Global Information Technology Report highlights lack of progress in bridging the new digital divide

Global Information Technology Report 2013 finds most developing economies are still failing to create the conditions necessary to close the ICT-related competitiveness gap with advanced economies.

Finland, Singapore, Sweden lead the Networked Readiness Index. The Asian Tigers, i.e. Singapore, Taiwan- China, Republic of Korea, Hong Kong SAR are all in the top twenty.

China, drops seven places to 58th place due to stagnating rates of ICT uptake.

Shanghai, 11 April 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 Booz & Company. Booz & Company contributed a chapter entitled “Digitization for Economic Growth and Job Creation”.

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.

Two other Asian economies, Republic of Korea (11) and Hong Kong SAR (14), feature in the top twenty. They are followed closely by Japan (21), with Malaysia next at 30. China, falling seven places to 58, is overtaken by its fellow BRICS economy, the Russian Federation while further afield the region continues to reflect deep divisions between high performing tiger economies and their neighbors.

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:

  1. ICT infrastructure, cost of access and the presence of the necessary skills to ensure an optimal use.
  2. Uptake and use of ICT among governments, business and individuals.
  3. Business and innovation environment, and the political and regulatory framework.
  4. Economic and social impacts accruing from ICT.

“This analysis shows how matching investments in ICT with investment in skills and innovation can help economies cross a ‘magic threshold’, beyond which return on investment increases significantly,” said Bruno Lanvin, the Executive Director of the e-Lab at INSEAD and co-editor of the report. “Individual countries need to identify what separates them from reaching that threshold if they have not reached it yet in order to fulfil long-term growth, competitiveness and innovation targets,” he added.

“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 Adam Xu, Director, Booz & Company and knowledge partner of the Report. “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.”

Adam posited out, “By contrast, digitization has more sig¬nificant employment effects in emerg¬ing markets for three main reasons. First, the digitization gain in some emerging regions is higher than it is in the advanced economies. Second, some of these regions have very large populations (e.g., China and India), which means that a marginal improvement in the unemployment rate leads to a large number of jobs. Finally, offshoring grows in tandem with digitization. As companies in digitally advanced countries improve their productivity thanks to digitiza¬tion, they transfer jobs to digitally emerging countries.”

“Creating digital markets and boosting digitization can yield significant economic benefits and lead to substantial social benefits to societies and communities. Digitization has the potential to boost productivity, create new jobs, and enhance the quality of life for society at large,” added Adam.

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.

The editors of the report are Beñat Bilbao-Osorio, Associate Director and Senior Economist, Global Competitiveness and Benchmarking Network, World Economic Forum; Soumitra Dutta, Anne and Elmer Lindseth Dean, Samuel Curtis Johnson Graduate School of Management at Cornell University; and Bruno Lanvin, Executive Director at E-Lab, INSEAD.

 

About World Economic Forum
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is tied to no political, partisan or national interests (www.weforum.org).

About Booz & Company
Booz & Company (www.strategyand.pwc.com) is a leading global management consulting firm focused on serving and shaping the senior agenda of the world’s leading institutions. Drawing on the talents and insights of more than 3,000 people in 58 offices around the world, we help our clients achieve essential advantage by working with them to identify and build the differentiating capabilities they need to outperform.

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