Internet Penetration and Economic Growth Evidence from Albania and the European Union

This paper investigates the relationship between internet penetration and economic growth in Albania compared to the European Union (EU) over the period 2005–2024. The digital economy has emerged as a key driver of productivity and competitiveness worldwide, with internet access being a critical enabler of innovation, business development, and human capital formation. While the EU has experienced a relatively early and widespread diffusion of internet services, Albania represents a late adopter, offering a valuable case for examining the dynamics of digital catch-up in transition economies. The study employs a quantitative approach using time series and panel data analysis. Internet penetration rates, measured as the percentage of individuals using the internet, are regressed against GDP per capita and GDP growth, while controlling for foreign direct investment, education, employment, and inflation. Data are drawn from Eurostat, World Bank, ITU, and national statistical sources. Econometric techniques include stationarity testing, cointegration analysis, and fixed/random effects models to ensure robustness. Preliminary results indicate that internet penetration exerts a positive and statistically significant effect on GDP growth in both Albania and the EU, though the magnitude of the impact differs. In the EU, where digital infrastructure is more advanced, the effect is associated with innovation and productivity gains. In Albania, internet penetration appears to play a stronger role in expanding access to markets, education, and financial inclusion. The findings highlight the transformative potential of digitalization for economies in transition and underscore the importance of investing in broadband infrastructure, digital skills, and supportive policies.