1. Insight ReportThe Global InformationTechnology Report 2013Growth and Jobs in a Hyperconnected WorldBeat Bilbao-Osorio, Soumitra Dutta, and Bruno Lanvin, Editors

2. Insight ReportThe Global InformationTechnology Report 2013Growth and Jobs in a Hyperconnected WorldBeat Bilbao-Osorio, World Economic ForumSoumitra Dutta, Cornell UniversityBruno Lanvin, INSEADEditors @ 2013 World Economic Forum 3. The Global Information Technology Report 2013 is a World Economic Forumproject within the framework of the World Economic GenevaForums Global Competitiveness and BenchmarkingNetwork and the Industry Partnership Programme for Copyright 2013Information and Communication Technologies. It is theby the World Economic Forum and INSEADresult of a collaboration between the World EconomicForum and INSEAD.All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted,Professor Klaus Schwab in any form or by any means, electronic, mechanical,Executive Chairman photocopying, or otherwise without the prior permission of the World Economic Forum.Brge BrendeManaging Director, Government Relations ISBN-10: 92-95044-77-0and Constituents Engagement ISBN-13: 978-92-95044-77-7Robert Greenhill This report is printed on paper suitable for recycling andManaging Director, Chief Business Officer made from fully managed and sustained forest sources. Printed and bound in Switzerland by SRO-Kundig.EDITORS Visit The Global Information Technology Report page atBeat Bilbao-Osorio, Associate Director and www.weforum.org/gitr.Senior Economist, Global Competitiveness andBenchmarking Network, World Economic ForumSoumitra Dutta, Dean, Samuel Curtis Johnson We thank Hope Steele for her excellent editing work andGraduate School of Management, Cornell University Neil Weinberg for his superb graphic design and layout.Bruno Lanvin, Executive Director, eLab, INSEAD The terms country and nation as used in this report do not in all cases refer to a territorial entity that is a stateGLOBAL COMPETITIVENESS AND BENCHMARKING NETWORK as understood by international law and practice. TheJennifer Blanke, Chief Economist, Head terms cover well-defined, geographically self-containedof the Global Competitiveness and economic areas that may not be states but for whichBenchmarking Network statistical data are maintained on a separate andCiara Browne, Associate Director independent basis.Gemma Corrigan, InternRoberto Crotti, Quantitative EconomistMargareta Drzeniek Hanouz, Director, LeadEconomist, Head of Competitiveness ResearchThierry Geiger, Associate Director, EconomistTania Gutknecht, Community ManagerCaroline Ko, Junior EconomistCecilia Serin, Team CoordinatorINFORMATION TECHNOLOGY AND TELECOMMUNICATIONSINDUSTRIES TEAMAlan Marcus, Senior Director, Head of Informationand Communication Technologies IndustriesWilliam Hoffman, Associate Director, Head ofIssue CommunityDanil Kerimi, Associate Director, Head ofGovernment CommunityElena Kvochko, Project Manager, InformationTechnology IndustryDerek OHalloran, Head of InformationTechnology IndustryAlexandra Shaw, Team Coordinator, InformationTechnology IndustryBruce Weinelt, Director, Head ofTelecommunication Industry@ 2013 World Economic Forum 4. ContentsPrefacev1.6 The Economic Impact of Next-Generation 77Brge Brende and Robert Greenhill (World Economic Forum) Mobile Services: How 3G Connections and the Use of Mobile Data Impact GDP Growth Chris Williams, Davide Strusani, David Vincent, andForewordvii David Kovo (Deloitte LLP)Cesare Mainardi (Booz & Company) 1.7 Better Measurements for Realizing the 81ForewordixFull Potential of Health Information TechnologiesJohn Chambers (Cisco Systems)Elettra Ronchi (OECD), Julia Adler-Milstein and Genna R. Cohen (University of Michigan), and Laura P. Winn andExecutive Summaryxi Ashish K. Jha (Harvard School of Public Health)Beat Bilbao-Osorio (World Economic Forum), SoumitraDutta (Cornell University), and Bruno Lanvin (INSEAD)1.8 Re-Establishing the European Unions 93 Competitiveness with the Next Wave of Investment in TelecommunicationsThe Networked Readiness Index Rankingsxxi Scott Beardsley, Luis Enriquez, Wim Torfs, Ferry Grijpink, Stagg Newman, Sergio Sandoval, and Malin Strandell-Jansson (McKinsey & Company)Part 1: The Current Networked Readinessfor Growth and Jobs 1.9 The Big Opportunity for Inclusive Growth 101 Mikael Hagstrm and Ian Manocha (SAS Institute Inc.)1.1 The Networked Readiness Index 2013: 3Benchmarking ICT Uptake and Support forGrowth and Jobs in a HyperconnectedWorld Part 2: Case Studies of Leveraging