While more people can benefit from access to information and communication, the potential for bad actors to create widespread havoc increases; with every year, the incidents of cyberattacks get bigger and have wider impact. Even in the short period since we published the previous edition of the Digital Evolution Index, much has changed in the journey to the digital planet, and just as surprising, there are many speed bumps scattered along the way. In conclusion, the world’s digital economy stands at a threshold where opportunity and risk stand in balance. We always urge you to read the methodology carefully. For global technology players and policy makers, it is essential to understand how the progress toward a digital planet is proceeding in different parts of the world. DIGITALIZATION in the 15-country mega trade deal could improve trade systems with key partners, a research fellow from the Philippine Institute for Development Studies (PIDS) said. digital maturity of the country. In our 2018 ranking, the US, Germany and the Netherlands are the top 3 digitagile countries across the world. This is the third edition of our ranking (a score from 0 = worst to 100 = best). But no one should panic, because jobs are … With the world’s largest internet user population – 721 million – China has a parallel digital market because so many of the major global players have no presence there. Depending on a country’s level of digital evolution and economic advancement, there are different drivers that are primarily responsible for digital momentum. of such companies whose businesses have attained the $1 billion of value benchmark—so-called unicorns. Most of the developing world is overwhelmingly cash-dependent; in Malaysia, Peru, and Egypt, only 1% of transactions are cashless. The drivers and key components we analyzed are as follows: We also examined the competitiveness of a country’s digital economy along two dimensions: its current state of digital evolution, as determined by the interplay of the four drivers mentioned above, and its pace of digital evolution over time, as measured by the growth rate of a country’s digital evolution score over the period 2008 – 2015. Production phase. Some of these countries demonstrate remarkable creativity in the face of severe infrastructural gaps, institutional constraints, and low sophistication of consumer demand. The DiGiX finds Luxemburg as the highest-placed country in the world when it comes to digitization. There are more mobile connections than people on the planet, and more people have access to a mobile phone than to a toilet. Figure 4: The Digital Evolution Index. Where momentum is picking up, and where it’s stalling out. In 2013 85% of the world’s transactions were in cash. The high momentum of Break Out countries and their significant headroom for growth would make them highly attractive to investors. Digital technology is widespread and spreading fast. Over the past year, all EU countries improved their digital performance. The Digital Economy and Society Index (DESI), Integration of Digital Technology by Enterprises, Digital Economy and Society Index Report - the telecoms chapters. 15. DESI area report: Research and Development ICT. Stall Out countries enjoy a high state of digital advancement while exhibiting slowing momentum. The country benefits from a large market, a strong knowledge ecosystem and a … It is barely 20 years since Sergey Brin and Larry Page registered the domain name google.com, and only 10 years since Steve Jobs walked onto a stage in San Francisco and introduced the iPhone. Based on their stock prices on July 6, 2017, Apple, Alphabet, Microsoft, Amazon, and Facebook were the five most valuable companies in the world. Second, those working to accelerate their country’s digital momentum should focus on specifics: identifying and amplifying the country’s unique drivers of digital momentum. Traditional trading hubs (such as Hong Kong, Singapore, and the UK) and emerging digital hubs (such as New Zealand and Estonia) can take the lead in creating such “smart” digitally enabled ecosystems. The United States take the lead by far with a score of 87 out of 100. The index analyzes the economies of 99 different countries. The UAE. Digital players wield outsize market power. The score is based on five components: Regulation, Knowledge, Connectivity, Infrastructure and Size. Cross-border flows of digitally transmitted data have grown manifold, accounting for more than one-third of the increase in global GDP in 2014, even as the free-flow of goods and services and cross-border capital have ebbed in the aftermath of the 2008 recession. Australia ranked highest in the 2019 Digital Quality of Life index, a study produced by Surfshark, a virtual private network based in the British Virgin Islands. The index indicates that countries are clustered as Digitally Constrained,Emerging, Transitional or Advanced, with varying degree of contribution of digitization to economic growth. Clearly, much of this has to do with the digital momentum being experienced in countries around the world, as well as with the systemic nature of the forces that govern digital evolution. In the meantime, the UK’s digital momentum is stronger than its EU peers. a country’s digital readiness. As for human capital, the people who are most digitally oriented, with the capacity to meet the challenges that the new