infrastructure and access to ICT
- Intensity, which is determined by the extent of
ICT usage
- Impact, which is determined by the efficient
and effective utilization of ICT
Based on this, three sub-indicators were
identified as components of the overall ICT
development index, the Information and
Communication Technology Development Index
(IDI), which aims to monitor the progress recorded
in the rates of ICT development and growth,
identify the digital divide between countries, as well
as determine the developmental capabilities of
digital technology and the extent to which countries
can benefit from it to enhance growth and
development within the available capacities and
skills.
The first sub-indicator focuses on the Access
Sub-index and includes five indicators for
infrastructure and access, which are, [
8
]:
Fixed telephone subscriptions
- Mobile cellular telephone subscriptions
- International internet bandwidth per internet user
- Number of households with a computer
- Households with internet access
The second sub-indicator focuses on the Use Sub-
index and includes three indicators for ICT
usage intensity, which are the number of internet
users among households and individuals, the use of
ICT in business (goods and services), and the use of
ICT in education, e-government, and e-waste, Fixed
broadband subscriptions and mobile broadband
subscriptions.
The third sub-index focuses on the skills
necessary to efficiently utilize ICT in the Skills
Sub-index and includes three approximate
indicators: average years of schooling, total
secondary school enrollment, and total enrollment in
higher education.
Overall, the countries that rank higher according to
the ICDI (ICT Development Index) belong to
advanced nations, while most of those ranking lower
are low-income countries from the least developed
category, [
9
].
2.2 Nature of Economic Well-being
The increasing disparity among individuals within a
society or across multiple societies has led to the
emergence of class distinctions, typically
delineating society into upper and lower classes as a
result of income inequalities.
These reasons have been a strong impetus for
the emergence of concepts related to equality and
justice in income distribution, and subsequently to
the pursuit of well-being for every individual
regardless of the type of society they belong to.
The term well-being generally expresses
happiness and living standards and has been given
various linguistic and terminological concepts,
including:
A- Definition of Well-being in Economic
Terminology
Economic well-being is an economic state
characterized by individuals and communities,
representing the extent or need that each person,
family, group, or society reaches in providing their
material and service needs. From this perspective,
we observe that the notion of well-being aligns
closely with the concept of livings standard.
In economics, well-being means the social
outcomes that can be objectively measured and
addressed in economic theory, such as national
income. That is, the flow of goods and services is
directly associated with well-being, and the greater
the national income and equality in its distribution,
the greater the economic well-being of society.
Welfare economics also specializes in studying
and evaluating economic efficiency and systems
related to resource allocation, resulting in attaining
the maximum social advantage and establishing
conditions whereby economic policies can foster
societal well-being. These policies require
intervention to encourage productive projects and
equitable distribution through taxation to increase
production and satisfy needs.
Some link the concept of economic well-being
to the state, whether it is socialist (providing
services) or guardian, [
10
].
B- Economic Well-being Index
The well-being index in a society is the sum of
standards and factors through which we can
measure the degree and level of quality of life in
comparison with other countries.
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Many global economic indicators have emerged
that are concerned with measuring economic well-
being, including in particular, [
11
]:
The Human Development Index was issued by
the United Nations Development Program (UNDP).
The United Nations has developed an index to
measure the level of well-being of nations
worldwide, known as the Human Development
Index (HDI). It has been published annually since
1990 to promote the development of countries and
improve the living conditions of their citizens. This
index is measured based on three indicators: life
expectancy at birth, expected years of schooling,
and individual purchasing power, [
12
].
The Global Happiness Index was issued by the
United Nations Sustainable Solutions Network. In
July 2011, the United Nations General Assembly
issued a resolution calling on member states to
measure the amount of happiness among their
people to work to develop policies for each country
and work to improve the conditions of its citizens, to
issue a report. Global Happiness
On April 1, 2012, which is considered the first
global happiness survey in the world, the report
identified the global happiness status, the causes of
happiness and misery, and the effects on policies.
The World Happiness Report classifies countries
based on the levels they have achieved in areas
related to per capita gross domestic product, social
welfare, average lifespan, social freedoms, absence
of corruption, quality of health and education, and
labor market.
