Digital Competitiveness Index 60 Countries

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16 July 2017

I'm not used to doing it., but this article of Harvard Business Review deserved to reach everyone. I've translated it as best I can..

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Digital Competitiveness Index 60 Countries

It's only been 20 years Sergey Brin and Larry Page registered the, and it does just 10 steve Jobs introduced the iPhone in San Francisco. However, in this short period of time, digital technologies have turned our world upside down. Hbr presented the digital evolution index In 2015 to track the appearance of a "digital planet". To see how physical interactions – in communications, social and political exchange, Trade, media and entertainment – are being displaced by digitally sourced. Many points in the world were identified where these changes are rapid and other places where momentum has slowed. Two years later, depending on where we live, we keep advancing at different speeds towards the digital planet.

Current digital panorama

Although many things have changed since 2015, there are still obstacles along the way that stand surprisingly. Consider the five most outstanding features of today's digital landscape.

Digital technology is widespread and fast-spreading.

There's more mobile connections that people on the planet, and more people have access to a mobile phone than to a toilet. Cross-border flows of digitally transmitted data have grown from many angles, and account for more than a third of the world's GDP increase in 2014. Instead, the free flow of goods and services and cross-border capital have declined in the wake of the crisis in 2008. While many people can benefit from access to information and communication, the potential for evil to create digital chaos grows every year; The cyberattack incidents increase and have a greater impact.

Digital companies have enormous market power.

Based on the prices of your shares at 6 July 2017 , Apple, Alphabet (Google), Microsoft, Amazon and Facebook were the five most valuable companies in the world. The most valuable non-American was the Chinese e-commerce giant, Alibaba Group. With products moving very fast on the grid, these companies enjoy economies of scale and high market shares. In addition, have plenty of resources for innovation, with the ability to accelerate the penetration and adoption of digital products.

Digital technologies will change the future of work.

Automation, big data, and AI (artificial intelligence) could affect the 50% of the world economy. Anticipation and fear are equally across the threshold "second age of machines." More than one billion jobs and jobs 14.6 trillions of dollars in wages are potentially automated by today's technology. That could open the door to new ways to harness human potential, but also to destroy many current jobs and to increase social inequalities.

Digital markets are uneven.

Politics, regulations and levels of economic development play an important role in shaping the digital industry and its market appeal. China, with the the world's largest population of Internet users – 721 Million – has a parallel digital market because many of the major global players have no presence there. India, with his 462 millions of Internet users , has a digital economy that certainly represents the increased market potential for global players ; However, it operates in multiple languages. The European Union has 412 millions of Internet users, but its market is fragmented and pending the need to create a "digital single market". In many countries, access to certain websites and digital companies is still blocked. Around the world, digital access is far from uniform: just the 50% of the world's population has access to the Internet today.

Digital commerce is still done with cash.

Global retail e-commerce sales are expected to exceed 4 trillions of dollars in 2020 , almost twice as much today. A major obstacle is that cash has not been displaced by digital alternatives despite countless options. In 2013 The 85% of the world's transactions were made in cash. While the Netherlands, France, Sweden, Switzerland are among the least effective-dependent countries of the world, even in the euro area The 75% payments are in cash . Most of the developing world is overwhelmingly dependent on cash; in Malaysia, Peru and Egypt, only the 1% transactions are cashless . Even an India's demonetization experiment has not broken the country's cash dependence.

Each of these five points carries advantages and challenges. Moreover, how strongly each of them is felt varies depending on where you are in the world. For key players global technology and for politicians, it is essential to understand how progress towards a digital planet is taking place in different parts of the world.

Mapping the digital moment in the world

As part of the collaboration of The Fletcher School of Tufts University and Mastercard, we've created the Digital Evolution Index and analyzed the status and rate of digital evolution in 60 Countries. This evolution is the result of an interaction between the four axes, with about 170 indicators through them (see box).

Our investigation began with the following questions:

  1. What are the patterns of digital evolution around the world? What factors explain these patterns, and how they vary from region to region?
  2. Which countries are the most digitally competitive? Which actors are the main drivers of competitiveness: public or private sector?
  3. What does each country do to accelerate its digital drive?

By measuring the current state of each country of the digital evolution and its pace of digital evolution over time, we've created the following graph, a map of our digital planet (see table below). The countries in this table are divided into four zones: Featured, Stuck, explosives and, endangered. Some countries are in the border multizone.

Digital Competitiveness Index 60 Countries

Featured (stand out)

They are countries of advanced high-speed digitization. They are leaders in driving innovation, based on their existing advantages efficiently and effectively. However, maintaining that status over time is a challenge. To stay at the forefront, these countries need to keep their innovation engines on the go and generate new demand, in pain of stagnating.

Stuck (Stall out)

Although these countries are highly digitized, show signs of slowdown. The five countries with the highest DEI score (Digital Evolution Index) 2017 – Norway, Sweden, Switzerland, Denmark and Finland – are settling in, reflecting the challenges of sustained growth. They will have to make a conscious effort to reinvent themselves, to bet on increased digital technology and remove barriers to innovation. It would be said that stagnant countries are benchmarks in innovation-driven growth, but because of its maturity, require creating new economies of scale to reinvent themselves and grow.