technologies present, are the Finns. Automation, big data, and artificial intelligence enabled by the application of digital technologies could affect 50% of the world economy. Even India’s demonetization experiment has not broken the country’s heavy cash dependence. India, with many policy-led pushes for digitalization, including a Digital India campaign and initiatives to give a boost to digital payments, ought to pay attention to the overall low level of evolution in the country. Each sub-index comprises technologies … India, with its 462 million internet users, has a digital economy representing arguably the greatest market potential for global players; however, it operates in multiple languages and multiple infrastructure challenges, despite the government having taken sweeping actions that affect the digital market. countries/organizations have started the digitalization path, providing the necessary environment for its development but still with significant challenges. access to a mobile phone than to a toilet. This will enable Africa to create a niche within the global economy. Alongside business innovation, digitalization – the development of digital innovations – is one of the most important business trends for the future of the economy. 3 Established: countries… While much has changed even since 2015, there are roadblocks on the journey that have remained surprisingly resilient. As regards mobile subscription penetration, there are similar behaviors, with 110–113 subscriptions per 100 inhabitants, but typologies differ heavily. Copyright © 2020 Harvard Business School Publishing. 4. Business and Government Investment Building digital infrastructure and … However, sustaining consistently high momentum over time is challenging, as innovation-led expansions are often lumpy phenomena. So do high-momentum countries (such as Singapore, New Zealand, and the UAE) as well as many Break Out countries (including China, Malaysia, and Saudi Arabia). Digital technologies are poised to change the future of work. They are leaders in driving innovation, building on their existing advantages in efficient and effective ways. Let us look at each of our three broad index categories in turn. Euler Hermes presents its Enabling Digitalization Index (EDI) 2018, which illustrates each country’s ability to provide the necessary environment for business to succeed in an increasingly digitalized global economy. To stay ahead, these countries need to keep their innovation engines in top gear and generate new demand, failing which they risk stalling out. Ben Gummer’s claim, quoted above, is based on a 2016 United Nations E-Government Survey which positioned the UK in pole position in terms of both e-government development and e-participation as shown in Figure 1 below.. Based on a survey of business leaders that ranks which markets are likely to attract the most investment in the next three years, we find that investor sentiments reveal a variety of paradoxes in the environment for FDI, many of which can be explained by the rise of the age of multi-localism. Where quantified, agreement or strong agreement to indicators were found to be between 35 and 65 percent. Upstream supply chain phase. Now in its third year, the IMD World Digital Competitiveness Ranking measures the capacity and readiness of 63 economies to adopt and explore digital technologies as a key driver for economic transformation … Enabling internet access on the mobile phone provides the biggest bang for the buck. Around the world, digital access itself is far from uniform: Barely 50% of the world’s population has access to the internet today. country on digital startups. The US on top of the digitagile world. The aggregate business digitalization index (BDI) in Russia was measured at 50 points. Chart. The five-country surveys, covering approximately 1,200 firms, provided the empirical base to examine the extent to which advancements in digitalization are evolving in each country. Countries with a long road ahead in their digital development include South Africa, Egypt, and Pakistan. Euler Hermes presents its Enabling Digitalization Index (EDI) 2018, which illustrates each country’s ability to provide the necessary environment for business to succeed in an increasingly digitalized global economy. The overall DAI is the simple average of three sub-indexes. In Africa, while the two largest economies, Nigeria and South Africa, remain in Break Out and Watch Out zones, respectively, digitally savvy Kenya has picked up an impressive level of momentum by assembling a thriving ecosystem. Digitalization has many different aspects, which are explained in this article. The picture that summarizes the state of the digital planet will evolve when it does. Despite uncertainties regarding its reforms agenda, the country is seen as pivotal to Europe’s regeneration. This has different implications for what advanced economies and developing economies ought to prioritize: innovation for the former and institutions for the latter. The European Union has 412 million internet users, but its market is fragmented; it is still in the process of creating a “digital single market.” In many countries, several websites or digital companies are blocked. As part of a collaboration between the Fletcher School at Tufts University and Mastercard, we created the Digital Evolution Index and analyzed the state and rate of digital