Blockchain technology as a driver of economic development in small economies: a dynamic capabilities framework

Abstract

Blockchain can enable small countries to overcome systemic constraints and strengthen their economies. Based on dynamic capabilities theory, we develop a conceptual framework that explores the applicability of blockchain for fostering economic development. Specifically, we postulate that the agent’s role in dynamic capabilities theory can be extended from the organisation level to the country level. Our proposed framework integrates blockchain as an economic driver and dynamic capabilities on higher-order and lower-order levels (i.e., business and investment development, human capital development, financial system enhancement, regulatory framework improvement, and systems and infrastructure improvement) to show their impacts on different aspects of economic development. International regulatory and political factors serve as moderators that determine whether a national blockchain-based strategy will ultimately be successful. In summary, we illustrate how blockchain as an enabler of dynamic capabilities can contribute to a small country’s economic development.