Explosives (break out)

Break-out countries score under digitization, but they're evolving rapidly. The strong momentum of these countries and their significant growth margin make them focuses of attraction for investors. Historically lagging behind weak infrastructure and poor institutional health, explosive countries would do well to promote better policies that help nurture and sustain innovation. They have the potential to become the leading countries of the future, with China, Malaysia, Bolivia, Kenya and Russia at the forefront.

In danger (watch out)

These countries face gigantic challenges because of their low state of digitization and low momentum. In some cases, these countries are even going backwards in their pace of digitization. Some show remarkable creativity to serious infrastructural deficiencies, institutional constraints and low sophistication of consumer demand. The safest way for these countries to get in the digital car would be to improve Internet access by controlling the mobile Internet gap, I mean, the difference between the number of mobile phones and the number of mobile phones with Internet access.

United States and Germany, two of the world's largest economies, are located on the border between prominent (stand out) and stagnant (stall out), with a third, Japan, in the middle. It is essential that these economies recognize the risks of stagnation and observe smaller, stronger countries as policy interventions could be effective in pushing a country into an area of greater competitiveness. Meanwhile, the UK's digital drive is stronger than its EU peers.

The most interesting area in the world, digitally speaking, it's Asia, with China and Malaysia as examples. We can expect a lot of investment and business interest in this region. To do this, it is essential that political institutions be stable and supportive.

India, with a lot of political support for digitization, including the Digital India campaign and initiatives to boost digital media payment, should pay attention to the low overall level of developments in the country. This can be an obstacle to any initiative. More general and systemic changes are needed to drive digital evolution in this type of environment.

In Africa, the two largest economies, Nigeria and South Africa, are located between the explosion and the danger zone. Kenya, instead, has evolved digitally towards a level of dynamism to create a thriving ecosystem. Parallel, Latin American countries can learn some lessons from smaller and more agile countries, colombia and Bolivia.

Towards a digital planet

This analysis of digital evolution has several implications for public and private leaders as they explore ways to improve the state of digital economies around the world.

First, supporters of digital innovation must recognize that public policies are essential to the success of the digital economy.

Countries with high-performance digital sectors, like those in the EU, have generally had a strong involvement of governments and policies in setting up digital economies. It also happens in the prominent countries (Singapore, New Zealand and the United Arab Emirates), as well as many explosive countries (including China, Malaysia and Saudi Arabia).

U.S. risks falling into stagnation zone. Bhaskar has pointed out that there is an outstanding political debate in the United States about the digital economy, even though digital companies and American innovations are predominant around the world. To avoid stagnation, policies are needed to: public-private partnerships on digital innovations; Better integration of automation, data and new technologies in the legacy economy; Investments in restructuring workers and teaching students in schools the skills and thinking to thrive in a digital world; Improving access to capital and digital infrastructure and reducing the many inequalities; Sensible regulations that comply with the transformative rules of competition and have a dynamic vision of protecting consumer interests without shutting down innovation; And reimagine America's competitiveness in terms of its digital economy and international data flows and think beyond traditional manufacturing and trade in physical goods and services. In the digital entrepreneurship sector, OPA and mergers have not kept pace with record capital figures moving. More value-sensitive investments are needed, and not that herd-based mentality.

Second, those working to accelerate their country's digital drive should focus on specific aspects: identify and amplify the country's unique drivers of digital momentum.

Depending on a country's level of digital evolution and economic progress, there are different Drivers who are the main responsible for digital momentum. This has different implications, so advanced economies and developing economies should prioritize: innovation for the former and improve institutional support for the latter. Digitally less advanced countries must allocate limited resources intelligently. Enabling Internet access on mobile phone leads to greater economic development.

The size of the country is also an important factor. Smaller countries with strong institutions can create high value as first to adopt and create a mirror effect for the world by implementing the right ecosystem. The Hubs traditional commercials (like Hong Kong, Singapore and the United Kingdom) and emerging digital centers (like New Zealand and Estonia) can take the lead in creating ecosystems “Smart” digitally- capabilityd.

Concluding, the world's digital economy is on a threshold where opportunity and risk are on par with. Even in the short period since we published the previous edition of the Digital Evolution Index, has changed a lot on the journey to the digital planet, and more surprising, there are a lot of brakes scattered along the way. Much of this has to do with the digital momentum experienced in countries around the world, as well as with the systemic nature of the forces that govern digital evolution. Undoubtedly, Stand Out countries (Featured) and Break Out (Explosives) benefit from a combination of strong digitization rates and government participation in the organization of digital economies.

Will the world order presented in this year's Digital Evolution Index collapse as transformation technologies, like artificial intelligence, cause widespread changes or regulatory and political considerations that increase inequality in digital markets? The scene that sums up the state of the digital planet will evolve when needed.

Bhaskar Chakravorti, Ajay Bhalla, Ravi Shankar Chaturvedi

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