The Social Progress Index was issued by the
American organization Social Progress Imperative
in 2011.
The index measures the extent to which
countries are progressing in meeting the social and
environmental needs of their citizens. To assess the
relative performance of world countries, the index
utilizes 54 indicators that cover three main areas :
basic human needs, foundations of decent living,
and the extent of.
The availability of development opportunities is
measured by this indicator, which directly assesses
the well-being of society by monitoring social and
environmental outputs, rather than economic
factors. Social and environmental factors include
public safety (health, shelter, and sanitation
services), equality, inclusion, sustainability, as well
as personal freedom and security.
Global Life Satisfaction Index
The World Prosperity Index, created at the
University of Leicester, focuses on collecting and
analyzing data to calculate a measure of satisfaction
with life in different countries. It strongly correlates
personal well-being with health, wealth, and access
to basic education as an alternative to traditional
measures of policy success such as Gross Domestic
Product (GDP).
It also emphasizes social and economic
development indicators.
The Global Prosperity Index, issued by the
Legatum Institute in Britain since 2007, measures
overall prosperity.
These specialized indicators of social well-being
not only focus on economic aspects but also extend
to social, environmental, and other dimensions.
They share many sub-indicators. This research
paper will discuss one of these indicators, the (HDI).
It is a composite index that measures the average
quality of life of a country's population.
Theoretically, the index ranges from 0 to 1 and
considers three dimensions of human development.
Firstly, the ability to have a long and healthy life
based on life expectancy at birth. Secondly, the level
of education is assessed based on literacy rates and
attendance at different levels of the education
system. Lastly, the standard of living is calculated
using the Gross Domestic Product per capita while
considering purchasing power parity.
Purchasing power parity is used to measure the
relative purchasing power of different currencies for
the same types of goods and services. Since prices
of goods and services can vary from one country to
another, purchasing power parity allows for a more
accurate comparison of living standards across
different countries. For this estimation, prices of
similar items are compared. However, since the
available items in different countries and periods are
not identical, these estimations are not always
accurate.
3 The Reality of Economic Prosperity
and the Development of ICT in
Algeria
Undoubtedly, prosperity is a relative matter that
depends on various variables, including natural,
economic, social, and political factors, as well as
technological levels and their development.
Moreover, these variables are influenced by an
endless series of factors and changing influences
over time.
ICT can help accelerate the progress made in
implementing each of the Sustainable Development
Goals (SDGs), and the International
Telecommunication Union contributes by trying to
implement and implement Goal 9 of the Sustainable
Development Goals in particular, which pours into
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the crucible of well-being in general. This is
embodied through the following, [
13
].
Building resilient infrastructure that encourages
inclusive and sustainable industrialization and
fosters innovation.
Efficient and affordable ICT infrastructure and
services enable countries to participate in the digital
economy and increase their well-being and overall
economic competitiveness, and most developed
countries are making tremendous progress towards
achieving this goal while reducing poverty and
improving health status and distance education.
- ICT can achieve wide and rapid results
characterized by quality, accuracy, and
unexpected costs.
- In the field of creating and achieving well-
being, ICTs are means of delivering quality
goods and services in the fields of health care,
education, finance, trade, administration, and
agriculture.
- Furthermore, it can help reduce poverty and
hunger, strengthen health, provide new job
opportunities, mitigate the effects of climate
change, improve energy efficiency, and make
cities and communities sustainable.
3.1 Digital Transformation Reality in Algeria
Success in the digital and information age is largely
determined by the efficient utilization of
information technology, communication, and
connectivity to the global information network (the
Internet), as well as the availability of fast
information methods, digital broadcasting and
television networks, mobile phones, computers,
digital information exchange services, which have
become the foundations governing all aspects of life
and business performance, [14]. However, Algeria
remains somewhat distant from responding to these
standards, despite its efforts in this regard. This is
shown in Figure 1.
Fig. 1: Ranking according to the development of the
(ICT) index in Algeria
Source : International Telecommunication Union
(ITU) (2023a), [
14
]
Algeria ranked 97th among the world's
countries in the 2007 Technological Development
Index, attributed to several factors.
The number of internet subscribers has reached
1.2 million subscribers who own mobile phones.
