Oliver Cann, Director, Public Engagement; Tel.: +41 79 799 3405; Email: oca@weforum.org
Smartphones and patents boost China’s digital competitiveness in 2016
- The World Economic Forum’s Global Information Technology Report 2016 finds that China has made significant progress in its ability to leverage information and communication technologies to drive economic and social impact as it transitions to a digital economy
- The report’s Networked Readiness Index shows China climbing three places to rank 59th. This progress is largely due to widespread consumer use of mobile broadband and greater efforts by businesses in research and development
- The reform plan aims to streamline business processes while providing a vision for further progress
- Read the report http://wef.ch/gitr16
Geneva, 6 July 2016— China ranks higher this year in the World Economic Forum’s Networked Readiness Index (NRI) than at any time since 2013, thanks to strong consumer demand for mobile broadband services and a growing number of patents registered by Chinese academic institutions and businesses. The Networked Readiness Index was released today in the World Economic Forum’s Global Information Technology Report 2016.
The Networked Readiness Index measures the progress of 139 countries in creating an enabling environment for information and communication technologies (ICT) to deliver effective economic and social benefits. China made positive progress in this area over the past year, rising three places overall to 59th. One important driver was strong consumer demand for mobile broadband services: the share of the population subscribing to broadband services rose from 21.4% last year to 41.8%, nearly doubling. Other contributing factors included a faster pace of domestic innovation, an increase in patents in the ICT sector and the positive trajectory of the overall economy since 2013.
The trend of strong consumer demand driving ICT in China is consistent with a new global trend identified in this year’s report: consumers are the most active adopters in the digital economy, ahead of businesses and governments. In China’s current circumstances, the business environment (ranked 104th overall) remains one of the country’s biggest bottlenecks to improving its Networked Readiness Index ranking. Key factors include high business tax rates and lengthy, complex procedures for starting a new business. However, the report also notes that current government efforts to simplify red tape and encourage competition could help China improve its ranking in the future.
Which countries lead the 2016 Networked Readiness Index?
Singapore tops the 2016 NRI country rankings. Finland, which led in 2014, ranked second for the second consecutive year, followed by Sweden (3rd), Norway (4th) and the United States (5th, up two places). The Netherlands, Switzerland, the United Kingdom, Luxembourg and Japan ranked 6th to 10th, respectively.
The top-ranked countries in the NRI show that a close link remains between networked readiness and income per capita. At the same time, about 75% of countries improved their scores in this year’s index. However, gaps in networked readiness persist both globally and regionally. Since 2012, the gap between the highest- and lowest-ranked countries has widened in four regions: Eurasia, Emerging Europe, the Middle East, North Africa and Pakistan, and sub-Saharan Africa.
Among major emerging markets, Russia held steady at 41st; China followed, up three places to 59th; South Africa climbed sharply, rising 10 places to 65th; Brazil partly reversed its previous decline, ranking 72nd; and India fell two places to 91st.
Europe continues to lead in technology: seven of the top 10 countries in the NRI rankings are European. But there are marked differences among European countries: Greece fell four places to 70th, while Bosnia and Herzegovina ranked lowest among European countries, at 97th. Several Eastern European countries, including Slovakia, Poland and the Czech Republic, made the greatest gains, all entering the top 50 in the NRI. Their achievement was mainly due to falling ICT costs, which substantially increased economic and social benefits. Italy also made rapid progress this year, rising 10 places to 45th as the socioeconomic impact of ICT began to show (it climbed 18 places in the global impact ranking).
Eurasia continued its upward trend, with a substantial increase in its average NRI score since 2012. Notably, the region improved across all four components of the index: environment, readiness, usage and impact. Kazakhstan is the region’s highest-ranked country and has maintained positive momentum in recent years, ranking 39th this year.
Among emerging Asian economies, regional leader Malaysia rose one place to 31st. Its strong performance is closely linked to the government’s firm commitment to advancing digitalization. The top five emerging Asian countries in overall ICT readiness remain the same as in 2015: Malaysia, Mongolia, Thailand, China and Sri Lanka. Emerging Asian countries have continued to improve since 2012, and the gap among them has narrowed. Personal ICT usage in Asia remains among the lowest in the world, but has grown strongly in recent years.
Countries in Latin America and the Caribbean continue to show mixed performance: the highest-ranked country, Chile (38th), is almost 100 places ahead of the lowest-ranked, Haiti (137th). In terms of relative performance, the region showed no clear trend from 2015 to 2016, and Chile and Haiti held their positions. Among the remaining countries, half rose in the rankings and half fell. However, in absolute NRI scores, the region has continued to improve since 2012, and the gap has narrowed. Innovation is a key force driving digital development and the Fourth Industrial Revolution. To foster innovation, many governments in the region urgently need to do more to improve their regulatory and innovation environments.