evolution across 60 countries. Key economic and social indicators. Countries in the Stall Out zone can put their maturity, scale, and network effects to use to reinvent themselves and grow. To avoid stalling out and rebuilding momentum, policies need to be adopted for: public-private partnerships on digital innovations; better integration of automation, data, and new technologies into the legacy economy; investments in reskilling 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 inequities; sensible regulations that keep pace with the transforming rules of competition and have a dynamic view of protecting consumers’ interests without stifling innovation; and reimagining U.S. competitiveness in terms of its digital economy and international data flows and thinking beyond traditional manufacturing and trade of physical goods and services. Of these, 54 percent are based in the United States to date, with 23 percent in China, and 10 percent in Europe. Click on the countries displayed within the map below to see the country-specific reports on digital performance, or click in the list. They have deep resources for innovation with the ability to accelerate the penetration and adoption of digital products. What are the patterns of digital evolution around the world? The Digital Evolution Index, a joint project between The Fletcher School at Tufts University and Mastercard, traces the emergence of a “digital planet.” In other words, it maps how physical interactions – in communications, social and political exchange, commerce, media and entertainment — are being displaced by digitally mediated ones, and pinpoints where this transition is happening most rapidly. The fact that German companies rate themselves so much worse than their European neighbors do is astounding. The Enabling Digitalization Index created by Euler Hermes helps measuring the “digitagility” of countries, with the US, Germany and the Netherlands on the podium, and shows five options for countries to move up the EDI ranking. The country’s ability to use digital solutions is essential in the fast-paced technologically advancing global world. The IMD World Digital Competitiveness Ranking 2019 results . Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. Country size is also a factor. The world’s biggest trade deal, the Regional Comprehensive Economic Partnership (RCEP), was signed by China, Australia, New Zealand, Japan, South Korea and all 10 Association of Southeast Asian Nations … Digital Economy and Society Index 2020 (DESI) reports are based on 2019 data. Their rise to prominence is evidenced in the number . the country of advanced technologies, the Global Connectivity Index (GCI-C) devel- oped by Huawei [ 9 ] is worth mentioning. In parallel, countries in Latin America can learn some lessons from smaller, faster-moving countries, such as Colombia and Bolivia. The countries investigated in the process represent over 70% of the global population and around 5.5 billion people. With products that rely on network effects, these players enjoy economies of scale and dominant market share. United United Kingdom remains in second place followed by Hong Kong (3rd), United States (4th) and Netherlands (5th. Digital technology is reshaping life and business around the globe, but the pace of change varies widely from one country to the next. Countries with high-performing digital sectors, such as those in the EU, typically have had strong government/policy involvement in shaping the digital economies. The five top scoring countries in the DEI 2017 ranking — Norway, Sweden, Switzerland, Denmark, and Finland — are all in the Stall Out zone, reflecting the challenges of sustaining growth. The score is calculated based on five components: connectivity, infrastructure, regulation, knowledge and size. The United States, Germany and the Netherlands make the top three of the 2018 EDI ranking. The Euler Hermes Enabling Digitalization Index (EDI) measures the ability – and agility – of countries to help digital companies thrive and traditional businesses harness the digital dividend. The Euler Hermes Enabling Digitalization Index (EDI) measures the ability – and agility – of countries to help digi-tal companies thrive and traditional businesses harness the digital dividend. More sensible and value-creating investments are needed, rather than a herd mentality that has resulted in a stampede of unicorns, while starving more complex, less fad-driven venture ideas that take on deeper problems. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. Which country leads the world in digital? One of us (Bhaskar) has made the point that there is a “missing political debate” in the U.S. over the digital economy, despite that fact that American digital companies and innovations are pre-dominant worldwide. Furthermore, we placed a focus on whether two structural features of developing countries, Will the world order as portrayed in this year’s Digital Evolution Index get overturned as transformational technologies, such as artificial intelligence, cause widespread changes or regulatory and political considerations add to the unevenness of digital markets? Our analysis of digital evolutions yields several implications for both public- and private-sector leaders as they explore ways to enhance the state of the digital economies across the world. 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