- The number of websites reached approximately
5,000 websites
- The number of internet providers increased to
80 providers in 2007
- Algeria ranked tenth in terms of internet
penetration in the Arab world (with the United
Arab Emirates ranking first).
We observe a decline in its ranking between
2008 and 2011, its global ranking stood at 100 in
2008, but it rose to 96 by 2011, primarily attributed
to the adoption of modern technologies, notably
second-generation technologies. Furthermore, by
2013, the incorporation of third-generation
technologies further contributed to its advancement.
In 2015, it adopted fourth-generation (G4)
technologies. In recent years, until 2018, the
Ministry of Communication and Information
Technology has shown increased interest in
providing access to the Internet in remote areas,
villages, and rural areas, due to their necessity and
importance, which includes all fields, especially
education. As for its rate of development compared
to other countries in the world, the following figure
2 illustrates this increasing growth in information
and communication index in Algeria.
Fig. 2: Development of the ICT Index in Algeria
Source : International Telecommunication Union
(ITU) (2023a), [
15
]
From the above figure, we observe the
continuous increase in the development index of
ICT over time. In 2007, the rate reached 2.5 due to
the increase in the number of computers to 429,167
computers. The percentage continued to rise, with
the number of computers reaching 1,450,000 in
2013. The index increased from 4.32 in 2016 to 4.92
97 100 105 103 96
114 114 112 113 106 102
RANK
2,512,652,412,82
3,53 3,3 3,423,563,71
4,324,674,59
IDI
IDI
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in 2019. Additionally, it is higher compared to the
average level of African countries. However, it is
still far from the desired level, as it is lower than the
global average level of 5.17. Despite Algeria's
classification by the International
Telecommunication Union as the top-ranked Arab
country and 22nd globally in terms of the dynamic
development of ICT index, its ranking was 106
between 2016-2017, then moved to 102 during
2018-2019. This change is confirmed by the ICT
Development Index (IDI). This is attributed to the
sub-index related to readiness, which branches from
the main IDI index.
3.1.1 Network Readiness Index
This index was issued by the World Economic
Forum and measures the ability of countries'
economies to leverage information and
communication technologies to increase
competitiveness and prosperity. This index is based
on a set of data from the International
Telecommunication Union, the World Bank, the
United Nations Educational, Scientific and Cultural
Organization (UNESCO), and other organizations.
The index consists of four main pillars, which are:
A- Environment Index : It includes two sub-
indices, the Legislative and Regulatory Environment
Index and the Business Environment and Innovation
Index.
B- Readiness Index : It includes the Infrastructure
Index, the Affordability Index, and the Skills
Readiness Index.
C- Usage Index : It consists of three sub-indices,
which are the Individual Usage Index, the Business
Sector Usage Index, and the Government Usage
Index.
D- Impact Index : It includes the Economic Impact
of Technology Index and the Social Impact of
Technology Index.
It is evident from the table that Algeria ranks
very low in terms of the Network Readiness or
Digital Readiness Index, ranging from 117/139 to
131/144 globally during the period from 2012 to
2016. The only improvement recorded during this
period was in 2016 compared to other years, where
Algeria ranked 117/139 in the Network Readiness
Index compared to 131 in the Environment Index,
95 in the Readiness Index, 125 in the Usage Index,
and 129 in the Impact Index. The reason for
Algeria's bottom ranking is the significant delay in
enacting laws and regulations governing modern
media and communication technologies, as well as
the severe deficiency in the usage of ICT in
businesses, ranking 133/147. Additionally, there has
been a sharp decline in the Economic Impact of
Technology Index and the Social Impact of
Technology Index, which were ranked 124/139 and
132/139 respectively. Table 1 describes this
Table 1. Evolution of the Network Readiness Index
for Algeria according to the World Economic
Source : Portulans institute (2020), [
16
]
We conclude from the above that despite the
efforts made by Algeria to strengthen the
information and communications technology
infrastructure, global measurement indicators
classified it among the countries least prepared and
least connected to the electronic network.
3.1.2 Internet Use Index
It indicates the percentage of use of the Internet out
of the total population. The following Table 2 shows
the development of this indicator in Algeria.