The United Arab Emirates (26th) and Qatar (27th) continue to lead Arab countries in networked readiness. The Middle East, North Africa and Pakistan region also includes two of this year’s biggest improvers: Kuwait (61st, up 11 places) and Lebanon (88th, up 11 places). Individuals led progress in both countries, with businesses close behind making a major contribution to their strong performances. Although governments lag in adopting digital technologies (Kuwait ranks 81st; Lebanon, 124th), businesses in both countries are playing an increasingly important role in shaping government ICT objectives and efforts to improve the regulatory environment.
Several countries in sub-Saharan Africa also made substantial gains in the NRI, including South Africa (65th, up 10 places), Ethiopia (120th, up 10 places) and Côte d’Ivoire (106th, up nine places). Different stakeholder groups are leading the adoption of digital technologies in these countries. In Ethiopia and Côte d’Ivoire, governments are the main drivers of digitalization; in South Africa, the private sector is at the forefront. The biggest barriers to digital development also vary: Côte d’Ivoire needs to improve infrastructure and lower ICT costs; South Africa needs to address its deteriorating business and innovation environment; and Ethiopia needs to broaden individual access to ICT and improve people’s skills.
“The digital economy is an essential part of the Fourth Industrial Revolution. For digital technologies to continue having an impact on society and the economy, countries need to anticipate how digitalization will affect markets and ensure that workers are treated fairly in digital markets. New models of governance are key to this process,” said Richard Samans, Member of the Managing Board of the World Economic Forum and Director of the Global Agenda Center.
“Cross-border data flows can enable innovation and drive growth,” said Pastora Valero, Vice-President, Government Affairs, Cisco. “The countries and companies that excel at innovation know that the free flow of ideas and information is what truly drives improvements in processes and products. That is why initiatives to facilitate data flows are crucial to advancing the globalization of the data economy.”
“Measuring the socioeconomic impact of digitalization is important to evidence-based decision-making in both developed and developing countries. The Networked Readiness Index is a valuable tool that can help public- and private-sector leaders unlock the potential of technology,” said Soumitra Dutta of Cornell University. “‘Digitalization’ is not just about technology; it is also a mindset and a source of new business and consumption models, as well as new ways for businesses and individuals to organize, produce, trade and innovate. Emerging economies such as Singapore, the United Arab Emirates and South Africa have made notable progress in the global process of digital innovation and may achieve even more remarkable results in the future. In the years ahead, they will harness digital technologies to improve their competitiveness and advance economic development and social progress,” said Bruno Lanvin of INSEAD.
“Looking ahead, we need to strengthen our efforts to collect information and gain a more detailed understanding of how the current transformation is affecting different regions. This will enable us to ensure that the digital economy delivers broader benefits,” said Silja Baller of the World Economic Forum.
What does the Global Information Technology Report 2016 say about the Fourth Industrial Revolution?
In addition to reviewing countries’ performance as the digital revolution advances, the report highlights several trends in ICT usage in 2016:
- How much innovation is “digital”? As the global economy becomes increasingly digital, innovation is no longer confined to technology. For example, among the more than 100 countries surveyed in the report, business-model innovation is increasing, yet the countries have stagnated on the “business usage” indicator. This suggests that although innovation is a top priority for many businesses, they have not used ICT to create greater impact.
- Patents are becoming less important as a measure of innovation. As business leaders around the world place increasing emphasis on innovation, traditional indicators such as patent counts carry less weight in measuring innovation. This may be because the current transformation is driven by a different kind of innovation, one increasingly based on digital technologies and the new business models they enable.
- The ICT infrastructure gap remains a persistent and growing challenge. Of the 12 indicators used in the report, infrastructure showed the least progress. Worse, in absolute terms, infrastructure in the lowest-ranked countries has deteriorated since 2012. Alongside affordability and skills, infrastructure is a key factor determining a country’s ICT readiness; it is a prerequisite for expanding ICT usage and ultimately increasing its social and economic impact.
- The social impact of ICT is improving overall, but key areas need renewed momentum. Since 2012, although the NRI’s social impact measure has made positive progress, most regions have regressed on the important indicator “impact of ICT on government efficiency.” “ICT and access to basic services,” another important measure of social impact, began to improve in 2016 after declining for several years. This suggests that more people are benefiting from the convenience of accessing health, financial, insurance and other services online. Over the past year, the social impact of ICT improved most significantly in high-income countries.
Notes to editors:
Read the report: http://wef.ch/gitr16
View the Forum’s selected photos on Flickr: http://wef.ch/pix
Follow the Forum on Facebook: http://wef.ch/facebook
Follow the Forum on Twitter: http://wef.ch/twitter
Subscribe to Forum news releases: http://wef.ch/news