ARTIFICIAL INTELLIGENCE AS A DRIVER OF DIGITAL ECONOMY DEVELOPMENT: INSIGHTS FROM HUNGARY AND AZERBAIJAN

Abstract

This study investigates the role of artificial intelligence in shaping digital economy development through a comparative analysis of Hungary and Azerbaijan. It examines how different governance models, institutional capacities, and innovation ecosystems influence AI adoption and its economic outcomes. The research applies a comparative analytical approach using secondary data from international databases, national statistics, and policy documents covering the period 2018–2025. The findings show that Hungary, as an EU-integrated economy, demonstrates more advanced digital infrastructure, stronger human capital, and a more developed innovation ecosystem, resulting in higher levels of AI readiness and digital economy performance. Azerbaijan, in contrast, has achieved notable progress in public sector digitalization and e-government services, driven by state-led reforms, but remains limited in SME digital adoption and private-sector innovation. The study also highlights that AI contributes to productivity growth and new business models, while simultaneously generating challenges related to skills gaps and institutional readiness. Overall, the comparison confirms that balanced development across infrastructure, skills, and innovation systems is essential for effective AI-driven digital transformation.