Through our analysis of the data in the table, it
is evident that the internet usage index has been
evolving from 2010 to 2020. This is a result of the
efforts made to provide a stimulating environment
that allows access to the Internet in shared spaces
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such as youth centers, cultural centers, public
libraries, and mosques.
Table 2. Development of Internet use in Algeria
compared to all countries of the world
Source: DATAREPORTAL, DIGITAL 2023 : ALGERIA, [
17
]
The Ministry of Post, Information Technology,
and Communication have adopted a sectoral plan
based on the synergy of efforts and resource
sharing. This plan has facilitated coordination and
consultation with four other ministries, namely the
Ministry of Culture, the Ministry of Youth and
Sports, the Ministry of National Solidarity, Family,
and Women's Affairs, and the Ministry of Religious
Affairs and Endowments, to connect over two
thousand institutions to the internet for the benefit of
citizens as a first phase. Additionally, in
collaboration with the Ministry of National
Education, efforts have been made to connect
primary schools to the Internet.
3.1.3 Percentage of Households with
Computers
This indicator encompasses all households equipped
with a computer accessible to all family members at
any given time, considering it as a household asset.
Table 3 presents the percentage of households with
computers in Algeria in comparison to other
countries worldwide.
Table 3. Comparison of households with computers
in Algeria, Africa, and the rest of the world
Percentage of households with computers (%)
Region
Number of
countries
Year
2017
Year 2018
Year
2019
Algeria
/
38.42
38.86
38.92
Africa
38
9.60
9.74
9.78
All countries
worldwide
176
46.61
47.36
47.98
Source : Prepared by the researcher based on data from
Statista website, [
18
]
t is evident from the table that there is a
significant disparity in the statistical ratios of
households with computers in Algeria compared to
Africa and the rest of the world. Despite the high
rate of computer ownership in Algeria compared to
African countries during the three years "2017,
2018, and 2019," it still lags far behind the rest of
the world. This reveals a digital divide in computer
penetration between Algeria and the rest of the
world, making the lack of awareness about
computer usage in Algeria a major obstacle to
economic prosperity.
3.1.4 The Broadband Fixed and Mobile
Phone Subscription Development
Index
The Broadband Fixed and Mobile Phone
Subscription Development Index consists of four
sub-indices, which are as follows :
- Fixed Phone Subscription Index : Refers to the
total active number of fixed phone lines, voice-over
internet protocol subscriptions, and public fixed
phones.
- Mobile Phone Subscription Index : Refers to the
number of subscriptions to mobile cellular service
that provides access to the Public Switched
Telephone Network (PSTN) using cellular
technology. It applies to all mobile cellular
subscriptions that provide voice communications,
excluding mobile radio services for private
communications, radio paging, and remote
metering.
- Broadband Fixed Internet Network Subscription
Index : Refers to high-speed access to the internet
network, with transmission control protocol/internet
protocol speeds in the direction of the destination
greater than or equal to 256 Kbit/s, in addition to
digital subscriber lines and fibers used for internet
acceleration.
- Mobile Broadband Subscription Index : Refers to
the number of subscriptions to mobile cellular
networks that can access broadband data
communications, such as the internet, at broadband
speeds in the direction of the destination.
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Table 4 illustrates the development of fixed and
mobile phone subscriptions and their broadband in
Algeria compared to Africa and the rest of the
world.
Table 4. Comparison of fixed and mobile phone
subscriptions and their broadband in Algeria, Africa,
and the rest of the world
Source : Prepared by the researcher based on data from
Statista website, [
19
]
It is clear from the table that although fixed-line
telephone subscriptions per 100 residents in Algeria
(8.24) are more than the average of African
countries (1.00), they remain fragile when compared
to the European level (37.7) and the global level
(13.57), and this is mainly due to The lack of
competitiveness in the fixed telephone sector in
Algeria. As for the mobile phone, it is one of the
most developed sectors, as it exceeded the global
average level by “15.49”. This is due to the intensity
of competition in the mobile phone market between
several companies, which reflected positively on
subscription prices and made them suitable for
different segments—the community, as well as the
variety and number of offers presented.
As for the fixed-line broadband index, it is
higher than the average for African countries, but it
remains very weak compared to the global average.