ICTsBeat Bilbao-Osorio (World Economic Forum), for Competitiveness and Well-BeingSoumitra Dutta (Cornell University), Thierry Geiger(World Economic Forum), and Bruno Lanvin (INSEAD)2.1 Colombias Digital Agenda: Successes 111 and the Challenges Ahead1.2 Digitization for Economic Growth and 35Diego Molano Vega (Ministry of InformationJob Creationand Communication Technologies of Colombia)Karim Sabbagh, Roman Friedrich, Bahjat El-Darwiche,Milind Singh, and Alex Koster (Booz & Company) 2.2 The Metamorphosis to a Knowledge-Based 119 Society: Rwanda1.3 Convergent Objectives, Divergent Strategies: 43Alex Ntale (Rwanda ICT Chamber and Private SectorA Taxonomy of National Broadband and Federation), Atsushi Yamanaka (Rwanda DevelopmentICT Plans Board-ICT/Japan International Cooperation Agency), andRobert Pepper and John Garrity (Cisco Systems) Didier Nkurikiyimfura (Ministry of Youth and ICT of Rwanda)1.4 The Importance of National Policy Leadership532.3 E-Government in Latin America: A Review 127Phillippa Biggs and Anna Polomska (ITU/UNESCO of the Success in Colombia, Uruguay, and PanamaBroadband Commission for Digital Development) Miguel A. Porra (Organization of American States)1.5 Fiber Broadband: A Foundation for Social 67and Economic GrowthSean Williams (BT) The Global Information Technology Report Report 2013 | iii@ 2013 World Economic Forum 5. ContentsPart 3: Country/Economy ProfilesHow to Read the Country/Economy Profiles.................................139Index of Countries/Economies.......................................................141Country/Economy Profiles.............................................................142Part 4: Data TablesHow to Read the Data Tables........................................................289Index of Data Tables......................................................................291Data Tables...................................................................................293Technical Notes and Sources361About the Authors367List of Partner Institutes 375Acknowledgments383iv | The Global Information Technology Report Report 2013 @ 2013 World Economic Forum 6. PrefaceBRGE BRENDE AND ROBERT GREENHILLWorld Economic ForumThe 12th edition of The Global Information Technology actorsindividuals, businesses, and governments.Report (GITR) is being released at a time of cautiousOver time, the series has become one of the most-optimism after a long period of economic uncertaintyrespected studies of its kind. It is extensively used bythat has transformed the global economic outlook. While policymakers and relevant stakeholders as a unique tooluncertainty in the euro zone and the risk of politicalto identify strengths on which to build and weaknessesdeadlock in the United States still persist and could derailthat need to be addressed by national strategies forthe tentative economic recovery in developed economies, enhanced networked readiness.the risk of a financial and economic meltdown with The Global Information Technology Report 2013unprecedented consequences seems more remote than itfeatures the latest results of the NRI, offering an overviewdid a year ago. Overall, developed economies are striving of the current state of ICT readiness in the world. Thisto return to higher levels of competitiveness while fightingyears coverage includes a record number of 144the stubbornly high levels of unemployment, especiallyeconomies, accounting for over 98 percent of globalamong youth; at the same time, developing and emergingGDP. A number of essays on the role of ICTs to promoteeconomies are focusing on innovation as a prerequisitegrowth and jobs in an increasingly hyperconnectedto sustain the high economic growth rates they have world, as well as policy case studies on developingexperienced in the past decade and leapfrog towardICTs, are featured in the Report, together with ahigher levels of economic and social prosperity.comprehensive data sectionincluding detailed profilesAgainst this backdrop, the role that informationfor each economy covered and data tables with globaland communication technologies (ICTs) can play to rankings for the NRIs 54 indicators.support economic growth and the creation of high-We would like to convey our sincere gratitude to thequality jobs has never drawn so much attention andindustry and international organizations experts whoresearch. There had been some initial concerns aboutcontributed outstanding chapters exploring the linksthe risk, in some developed economies, that ICTsbetween ICTs and economic