Economic Security Management in Regions with Weak Economies in the Conditions of Digital Transformation

Abstract

This study aimed to examine the dynamics of economic security management in regions with weak economies amid digital transformation, focusing on an empirical analysis of economic security indicators across ten regions of the Russian Federation from 2017 to 2022. The study adopted quantitative metrics, such as the Economic Diversification Index (EDI), the Quality of Economic Growth Index (QEGI), and the Digital Transformation Index (DTI). The result showed significant heterogeneity in the impact of digitalization on regional economic security. All analyzed regions maintained economic diversification within non-crisis thresholds. However, a concerning trend has become evident in several regions, which experienced sectoral stagnation. By 2022, QEGI has declined to crisis levels, showing a deteriorating quality of economic growth. This trend was further increased by the pandemic, leading to significant shifts in the quality of entrepreneurial activity and population well-being, with some regions witnessing up to a 30% decline in the latter. A 2022 cluster analysis identified two distinct clusters that represented the varied influence of digital transformation on economic security. In regions where digitalization was effectively harnessed, economic security experienced a significant increase of up to 25% in the DTI, which correlated with positive shifts in economic stability and growth. Conversely, regions lagging in digital adoption faced compounded economic challenges, showing the critical role of qualitative growth strategies and digital competencies in securing economic resilience. This study shows the significant role of digital transformation as both a strategic and a differential factor in bolstering the economic security of regions with inherently weak economies. Furthermore, digital transformation offers insights into the nuanced interplay between digitalization and regional economic policies.

Keywords

• digital transformation
• economic security
• regions with weak economy
• management
• resilience