This is mainly due to the weak infrastructure of the
fixed network and the high cost of investment in it,
as well as the lack of competition in the service,
which negatively affected the quality of the service
provided and its prices despite Fixed phone
broadband providing speed and quality compared to
mobile broadband.
As for the mobile broadband index, although it
is higher than the average of African countries, it
remains relatively weak compared to the global
average. Algeria also hopes to raise its readiness to
keep pace with the development of smartphone
devices.
3.2 The Reality of Economic Prosperity in
Algeria
Our analysis of the state of well-being in Algeria
has been based on criteria including education,
health, safety and security, personal freedom, and
social institutions. As a result, Algeria ranked fourth
in the Arab world and 60th globally in the 2012
Well-being Index. However, it experienced a
decline in 2015, where it ranked 96th globally, and
in 2016, it occupied the 111th position globally and
the eighth position in the Arab world. The Well-
being Index classifies.
Luxury ranked 91st globally and 7th in the Arab
world out of 191 countries in 2022, according to a
report issued by the United Nations based on 8
indicators: economy, entrepreneurship, investment
opportunities, government performance, education,
health, security, individual freedom, and social
communication. The British Institute confirms that
luxury is not only related to individual income or
GDP, but also to the quality of life, comfort, and
happiness of citizens.
Through the health criterion, which defines the
well-being index, we can thus link health to
domestic production and achieve higher rates of
economic growth, which proves that workers who
enjoy good health are more productive. Good health
also raises per capita income, which is an incentive
for national savings and increased longevity -
encouraging foreign investment, so that investors
avoid environments in which the workforce suffers
from severe disease burdens. In addition to what
was mentioned, there is the standard of education, as
the healthiest children enjoy high rates of school
attendance and educational attainment.
In the analysis, we presented health over
education because of what we mentioned in the last
lines and because of what the literature has proven
in this field, there is a close relationship between
health and education, and if the relationship between
education and health is causal, that is, transferring
some of the expenses from health care to education,
it is a procedure. It is effective in improving both
the educational level and the health aspect of
society. Educational policies also have a significant
impact on the health aspect, and this is what
required the state to invest in the two sectors and
increase spending rates on them, as they improve
the lives of the individual and society and thus
increase their well-being. The next Figure 3 shows
the development of this indicator in Algeria.
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Fig. 3 : Development of the Human Development
Index in Algeria
Source : Data collected by the researcher from United Nations
Development Programme (2023), [
20
]
Through the above curve, we observe that the
slope at which the human development rate grows in
Algeria is relatively high, while in terms of the
(HDI) associated with gender, it reached a level of
0.679 in 2001 and ranked accordingly.
Algeria ranks 90th out of a total of 146
countries, reflecting a decrease in gender disparities.
The parliamentary participation of women reached
6% in 2001, with a 2% increase in 2000.
Additionally, women have a strong presence in the
private sector as well as other social sectors such as
education, healthcare, and the judiciary,
representing :
More than 60% of the total number of teachers
in the national education sector.
More than 60% are in the healthcare sector.
Approximately 50% of university professors.
More than 50% of the total number of judges.
The National Center for Commercial
Registration estimates women's integration in
economic responsibility at 100,000.
A woman registered in 2008 as a trader and
contractor, and despite the advancements, female
participation in political decision-making and
elected councils remains modest.
According to the 2023 Human Development
Report, Algeria ranked 91st globally in the
international Human Development Index, advancing
by 6 points. It moved from 96th to 91st in the global
ranking, with a development index of 0.745. Life
expectancy reached 76.4 years, average years of
schooling were 14.6, and average individual income
was $10,800.
Tunisia ranked second in the Maghreb region
and 97th globally, despite dropping three places.
The report stated that its development index
declined to 0.731, with a life expectancy of 73.8
years, average years of schooling at 15.4, and
average individual income of $10,258.
Libya ranked third in the Maghreb region and
104th globally, showing significant progress by
moving up 13 places with a development index of
0.718. Life expectancy was 71.9 years, average
years of schooling were 12.9, and average
individual income was $15,336.
Morocco dropped one place, ranking fourth in
the Maghreb region and 123rd globally, with a
development index of 0.683. Life expectancy
reached 74 years, average years of schooling were
14.2, and average individual income was $7,303.