growth and job creation,could accelerate the delocalization of certain economic as well as to policy analysts for providing their valuableactivities toward developing countries. But the benefitsinsights in the policy case studies.of ICTs are now widely recognized everywhere as an We especially wish to thank the editors of theimportant source of efficiency gains for companies that Report, Soumitra Dutta at the Samuel Curtis Johnsonwill allow them to optimize their production function and Graduate School of Management at Cornell University,liberalize resources toward other productive investments. Bruno Lanvin at INSEAD, and Beat Bilbao-OsorioMoreover, ICTs are also increasingly recognized as aat the World Economic Forum, for their leadership inkey source of innovation that can generate increasedthis project, together with the other members of theeconomic growth and new sources of high-value-added GITR team: Thierry Geiger, Danil Kerimi, and Elenajobs. This ability to innovate is essential in the currentKvochko. Appreciation also goes to Alan Marcus,information revolution that is transforming economic andSenior Director and Head of the Information Technologysocial transactions in our societies. and Communication Industries team, and JenniferThe GITR series has been published by the World Blanke, Chief Economist and Head of the GlobalEconomic Forum in partnership with INSEAD since Competitiveness and Benchmarking Network, as well2002. The Report has accompanied and monitoredas her team: Ciara Browne, Gemma Corrigan, RobertoICT advances over the last decade as well as raisingCrotti, Margareta Drzeniek Hanouz, Tania Gutknecht,awareness of the importance of ICT diffusion andCaroline Ko, and Cecilia Serin. Last but not least, weusage for long-term competitiveness and societalwould like to express our gratitude to our network ofwell-being. Through the lens of the Networked 167 Partner Institutes around the world and to all theReadiness Index (NRI), the driving factors and impactsbusiness executives who participated in our Executiveof networked readiness and ICT leveraging have been Opinion Survey. Without their valuable input, theidentified, highlighting the joint responsibility of all social production of this Report would not have been possible.The Global Information Technology Report Report 2013 | v @ 2013 World Economic Forum 7. @ 2013 World Economic Forum 8. ForewordCESARE MAINARDIChief Executive Officer, Booz & CompanyEver since Adam Smith first proposed the theory ofimproves; some jobs get replaced by technologies; andabsolute advantage enjoyed by a country in producinglower-value-added, labor-intensive jobs go overseasa good or service, policymakers have sought to buildto emerging markets where labor is cheaper. On aand maintain such an advantage in key sectors of theirsector-by-sector basis, you see the same effect ineconomies. What has become increasingly clear overhighly digitized industries such as financial services andthe past 12 years that the World Economic Forum and manufacturing.INSEAD have been publishing this Global Information Thus no universal prescriptions are available forTechnology Report is the role that informationrealizing the full socioeconomic benefits of digitizationcommunication technologies (ICTs), and specifically the right formula will vary by country and industry. Butdigitization, plays in the potential development andthere is no question that the benefits are there to bemaintenance of absolute advantage.realized, and they are substantial for the foresighted andDigitizationthe mass adoption of connected digital sure-footed.services by consumers, enterprises, and governmentsThe lesson for policymakers and national leaders isis far more than a disruptive wave washing over isolatedclear: having laid the necessary groundwork by buildingindustries. We have long since recognized that reality. out broadband infrastructure and ensuring access, it isDigitization is a fundamental driver of economic growth now time to differentiate around distinctive opportunitiesand job creation the world overin both developed and and capabilities. Governments have a role to play asemerging markets. And that is not hollow rhetoricitdigital market makers. That means making deliberateis confirmed by econometric analysis that Booz &choices about what sectors furnish the best opportunityCompany has conducted to quantify the actual impact for that absolute advantage Adam Smith described andof digitization on a countrys economic output (GDP)focusing