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World Economic Forum Report: High-Income Economies are Better at Taking Advantage of ICTs

The 2015 Global Information Technology Report (GITR) sees advanced economies in the first 31 places in the overall Network Readiness Index (NRI) rankings, associating a high level of income with a high NRI score. The report is produced jointly by the World Economic Forum and INSEAD, in collaboration with partners, including Cisco and Strategy& (formerly Booz & Company).

The GITR looks at 143 countries, examining the role of information and communication technologies (ICTs) in supporting inclusive growth through contributions by its practitioners. Their findings include:

• Of the 50 high-income economies reviewed, 44 rank in the top 50
• Six upper-middle-income countries rank in the top 50
• Top-ranked Singapore is the only Asian country in the top 10
• The Republic of Korea and Hong Kong SAR placed 12th and 14th, respectively

The strong contrasts in emerging Asia

Over 100 places separate the region’s best- and worst-performing economies. Malaysia (32) is the only emerging Asia country in the top 60. Two-thirds of the countries from the region are in the bottom half of the rankings. Mongolia (61), Sri Lanka (65), and Thailand (67) lag some 30 places behind Malaysia. China is in 62nd position and India has fallen to 89th place.

Twenty-six low-income or lower-middle-income countries rank among the 30 lowest positions. Developing and emerging economies are failing to exploit the potential of ICTs to promote social and economic transformation and catch up with more advanced nations. The data suggest that the gap between the best- and worst-performing economies is widening.

The report found that those in the top 10% have seen twice the level of improvement since 2012 compared to those in the bottom 10%. This demonstrates the scale of the challenge facing developing and emerging nations as they seek to develop the infrastructure, institutions, and skills needed to realize the full benefits of ICTs.

Country updates

Singapore earned the NRI’s top spot this year. It ranks at the top of 3 of the 10 pillars assessed: business and innovation environment, government usage, and social impact. The government leads the ICT revolution with a clear digital strategy and one of the world’s best offerings in terms of online services and tools. Furthermore, Singapore has the highest penetration of mobile broadband subscriptions per capita in the world.

Japan features in the top 10 overall. It ranks second in the business usage pillar, thanks to the omnipresence of technology, which contributes to the formidable innovation capacity of Japanese businesses. Almost 90% of the population uses the Internet on a regular basis in Japan. Nearly every mobile phone is a smartphone. The number of mobile broadband subscriptions for each person is the third highest in the world. The innovation is mostly incremental rather than disruptive, however, because of the hierarchical and patriarchal corporate culture, the society’s relatively high aversion for risk, and an unfavorable regulatory regime.

The Republic of Korea ranks 12th. Nearly 98% of all households have Internet access, making the Korean population one of the most digitally connected. Ultra-fast Internet is ubiquitous in Korea. The transformative effect of ICTs on society is significant thanks to the government’s leadership in adopting ICTs and promoting e-participation.

As China grows, its ability to enable stakeholders across the country will determine its ability to accelerate the transformation from a middle-income country to a high-income country. China is becoming more innovative, but despite a few corporate success stories, a culture of entrepreneurship is not in place. The government’s recognition of the critical role of ICTs and innovation in sustaining the growth momentum, earned a relatively high rank of 39 in the government usage pillar.

Indonesia, Asia’s third-, and the G-20’s fourth-, most populous country, ranks 79th overall in the NRI. It ranks high on the business usage pillar, but the government lags in embracing ICTs and promoting digital transformation.

India (89) is the lowest-ranked of the BRICS nations (Brazil, Russia, India, China, and South Africa). Since 2012, the country has dropped almost 20 places. Despite many clusters of excellence, and its knack for frugal innovation, India does not use ICTs to the benefit of its entire population. The country places in the bottom half of the rankings on seven NRI pillars, and beyond the 100th mark in four. Adoption of ICTs in India is among the lowest in the world.

Among the many insights that emerge from the NRI results, the following five stand out because of their important policy implications:

• ICTs play an important role in economic and social transformation. The NRI reveals the almost-perfect correlation between a country’s level of ICT adoption and the economic and social impact ICTs have on its economy and society.
• ICTs are neither ubiquitous nor spreading as fast as many believe. The digital divide across and within countries continues. There are as many mobile subscriptions as human beings on the planet. But half of the world’s population does not have mobile phones and 450 million people still live beyond the reach of a mobile signal. In developing countries, a huge gap exists between well-connected urban centers and off-the-grid rural areas. Some 90 percent of the population in low-income countries, and over 60 percent globally, are not online yet. Most mobile phones are of an older generation. The ICT revolution will not be carried over voice and SMS but will require universal high-speed Internet.
• Governments need to develop their ICT ecosystems. There is a need for Long-term, high-value investments in infrastructure and education. Governments can also create an enabling environment by promoting competition through sound regulation and liberalization. In sub-Saharan Africa, many countries have fully liberalized their ICT markets. This strategy has resulted in increased private investment and the introduction of new business models and services.
• ICTs allow new models of collaboration that increase efficiency and flexibility. They also allow for a more direct interaction between populations and governments. An improved government online presence can significantly increase the efficiency of public administration by providing ways for citizens to participate in policy- and decision-making processes. Transparency, governance, and accountability are benefits and opportunities that will materialize with the use of ICTs.
• Better data leads to better policies. The lack of good data on some of the most basic indicators of socio-economic performance is alarming. It can lead to misguided policies and misallocation of resources. Governments around the world need to strengthen the capacity of national statistical offices and collect more reliable and granular data.

The report highlights some compelling solutions. It makes policy recommendations for avoiding the pitfalls, bridging the divides, and allowing everyone to benefit from, and participate in, the ICT revolution. Access the full version of the report at http://www.weforum.org/reports/global-information-technology-report-2015.