Digital Convergence and Divergence in EU and ASEAN Economies

Abstract

This study examines the evolving digital economy in terms of convergence and divergence in European Union (EU) and Association of Southeast Asian Nations (ASEAN) countries over the period from 2010 to 2024, including the effects of the COVID-19 pandemic. This research uses a range of digital economy indices, including the ICT Development Index, E-Government Development Index, Online Service Index, Telecommunication Infrastructure Index, and Human Capital Index. It aims to identify and compare the patterns of convergence or divergence in digital indicators within and between the EU and ASEAN regions. The study employs beta convergence analysis, sigma convergence analysis, and difference-in-difference analysis to compare digital performance and assess the impact of the pandemic on the digital economy. By contrasting the digital development paths of the EU and ASEAN, the study provides insights into the digital gap and offers policy recommendations to promote more equitable digital development in both regions. The findings indicate that while the EU demonstrates more consistent convergence across digital indices, ASEAN exhibits both convergence and divergence, particularly during the post-pandemic period. The results reveal the urgent need for policy interventions aimed at reducing regional digital gaps, especially by enhancing digital infrastructure and improving human capital. This research offers valuable insights for policymakers in both regions, providing actionable strategies to foster inclusive digital development, enhance resilience in the face of global crises, and bridge the digital divide in an increasingly interconnected world.