on them. It means understanding the tradeoffsand employment. In fact, we have created a Digitization between job creation and productivity that increasingIndex that scores a countrys digitization level on a scale digitization brings, and creating mechanisms to offsetof 0 to 100. This level-setter allows us to go beyond the potential job losses. Finally, it means understandinganecdotal evidence of the transformational impact ofwhat capabilities you must bring as a policymaker toICTs and actually measure that impact on economic and advancing your countrys digitization agenda. Do yousocial factors on a comparative basis.need to play the role of direct developer, financier, orThe headline is powerful: despite the continued facilitator? There are successful models of all threesluggishness of economies across the globe, digitizationcapability sets in practice today around the world.has boosted world economic output by nearly US$200You have only to open your eyes and apply the rightbillion over the past two years and has created 6 million capabilities lens to chart the right path forward. Thisjobs. Specifically, our analysis reveals that an increase years Global Information Technology Report willof 10 percent in a countrys digitization score drives ailluminate the way.0.75 percent growth in its GDP per capita. That same 10percent boost in digitization leads to a 1.02 percent dropin a states unemployment rate. These benefits grow as acountry moves along the digitization continuumin otherwords, increased digitization yields improving returns.Although the net effect of digitization is positive,as you begin analyzing the data by country and sector,certain tradeoffs become apparent. For example,advanced-stage economies in North America andWestern Europe, for a number of reasons, realize feweremployment benefits than developing economies astheir digitization level increases. Their productivity The Global Information Technology Report Report 2013 | vii @ 2013 World Economic Forum 9. @ 2013 World Economic Forum 10. ForewordJOHN CHAMBERSChairman and Chief Executive Officer, Cisco SystemsIt has been almost 30 years since the connectionsthat sparked one of the greatest technologicaltransformations in history were made, creatingan enormous global market for information andcommunication technologies (ICTs) while laying thefoundation for networked readiness. Today the Internetand the applications and the services it supports touchour lives every day. Just as Cisco was at the forefrontof network development in the past, today we envisiona future where everything is connected and amazingthings are possible.More than 99 percent of things in the physicalworld are not linked to the Internet. Yet. But as the worldtransitions into what we call the Internet of Everything(IoE)the intelligent connection of people, processes,data, and thingsonly the networked readiness ofcountries will dictate where the IoE will take hold andwho will reap its benefits. Given the economic andsocial potential of this market transition, we are verypleased to again collaborate with the World EconomicForum and INSEAD in the production of this yearsGlobal Information Technology Report and its NetworkedReadiness Index.The IoE and intelligent networking will impact allsectors, creating opportunities for people, businesses,and countries. An intelligent network will be the driver ofthe next round of innovation, productivity enhancement,and employment.Developing the IoE will require close collaborationamong stakeholders in industry, customers, academia,and government. Products and services will bedeveloped commercially, customers will dictate whatsucceeds in the market place, academia can aid inresearch and design, and governments can play arole in maintaining a vibrant and competitive businessenvironment where innovation will flourish.This years Global Information Technology Report,focusing on ICTs for growth and jobs, places a spotlighton the role that technology can have in economicgrowth and employment. As highlighted in the researchthat follows, high-speed broadband networks havedemonstrated a positive impact on short- and long-termemployment, and we believe the next wave of Internetdevelopment will further advance the growth effects ofthe network.The Global Information Technology Report Report 2013 | ix@ 2013 World Economic Forum 11. @ 2013 World Economic Forum 12. Executive SummaryBEAT BILBAO-OSORIO, World Economic ForumSOUMITRA DUTTA , Cornell UniversityBRUNO LANVIN, INSEADWhen The Global