Mauritania maintained its previous ranking in
2020, placing last in the Maghreb region and 158th
globally, with a development index of 0.556. Life
expectancy was 64.4 years, average years of
schooling were 9.4, and average individual income
was $5,075.
The UN report, titled "Time of Uncertainty, Life
of Instability: Shaping Our Future in a Changing
World," covered 191 countries and highlighted that
multiple crises hinder progress in human
development, which is declining in the majority of
countries.
4 A Standard Study on the Impact of
Digital Transformation on Well-
Being in Algeria
In this study, we attempted to apply the theoretical
aspects discussed by conducting a standard study on
the impact or role of information and
communication technologies on economic well-
being in Algeria during the period 2007-2018, based
on the availability of data for the same period and
using Eviews 12 program.
4.1 Study Model and Variables
We will attempt to include the study models and
analyze their variables.
A- Study Model :
We formulate a model representing the impact of
the development of ICT on the economic well-being
of individuals in Algeria, according to the available
data, which was discussed in a descriptive study. To
avoid the heterogeneity of the variables and the lack
of a linear relationship between them, we enter the
Napierian logarithm into the model.
lnIDI= f (lnIDI)
lnIdh: Niberian logarithm of the HDI in Algeria
during the period 2007-2018
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lnIDI: Niberian logarithm of the Information and
Communication Technology Development Index in
Algeria during the period 2007-2018.
After formulating the models, we begin
studying their variables by examining their
stationarity through unit root tests for time series. In
this regard, we utilized the Phillips-Perron (PP) and
Augmented Dickey-Fuller (ADF) tests. Through
these tests, we can identify the stationarity of time
series and ascertain their order as follows:
Stable time series are characterized by the
absence of both overall trends and seasonal
fluctuations. However, economic phenomena in
history seldom unfold in random patterns.
B- Testing the Stationarity of Time Series: To
avoid falling into erroneous analyses, it is necessary
to study the stationarity test of time series as a
condition of joint integration. Unit roots are the
most important method for determining the stability
of the time series. Therefore, we will test the unit
root based on two tests, the augmented Dickey-
Fuller test.
Regarding the ascending ADF methodology of
Dickie Fuller, we have followed the following
methodology : The series (IDH) :
[M1]
[M2]
Δ
[M3]
Δ
We determined the degree of delay based on the
three criteria Schwarz, AIC (Akaike Information
Criterion), and Log-Likelihood.
We chose the smallest degree of lag, which was
mostly zero, Lag = 0.
To assess the model, we have selected the
following assumptions for most of the series.
[M1]
H0: λ=0, meaning we accept the hypothesis of the
presence of a unit root in the series if the probability
is greater than 0.05.
H0: b = 0, if the general trend coefficient differs
from zero, i.e. Prob (Trend) is 0.05, indicating that
the time series of type Ts is not stable.<
[M2]
H0: C = 0 We accept the hypothesis that the series
does not contain a constant derivative if Prob >
0.05.
H0: λ = 0, we accept the null hypothesis that there is
no unit root in the series Prob> 0.05.
[M3]
H0: λ = 0: We accept the hypothesis of the existence
of a unit root.
Table 5, Table 6 and Table 7 present the results of
the stationarity tests for the two series, respectively:
Table 5. ADF test results for the lnIDH series
From the table, we observe that according to
model [M1], the IDH series is non-stationary at the
level. Therefore, we test the stationarity of the series
after first differencing
Table 6. ADF test results for the lnIDH series after
first differences
Table 7. ADF test results for the IDI series
We observe from the table of ADF test results
that according to model [M2], the lnIDI series is
stable at the level. Through the tables, we observe
that the lnIDH series does not contain the overall
- ADF test for the lnidh series,
number of lags: minimum value =
0.
Mod
els.
H0: λ =
0.
H0: b =
0.
H0: C
= 0.
(Prob).
(Prob).
(Prob).
Result.
The
series
is non-
station
ary.
[M1]
.
0.1967.
0.0235.
0.0158
.
Non-
stationary
.
[M2]
.
0.7479.
/.
0.1826
.
Non-
stationary
.
[M3]
.
0.9694.
/.
/.
Non-
stationary
.
