Digital Transformation, Employment, and Productivity in GCC Countries

This study examines the impacts of digital transformation on employment and labor productivity in the Gulf Cooperation Council (GCC) countries from 2000 to 2022 using a composite Digital Economy and Society Index (DESI) and a panel ARDL model. The results reveal a productivity paradox: digitalization is negatively related to labor productivity, despite significant investments in ICT and widespread digital adoption. In contrast, overall employment increases, driven by growth in the industrial sector, while employment in the agriculture and service sectors is found to decline. These findings highlight the mixed effects of digitalization—creating jobs without corresponding productivity gains—and emphasize the need for policies that improve skills, encourage organizational innovation, and support sectoral adaptation to fully harness digital technologies for sustainable economic growth.