Information Technology Report (GITR)the world needs to collectively address environmentaland the Networked Readiness Index (NRI) were createdand social challenges to ensure a more sustainablesome 12 years ago, the attention of decision makers development path and a better quality of life for itsand investors was on adopting business and financialpeople.strategies that would allow them to develop in theOn the push side, technological progresscontext of a fast-moving but nascent Internet economy.continues at a relentless speed. The growing availabilityOver more than a decade, the NRI has provided of technology has empowered citizens of both developeddecision leaders with a useful conceptual framework toand emerging economies with fairly good access to theevaluate the impact of information and communications digital world. The rise of cloud computing has reducedtechnologies (ICTs) at a global level, and to benchmark the competitive differentials in technology availabilitythe ICT readiness and the usage of their economies. across larger and smaller firms. Low entry barriers in theToday, the world has undergone massive changes: digital space have sparked creativity and given rise to athe Internet bubble has come and gone, and emerging class of young entrepreneurs around the world. It is clearcountries such as China and India have become that ICTs offer higher benefit-to-cost ratios in all sectorsprominent global users and providers of ICT equipment of production, while simultaneously offering new ways toand services. Struggling to emerge from the financial create value by better and more efficiently organizing thecrisis, developed economies are striving to return to use of natural, financial, and human resources.higher levels of growth and competitiveness while Numerous studies have been presented in thefighting stubbornly high unemployment rates, especially literature on the connections between ICTs on theamong their youth. Both emerging and developedone hand, and development and growth on the other.economies are focusing on innovation, competing Although the first analyses of the economic impactglobally for talent, resources, and market shares.of fixed telephone density on economic growth wereInformation flows and networks have spread across conducted more than three decades ago,1 such studiesborders in ways that could not be imagined before the have proliferated in recent years. Despite the ubiquityonset of the Internet, the global adoption of mobileof ICTs in society and business, such research hastelephony and social networks, and the rapid growth ofnot been easy. For one thing, the pace of adoption ofbroadband. Business models have been redefined, the many technologies (broadband, mobile, etc.) has beenworkplace has been redesigned, small startups havefast and recentthus limiting the validity of longitudinalevolved into large companies, and entire functions of studies and making it difficult for data collectionsociety (education, health, security, privacy) are beingagencies to keep pace with the definition and collectionrethought.of appropriate metrics. Also, it remains challenging toisolate the impact of ICTs as their economic impactsICTs, COMPETITIVENESS, GROWTH, AND JOBS: Ahave often occurred when combined with other broadCOMPLEX RELATIONSHIPsocial and business changes.The links between ICTs (their tools, services, and models)For more than a decade, the NRI has includedon the one hand and the unwavering importance ofaspects of how ICTs are transforming the economycompetitiveness, growth, and jobs on the other have and society. Among the expressions of transformationnever before been the subject of so much attention andis the development of new skills that are important inconcern. This is hardly surprising when one considers knowledge-based, information-rich societies and thatthe pull of technology: developed economies needare crucial for employment. Despite the fact that ICTs areto reinvent themselves to maintain or restore their becoming increasingly universal, the question of accesscompetitiveness, retain or regain market shares, andand usage remains importantespecially for developingcreate jobs; emerging and developing economies arecountries, given their need to narrow the digital divide.seeking ways to improve productivity and find new The NRI includes features related to access and usagesources of growth through new technologies. Finally,that cover not only affordable ICT infrastructure but The Global Information Technology Report Report 