- ADF test for the lnIDH series,
number of lags: minimum value = 0.
Models
.
H0: λ =
0.
H0: b =
0.
H0: C
= 0.
(Prob).
(Prob).
(Prob).
Result.
The
series
is
station
ary.
[M1].
0.1619.
0.8911.
0.5509.
Non-
stationary
.
[M2].
0.0427.
/.
0.1352.
Stationar
y.
[M3].
0.0142.
/.
/.
Stationar
y.
- ADF test for the lnIDI series, number of
lags: minimum value = 0.
Mod
els.
H0: λ =
0.
H0: b = 0.
H0: C = 0.
(Prob).
(Prob).
(Prob).
Result.
The
series
is
station
ary.
[M1]
.
0.1265.
0.1540
0.0209
Non-
stationa
ry
[M2]
0.0508 ".
0.0238
Station
ary .
[M3]
0.0372
Station
ary .
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directional compound, therefore there is a type of
DS series.
We have lnIDH I(1) and lnIDI, which
prompts us to apply the methodology of the
autoregressive model for time series gaps.
C- Cointegration methodology using the
Autoregressive Distributed Lag (ARDL) model
for fractional time series gaps : The methodology
requires conducting tests for joint integration, [
21
],
that the variables be integrated at the same order. It
cannot be performed when there are variables
integrated in different orders. Hence, the
Autoregressive Distributed Lag (ARDL) model,
developed emerged as a solution, [
22
].
This model is considered an alternative to the
well-known tests of cointegration. The developed
test distinguishes it self from other tests in the
following aspects :
It does not require all-time series to be
integrated in the same order I(0) or I(1). The only
condition for applying this test is that none of the
variables have an integration order of I(2).
ARDL can be applied in cases where the sample
size is small, which is contrary to most traditional
cointegration tests that require a large sample size
for more efficient results.
The ARDL model enables us to separate the
short-term effects from the long-term effects,
allowing us to determine the cointegrating
relationship between the dependent variable and the
independent variables in both the long and short
runs within the same equation.
Determining the magnitude of the impact of
each independent variable on the dependent
variable.
In this methodology, we can also estimate the
parameters of the independent variables in the short
and long run. Its estimated parameters in the short
and long run are more consistent compared to other
methods such as Engle-Granger, Johansen, and
Johansen-Juselius methods. To determine the length
of distributed lag periods, two criteria are usually
used, namely Akaike Information Criterion (AIC)
and Schwarz Criterion (SC), where the length of the
period that minimizes both AIC and SC values is
chosen. The ARDL model for equation (1) is written
as follows :
The coefficient of the lagged dependent variable
represents (β), the long-term relationship
parameters. Meanwhile, the first difference
parameters are represented by (α), which captures
the short-term relationship. (C) and () indicate the
intercept and the random errors, respectively.
The ARDL model test first involves testing the
existence of a long-term equilibrium relationship
between the model variables and the parameters of
the independent variables in the short term. For this
purpose, the Fisher statistic (F) is calculated using
the Wald test, where the hypothesis of no common
integration (absence of long-term equilibrium
relationship) is tested. Then, it is compared with the
critical values for upper and lower bounds at
significance levels
4.2 Study Results
After determining the model and study variables, we
shed light on the results obtained from estimating
the model.
First - Testing for cointegration using the bounds
approach :
The following table shows the bounds test (ARDL)
by calculating the Fisher statistic and comparing it
with the upper critical values I(1) and lower critical
values I(0), as mentioned before, to test the
hypothesis of no common integration. The results
are as follows Table 8:
Table 8. Bounds Test for Long-Term Relationship
Since the calculated Fisher value is significant
and greater than the critical values at the 2.5%, 5%,
and 10% significance levels, it is in the common
integration region. Therefore, there is a long-term
equilibrium relationship between the study variables
(independent and dependent variables).
