Dutta

According to the Global Information Technology Report 2016, co-authored by Soumitra Dutta, dean of the Cornell College of Business, seven countries are excelling at reaping economic benefits from investments in information and communications technologies. They are: Finland, Switzerland, Sweden, Israel, Singapore, the Netherlands and the United States.

Worldwide, the report finds nations’ capacity to innovate is increasing across the board, although few have been successful so far in translating these investments into meaningful economic or social impact.

Now in its 16th year, the annual ranking of 139 world economies on their networked readiness is the result of a partnership among the World Economic Forum, INSEAD and Cornell University. Economies are measured on 53 indicators; these are organized in 10 “pillars,” such as infrastructure, and political and regulatory environment. An economy’s performance in each of the 53 indicators is used to compute its standing in the Networked Readiness Index (NRI).

On average, the group of high-achieving economies at the pinnacle of the report’s NRI economic impact pillar scores 33 percent higher than other advanced economies and 100 percent more than emerging and developing economies. The seven are all known for being early and enthusiastic adopters of information and communications technologies (ICT), and their emergence is significant as it demonstrates that adoption of ICT – coupled with a supportive enabling environment characterized by sound regulation, quality infrastructure and ready skills supply among other factors – can pave the way to wider benefits.

The breakaway of these seven economies is significant for other nations given the role that networked readiness is likely to play as the world transitions to the Fourth Industrial Revolution, in which processing and storage capacities are increasing exponentially and knowledge is becoming accessible to more people than ever before in human history.

“Measuring the economic and social impact of the digital economy is important for making appropriate policy decisions in both developed and developing economies,” Dutta said. “The Networked Readiness Index is a valuable tool for helping public and private sector leaders in leveraging the potential of technology.”

The report finds high levels of confidence among business leaders that capacity to innovate is increasing, which suggests that other nations, too, could start to see more economic and social impact from ICT. However, on a cautionary note, the NRI data also suggest that individuals are driving ICT adoption much more enthusiastically than either governments or business, where no clear trends are discernible across regions since 2012.

The report also notes a number of trends across ICT adoption in 2016:

How much innovation is “digital”? As the global economy becomes increasingly digitized, innovation is becoming much less defined in a narrow technological sense. For example, while the report finds business model innovation on the rise in more than 100 countries, it also finds stagnation in indicators of business usage. This would suggest that while innovation is a top priority for many businesses, they are still missing out on opportunities for greater impact through ICT adoption.

Patents are declining as a measure of innovative capacity. While business executives around the world are increasingly focused on innovation, traditional measures for innovation such as the number of patents registered are telling a smaller part of the story. This may be related to the fact that the current transformation is nurtured by a different type of innovation, increasingly based on digital technologies and on the new business models it allows.

The ICT infrastructure gap remains a chronic challenge and is getting wider. Of the 10 measurement pillars, infrastructure is where improvement is least pronounced. Worse, since 2012 the lowest-ranked countries have been reporting deterioration in their infrastructure in absolute terms. Infrastructure is a key determinant of a nation’s ICT-readiness alongside affordability and skills, acting as a gateway to increased usage and ultimately economic and social impact.

Social impact needs new momentum in important areas but is picking up overall. While the social impact pillar of the NRI has seen positive change overall since 2012, most regions register a decline in one of its important components, the impact of ICT on government efficiency. Another important social impact indicator, ICTs and access to basic services, is starting to recover in 2016 after years of decline. This suggests that more people are feeling the benefits of online access to health care, finance, insurance and other services. Social impacts on the whole rose most strongly in the group of high-income countries over the year.