2013 | xi @ 2013 World Economic Forum 13. Executive Summaryalso digital resources, including software and skills. In the friendliness of a countrys market and regulatoryaddition, the NRI includes proxies to assessing some of framework in supporting high levels of ICT uptake;the economic and social impacts accruing from ICTs. the degree of a societys preparation to make goodThus, the Index facilitates the identification of areasuse of an affordable ICT infrastructure;where policy interventionthrough investment, smartregulation, and/or incentivescould boost the impact of the efforts of the main social agentsthat is,ICTs on development and growth. individuals, business, and governmentto increasetheir capacity to use ICTs as well as their actual usePART 1: THE CURRENT NETWORKED READINESS of ICTs in day-to-day activities; andLANDSCAPE the broad economic and social impacts accruingPart 1 presents the latest findings of the NRI, offeringfrom ICTs and the transformation of a countrya comprehensive assessment of the present statetoward an ICT- and technology-savvy economyof networked readiness in the world. Furthermore, aand society.number of expert contributions inquiring into the relationbetween ICTs and growth and jobs in the currentAs in previous editions, the NRI is composed of aeconomic and digital context are also included. Thesemixture of quantitative data collected by internationalrelate to (1) the role of digitization for economic growthorganizationssuch as International Telecommunicationand job creation; (2) the description of a taxonomy ofUnion (ITU), other UN agencies, the Organisation fornational broadband and ICT plans; (3) the importance ofEconomic Co-operation and Development (OECD), andnational policy leadership; (4) the role of fiber broadbandthe World Bankand survey data from the Executivefor economic and social growth; (5) the economic impactOpinion Survey (the Survey), conducted annually byof next-generation mobile technologies; (6) the need forthe Forum in each of the economies covered by thebetter measurement to realize the potential of healthReport. The NRI 2013 covers a record number of 144information technologies; (7) the role of ICTs for Europeeconomies, accounting for over 98 percent of world GDP.to regain its competitiveness, and (8) the potential of ICTsIn terms of the results (see the Networkedto support social inclusion.Readiness Index Rankings provided on page xix), twogroups of economies dominate the NRI: NorthernInsight from the NRI 2013 on the worlds networkedEuropean economies and the so-called Asian Tigers.readinessAmong the Northern European countries, four out of theGiven the potential high returns that ICTs can providefive Nordic economies featured in the NRIFinland,in transforming a nations economy and its citizensSweden, Norway, and Denmark (in rank order)continuewell-being, assessing ICT developments has been theto feature in the top 10. Iceland, the last of the Nordics,object of much academic and policy attention in the pastis not too far behind, at 17th place. The performancedecade. Several organizations have made significantof this group in terms of readiness is particularlyefforts to measure and benchmark ICT deploymentoutstanding. All five Nordics feature in the top 10 of thisand uptake, but few have aimed at equally assessingsubindex. Within this subindex, on the infrastructurethe returns that ICTs can actually provide to both theand digital content pillar, four countries occupy the topeconomy and society. Although data availability ispositions. As highlighted in the previous edition andstill scarce in terms of ICT impacts, policy interest inin this Report, the gap between those countries andmeasuring ICTs has shifted from measuring ICT accessthe ones in the Southern and Eastern parts of Europeto measuring ICT impacts.is profound. A second group of economies that posts Last year, after two years of research anda remarkable performance are the Asian Tigers:consultations with ICT practitioners, policy and industrySingapore, Taiwan (China), the Republic of Korea, andexperts, and academia, a new subindex on ICT impactsHong Kong SAR. All boast outstanding business andthat aimed at holistically assessing the way thatinnovation environments that are consistently rankedcountries go about leveraging ICTs and benefiting fromamong the most conducive in the world. The Tigers alsothem in terms of enhanced competitiveness and well-stand out for their governments leadership in promotingbeing has been introduced in the