Scandinavia reigns supreme in the annual Networked Readiness Index, which aims to provide a framework for evaluating information and communication technology globally.
Countries seen as digitally connected have more opportunities to attract foreign investment and talent. Countries that remain low in the NRI run the risk of losing ground economically. The report authors say the digital gap is neither closing nor growing wider, which bodes well for countries in northern Europe, for example, but not so well for those in sub-Saharan Africa.
The index assesses the capacity of different economies to develop and deploy information and communication technology (ICT) and benefit from it. The index is based on equal weighting of four subindexes: environment, readiness, usage and impact. Within those subindexes are ten pillars, including regulatory and business environment, infrastructure, and business and government usage.
The 13th NRI has three Scandinavian countries in the top six, including Finland in the top spot. The report says that 90% of Finland’s residents are online and that the country exhibits high levels of technological innovation and “concerted efforts of governments, business and individuals investing in ICT”.
The top six remained the same from the previous year. The US moved up to seventh, two spots higher than a year ago, in part because of a rise in business and innovation environment (13th in 2013, seventh in 2014). The UK fell from seventh to ninth in the overall index, mainly because it dropped from 35th to 79th in affordability.
The US ranks well outside the top ten in political and regulatory environment (22nd) but ranks high (fourth) in infrastructure and digital content. The UK ranks 15th in infrastructure and digital content and fifth in political and regulatory environment. Finland ranks first in three pillars (skills, economic impacts, and infrastructure and digital content) and is ranked in the top ten in all but one pillar (affordability, 18th).
Advanced economies make up the top 22 spots in the index.
As a group, the BRICS – large, emerging economies of Brazil, Russia, India, China and South Africa – fell some in the rankings compared with the previous year, in part because smaller countries are gaining faster. Russia was the lone BRICS exception, rising from 54th to 50th, and South Africa remained at 70th. China fell to 62nd, Brazil to 69th and India to 83rd.
The NRI is part of the Global Information Technology Report, which is published by the World Economic Forum in partnership with global business school INSEAD.
The framework design for calculating the NRI has five guiding principles:
- Measuring the economic and social impacts of information and communication technologies (ICTs) is crucial: A strong ICT presence gives a country more economic opportunities, more informed citizens and more government accountability.
- An enabling environment determines the capacity of an economy and society to benefit from the use of ICTs: A climate that enables innovation and entrepreneurship plays a key role in a country being able to achieve desired results from ICTs.
- ICT readiness and usage remain key drivers and preconditions for obtaining any impacts: While availability of ICTs is on the rise, the report says, access and usage remain problematic in many countries, especially developing ones.
- All factors interact and co-evolve within an ICT ecosystem: Higher rates of ICT use help create “a virtuous cycle” where improvements in one sector can lead to improvements in other sectors.
- The framework should provide clear policy orientations and identify opportunities for public-private collaboration: Development of ICTs, the report says, depends on a country’s capacity to provide favourable business conditions and an “innovation-prone environment”.
Related CGMA Magazine content:
“The Brightest Growth Prospects for 2014”: The global economy is still in recovery, but the uncertainty that clouded forecasts a year ago is beginning to lift. Several bright growth prospects are emerging among developed and developing markets, according to Grant Thornton research.
“Which Countries Are Best Prepared to Benefit From Globalisation?”: A ranking of 27 countries rates their preparedness to take advantage of future globalisation of trade. The rankings considered factors such as negotiating favourable tax arrangements with trading partners, growth in exports, labour costs and others.
—Neil Amato (email@example.com) is a CGMA Magazine senior editor.