Ten years ago saw the end of the dot-com boom, but far from signifying the end of the digital era it heralded even greater technological advancement. The Global Information Technology Report (GITR), jointly published by INSEAD and the World Economic Forum, has been monitoring this progress for the last decade.
What does it take to make it to the top of the technology profile? According to the 10th anniversary edition of the Global Information Technology Report; produced by INSEAD and the World Economic Forum, it helps to be Scandinavian. And this is not the first time: Sweden is number one, with four other Scandinavian countries in the top ten; five in the top 20.
So what’s behind this Nordic knack for all things digital? “It must be the weather!” laughs Soumitra Dutta, the Roland Berger Chaired Professor of Business and Technology and professor of information systems at INSEAD and one of the report’s founders and co-authors. But of course it’s not just down to weather. “It’s no coincidence that Scandinavian countries rank favourably in surveys on quality of life - these countries invest heavily in human capital,” says Dutta. “It’s also the level of education, the degree of innovation, and support in the classroom…and a very technology-friendly mindset.”
One example of that mindset is Finland’s Nokia: this company began life as a wood pulp mill in the mid 19th century; today Nokia is Europe’s leading provider of handheld mobile devices, focused entirely on technology. “In fact, Nokia’s transformation very much mirrors the country’s transformation”, explains Professor Dutta. “Back in the late 80s and early 90s, the economy of Finland was largely based on natural resources and then with the collapse of the Soviet Union (until this time, Finland’s largest trading partner), the Finnish economy started shrinking dramatically. There was then a fundamental strategic decision to involve the government, key universities, and key private sector leaders to transform (it) into a knowledge-based economy”.
The strategic role governments play in creating policies supportive of technology forms part of the criteria set out in the GITR. Dutta believes that those countries which have faired better have strong governmental leadership – but it’s not just Scandinavia that stands out – Asia and the Middle East have also made great progress in this area, with Singapore ranked at number two, thanks to government political and financial support.
Middle East dilemma
He believes this is also the case in the Gulf Region, where governments have been actively pushing for greater access to technology by implementing e-government services, despite a lack of similar forward-thinking at the institutional level. “The resulting mismatch between technological advances, and the rigidity that we see in many government institutions are behind the scenes” says Dutta. “So if you have an increasing gap between what people are empowered to do and what they feel they’d like to do, and between what the system supports, you will have friction”.
Japan and the United States
Japan scores 19 in the latest report. Professor Dutta explains that although 19 is still a relatively good rating, Japan loses points on the economic side, suggesting that the country’s political and macroeconomic environment is more bureaucratic, sluggish and rigid compared with other economies. Starting a business is more difficult. “If you are unable to start a business, then fundamentally your ability to use technology and leverage it decreases” Dutta says. And although Japan has a great internal talent pool, it isn’t very good at attracting talent from foreign shores – one of the strengths of the United States. But even the US, at number five, is held back by its complex institutions. “It’s important for the US to realise that its position of dominance is not guaranteed and (perhaps more importantly) they need to understand what the key factors are that are pulling the US down”. The American legal system, Dutta claims, can be a barrier to business. Furthermore, although the US boasts some of the best universities in the world, the overall quality of math and science education in schools is low.
What lies ahead?
The past ten years have witnessed not just an increase in the use of technology worldwide but the introduction of an offshoot: social media, whose usage has grown exponentially in the past 18 months. “Measuring this in a formal, consistent manner is difficult and is a challenge facing the GITR over the coming years” underlines Dutta.
In parts of the world, despite conflict between expectations and reality, technology has a fundamentally positive impact on development: increasing mobile telephony increases a country’s GDP, particularly in countries where there is no solid base of fixed-lines. “The penetration of mobile phones in India is today very high – about 60 or 70 percent of the population” explains Dutta. “A large section of poor people in India today are much more empowered because of access to information”. Furthermore, the quality of life of individuals is set to improve as ICT plays a greater role in poverty reduction, either through direct income generation or more diversified and secure employment opportunities. This will have a major impact on the culture, the way people interact, and the way governments operate.
Dutta adds, “Now the challenge for us is to make sure that the Global Information Technology Report serves as an effective guide for the future because technology is becoming much more pervasive in society.”