13
Calculated Fisher
statistic FC
Result
Model
6.685608
Existence of a
common
integration
relationship
Critical
values
Upper
bound I(1)
Lower
bound I(0)
At a
significance
level of
2.5%
6.68
5.77
At a
significance
level of 5%
5.73
4.94
At a
significance
level of 10%
4.78
4.04
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Second : long-term relationship inference
In Table 9 show the long-term relationship between
the two variables as follows :
Table 9. Long-term parameter estimates (dependent
variable LnIDH)
Variable
Coefficient
Significance
LnIDI
10.7869
0.0004
C
4.6705
0.0000
The lagged values (1,0) were selected
When we apply the natural logarithm to the
study model, the parameters of this model become
elasticities. This means that if one independent
variable changes by one unit, the change in IDH will
be equal to the parameter value. Therefore, based on
this basis, the results of estimating the long-term
parameters will be interpreted
The model is significant, as Prob(fisher) is
estimated to be 0.00007.
We observe that in the long run, the contribution
ratio of information and communication technology
to individual well-being is significant at 1% and its
effect is positive, which is consistent with the theory
Thirdز estimation of the Error Correction Model
for the ARDL model (DLnIDH)
After confirming the long-term relationship, we will
derive the short-term relationship between the
variables using the non-structural Error Correction
Model. The results are shown in the following Table
10.
Table 10. Results of UECM estimation for the
ARDL model
Variable
Coefficient
Significance
coinEq(-1)
-0.6583
0.0189
DlnIDI
7.1011
0.0206
DlnIDH(-1)
0.3416
0.1665
We obtained the error correction model (ECM)
coefficient with a negative and significant sign,
confirming the existence of a long-term equilibrium
relationship. This coefficient represents the speed at
which imbalances are corrected in the long run.
However, in the short run, the presence of
information and communication technology has an
impact on economic well-being, while there is no
significant relationship between the study location
variable and its historical value in the previous
period. This is due to the short duration of the study
(12 years) and the lack of sufficient data on the
Information Development Index (IDI).
Fourthly: model diagnostic tests:
We conduct a series of diagnostic tests on the
obtained model to ensure its reliability in economic
interpretation. The results of diagnostic tests are in
the folowing Table 11.
Table 11. Results of model diagnostic tests
From the above table, we observe that the
diagnostic tests were positive, indicating the
absence of autocorrelation and heteroscedasticity
issues in the model, and the residuals are normally
distributed
5 Conclusion
The well-being index translates to healthcare and
sanitation for individuals, as well as prosperity. One
of the important components of the latter is
education and access to ICT. Digital transformation
revolves around adopting disruptive technologies to
increase productivity, create value, and enhance
social welfare. Through a descriptive study of
technological development and well-being
indicators in Algeria, we have observed a
continuous increase in both indicators over time.
This can be attributed to the state's efforts in
investing and spending in the three key sectors :
education, health, and technology. Consequently,
these sectors have experienced growth and
development, especially in recent times. Digital
transformation is a time-consuming process, usually
implemented in multiple stages by developing a
future vision that encourages innovation and utilizes
digital and technological capabilities. This explains
the positive long-term impact of digital
transformation on Algeria's economic welfare.
Test type
Null
hypothesis
(H0)
Statistical value
of the test
Test result
Serial
correlation
of errors
(LM)
No serial
correlation
between
errors
Fc: 0.87
Chi-square: 6.52
Prob=0.58
> 0.05
Fc > FT
Accept H0
Jarque-Bera
test for
normality of
residuals
Residuals
are
normally
distributed
Jarque-Bera:
0.6095
Prob=0.73
> 0.05
Accept H0
Test for
heteroscedas
ticity
Breusch-
Pagan-
Godfrey
Homosceda
sticity of
errors
Fc = 3.76
Prob = 0.09
Prob > 0.05
Fc > FT
Accept H0
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Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
Kadri Nouria, Conceptualization Ideas; formulation
or evolution of overarching research goals and aims.
Data Curation, Formal analysis, methodology and
writing ; review and editing of the original article.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
No funding was received for conducting this study.
Conflict of Interest
The authors have no conflicts of interest to declare.
Creative Commons Attribution License 4.0
(Attribution 4.0 International, CC BY 4.0)
This article is published under the terms of the
Creative Commons Attribution License 4.0
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WSEAS TRANSACTIONS on BUSINESS and ECONOMICS
DOI: 10.37394/23207.2024.21.139
Kadri Nouria
E-ISSN: 2224-2899
1712
Volume 21, 2024
