The Role of Digital Transformation in Shaping Economic Policy: Opportunities and Challenges

Abstract

This study explores the transformative role of digital technologies in shaping contemporary economic policy. By conducting a systematic literature review, the research synthesizes interdisciplinary insights on how digital transformation influences the design, implementation, and evaluation of economic governance. The findings reveal that digital tools such as big data analytics, artificial intelligence, and e-government platforms have significantly enhanced the responsiveness, transparency, and inclusiveness of public policy. These innovations enable more accurate data-driven decisions and expand access to financial services and government programs, particularly for marginalized populations. However, the study also identifies persistent challenges, including the digital divide, risks to data privacy and cybersecurity, and the disruptive impact of automation on labor markets. Moreover, institutional readiness emerges as a key factor in the success or failure of digital policy initiatives. The study concludes that while digital transformation offers immense opportunities for economic reform, its effectiveness depends on the presence of adaptive governance, inclusive digital strategies, and robust regulatory frameworks. A holistic and anticipatory policy approach is essential to maximize benefits and mitigate risks in the evolving digital economy.