Asia Dips in Digital Competitiveness Ranking

Digital Competitiveness 01

The USA leads the IMD World Digital Competitiveness Rankings 2018 followed by Singapore, Sweden, Denmark and Switzerland. Rising from the 3rd spot, the USA overtakes Singapore and Sweden to top the ranking.

The IMD World Digital Competitiveness Ranking 2018 studies 63 economies. This year the majority (29) of countries in the study experienced an improvement in their level of digital competitiveness. About 40% of the sample (26 countries) shows a decline while only eight economies remain in the same position.

Professor Arturo Bris, Director of the IMD World Competitiveness Center, notes that “The USA capitalizes on its improvements in knowledge (4th from 5th) and in technology (3rd from 6th). It remains stable in future readiness (2nd)”.

He adds “Gains in knowledge result from a strong performance in employee training and an increase in the share of scientific and technical employment while the furthering of the technology factor capitalizes on slight advancement in all its sub-factors, including connectivity infrastructure”.

Results show that several countries are experiencing an “adaptive imbalance” or a mismatch between high levels of training and education, and the attitudes toward embracing digitalization; among these economies, we note Austria, Malaysia and Russia. For instance, while in training and education Austria ranks 7th and Russia 12th, their performance in embracing new technologies (25th and 39th in adaptive attitudes) is relatively low.

In the overall rankings, Singapore drops from 1st to 2nd position. It reaches 1st place in the knowledge and technology factors, and 15th in future readiness. Seemingly, despite Singapore’s high level of training and education, and an environment conducive to digitalization, society’s attitudes toward the adoption of technologies and the agility of business to take advantage of digital transformation, are relatively low (20th and 18threspectively).

In 3rd place dropping from 2nd, Sweden shows a balanced scorecard. At the factor level, it ranks 7th in knowledge, 5th in technology and 5th in future readiness. The rather low performance in some of the knowledge components may be at the core of Sweden’s decline in the ranking. It ranks 20th in higher education achievement (down from 18th) and 23rd in the percentage of graduates in sciences (down from 20th). Switzerland joins the top five reaching 5th place from 8th. Norway, Finland, Canada, the Netherlands and the United Kingdom complete the top 10.

Asia and the Pacific

Singapore and Hong Kong lead the region. Although Singapore drops from 1st to 2ndposition and Hong Kong drops from the 7th to 11th position. Korea reaches the 14th spot (five places up from 19th) and Japan advances five places to 22nd position, in both cases because of an advancement in components of the knowledge and future readiness factors.

China slightly improves from 31st to 30th as does Thailand from 41st to 39th and India (51stto 48th). These countries all share progress in the technology factor, ranging from improvements in connectivity systems to tech-friendly regulation.

In contrast, Taiwan drops (12th to 16th), Malaysia declines from 24th to 27th. The Philippines experiences one of the largest drops in the overall digital ranking, from 46th to 56th. The slowdown comes after declines in the technology (51st to 58th) and future readiness (43rd to 52nd) factors. At 61st, Mongolia remains stable as does Kazakhstan at 38th. Dropping three ranks to 62nd in the overall digital ranking, Indonesia is the lowest ranking country in the region. The development of highly-skilled workers is a key-challenge for the country. In turn, it affects the capacity for technological development and the integration of new technologies in the private sector and in society, which lead to low scores in the technology and future readiness factors.

In the Pacific, while Australia moves up two places to the 13th position, New Zealand drops from 14th to 19th.

Introduced for the first time in May 2017, the ranking quantifies the rapid technological transformations that countries are undergoing, providing a tool for decision-makers in the public and private sectors to interpret and address these changes.

The objective of the digital competitiveness ranking is to assess the extent to which a country adopts and explores digital technologies leading to transformation in government practices, business models and society in general. In addition, it provides firms the ability to find better opportunities to strengthen future value creation.

The ranking draws upon 50 selected indicators divided into three factors: Knowledge, Technology and Future Readiness.

The knowledge factor refers to intangible infrastructure, which underlines the process of digital transformation through the discovery, understanding and learning of new technologies. The technology factor assesses the overall context through which the development of digital technologies is enabled (technology-friendly regulation, availability of capital for investments and the technological infrastructure). Finally, the future readiness factor examines the degree of technology adoption by government, business and society in general.