Finland, Singapore, Sweden lead the Networked Readiness Index. The US, ranked 9th, benefits from strong ICT infrastructure and innovation but is hindered by its political and regulatory environment.
BRICS economies must address weaknesses in their digital and innovation ecosystems to ensure sustained productivity gains and future growth.
New York, NY, April 10, 2013—Despite efforts in the past decade to improve information and communications technologies (ICT) infrastructure in developing economies, there remains a new digital divide in how countries harness ICT to deliver competitiveness and well-being, according to the 12th edition of The Global Information Technology Report, released today by the World Economic Forum, in collaboration with knowledge partners Booz & Company, INSEAD, and Cornell.
Published under the theme, Growth and jobs in a hyperconnected World, the report suggests that national policies in some developing economies are failing to translate ICT investment into tangible benefits in terms of competitiveness, development and employment. This is in addition to the profound digital divide that already exists between advanced and developing economies in access to digital infrastructure and content.
The report’s Networked Readiness Index (NRI), which measures the capacity of 144 economies to leverage ICT for growth and well-being, finds Finland (1st), Singapore (2nd) and Sweden (3rd) take the top three places. The Netherlands (4th), Norway (5th), Switzerland (6th), the United Kingdom (7th), Denmark (8th), the United States (9th), and Taiwan, China (10th) complete the top 10.
The BRICS economies, and notably China (58th, down seven), continue to lag behind in the rankings. The sustained rapid economic growth of past years in some of these countries may be in jeopardy unless the right investments are made in ICT, skills and innovation.
With a record coverage of 144 economies, the report remains one of the most comprehensive and authoritative assessments of the impact of ICT on competitiveness of nations and the well-being of their citizens. To measure this, the NRI assesses the preparedness of an economy to fully leverage ICT in terms of:
– ICT infrastructure, cost of access and the presence of the necessary skills to ensure an optimal use.
– Uptake and use of ICT among governments, business and individuals.
– Business and innovation environment, and the political and regulatory framework.
– Economic and social impacts accruing from ICT.
“ICT’s role in supporting economic growth and the creation of high-quality jobs has never come under such scrutiny. Despite initial concerns that ICT would hasten the deployment of resources towards developing countries, the benefits of ICT are now widely recognized as an important way for companies and economies to optimize productivity, free up resources and boost innovation and job creation,” said Beñat Bilbao-Osorio, Economist, Global Competitiveness and Benchmarking Network, World Economic Forum, and co-editor of the report.
“Digitization created 6 million jobs and added $193 billion to the global economy in 2011. Although in aggregate positive, the impact of digitization is not uniform across sectors and economies – it creates and destroys jobs,” said Bahjat El-Darwiche, Partner, Booz & Company. “Policymakers wishing to accentuate the positive impact of digitization need to understand these different effects if they wish act as digital market makers in their economies.”
The focus of this year’s GITR report is on how digitization can profoundly accelerate the rate of job creation by positively impacting enterprises at multiple functional layers. “As the spread and depth of digitization increases globally, so does its role as a key driver of growth and source of national competitive advantage. Policymakers have focused until now on improving the reach and affordability of ICT services—most recently facilitating, and even investing in, large-scale broadband deployment. Though important, this is just one part of the story.” continues El-Darwiche. “Policymakers in the future need to become digital market makers—creators of a digital economy that provides its citizens, enterprises, and economic sectors with the competitive advantage essential to thrive in an increasingly global market.”
Becoming a digital market maker requires three undertakings: proactively charting sectoral digitization plans, building enabling capabilities, and jump-starting and monitoring the wider digitization ecosystem. In charting sectoral digitization plans, policymakers should seek to develop competitive advantage and generate jobs in sectors that are already critical to the national economy. Policymakers should then foster the development of capabilities and enablers necessary to achieve these digitization plans. Finally, policymakers should work in concert with industry, consumers, and government agencies to jump-start and continuously monitor an inclusive digitization ecosystem that will encourage the uptake of digital applications in these sectors and that will keep them competitive.
Booz & Company added that developed economies enjoy higher economic growth benefits by a factor of almost 25 per cent, although they tend to lag behind emerging economies in job creation by a similar margin. The main reason for the differing effects of digitization is the economic structures of developed and emerging economies. Developed countries rely chiefly on domestic consumption, which makes non-tradable sectors important. Across developed economies, digitization improves productivity and has a measurable effect on growth. However, the result can be job losses because lower-skill, lower-value-added work is sent abroad to emerging markets where labour is cheaper. By contrast, emerging markets are more export-oriented and driven by tradable sectors. They tend to gain more from digitization’s effect on employment than from the influence on growth.
The Global Information Technology Report is the result of a long-standing partnership between the World Economic Forum and INSEAD, and, since this edition, with the Samuel Curtis Johnson Graduate School of Management at Cornell University.
The NRI uses a combination of data from publicly available sources and the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the Forum in collaboration with Partner institutes, a network of 167 leading research institutes and business organizations. This survey of more than 15,000 executives provides insight into areas critical for networked readiness.