NRI. This evolutionthe digital agenda, and the impact of ICTs on societyensures that the NRI framework remains at the forefronttends to be larger in these economies.of ICT measurement. As one of the most authoritativeFinland (1st) reaches the top of the NRI rankingsassessments of its kind, it has been adopted by severalfor the first time, thanks to improvements across thegovernments as a valuable tool for informing theirboard. The country shows progress on two-thirds ofcompetitiveness and policy agendas.the 54 indicators of the NRI and posts a very consistent As a result, the framework gauges:performance across all categories of the NRI. Singaporexii | The Global Information Technology Report Report 2013 @ 2013 World Economic Forum 14. Executive Summaryremains 2nd overall, while slightly improving its score. Asian Tigerson the planet are next to some of theThe extreme efficiency and business friendliness ofleast-connected ones. Nowhere else does the regionalits institutional framework, strong intellectual propertydigital divide run as deeply as it does in Asia. Regardlessprotection, intense competition, and high university of their position on the development ladder, all Asianenrollment rate lead to these outstanding outcomes.economies have much to gain from increased networkedSweden (3rd) maintains its score, but declines two readiness. It will allow populations of the least-advancedpositions and abandons the top spot to Finland. Despitecountries to gain access to much-needed basic services,this slight decline in rankings, the country undeniablyimproved government transparency and efficiency,remains one of the few truly knowledge-based andfor the most advanced, many of which suffer fromeconomies of this world. anemic economic growthit will contribute to boostingUp three notches, the United Kingdom (7th) their innovation capacity. The NRI reveals that in theposts the biggest rank improvement among the top case of Asias best-performing economies, governments10 economies. The country offers one of the most typically lead the digital effort, unlike in Europe. At theconducive environments for ICT development. In heart of Asia, and representative of its immense diversity,particular, it offers a sound and conducive political andthe Association of Southeast Asian Nations (ASEAN)regulatory environment (7th). The country also boastsis fairly dynamic. Led by Singapore, all eight ASEANhigh levels of ICT adoption. ICTs are pervasive amongmembers covered by the NRI improve their overall scorethe population, businesses, and the government. Down and a majority progress in the rankings, albeit in someone, the United States slips to 9th place despite acasessuch as Cambodia and the Philippinesfrom aperformance essentially unchanged from the previouslow base.year. This constitutes the countrys worst showing since Digitally connecting the hemisphere remains onethe first edition of the GITR in 2001, in which it rankedof the key challenges for Latin America and the1st, although changes to the methodology and in theCaribbean, as recognized during the Sixth Summit ofcomposition of the NRI over time cause the results not tothe Americas, which took place in Colombia in Aprilbe strictly comparable. The country still possesses many 2012.4 While several countries have made remarkablestrengths, however, which have contributed to making itimprovements that are clearly reflected in importantthe worlds innovation powerhouse for decades. gains in the scores and rankings of the NRIincludingSeveral European countries continue to leadPanama, Mexico, Colombia, and El Salvadoroverall,the rankings, showcasing their strong efforts andLatin American and the Caribbean still suffers fromcommitment to fully develop and leverage ICTs to a serious lag that prevents it from fully leveraging theboost their competitiveness and the well-being ofpotential of ICT to boost the regional productivity. Thetheir citizens. Within the European Union (EU), whilesocial and, most remarkably, economic impacts accruingstark intra-regional disparities persist, it is worth noting from ICTs remain low in comparison with other regionsthat the divergence across Member States in thedespite government-led efforts to develop and upgradeNRI is significantly narrower than it is in the Global ICT infrastructure and also despite governmentsCompetitiveness Index,2 the most comprehensive increasing use of the Internet to communicate andanalysis for measuring the set of policies, institutions,interact with individuals and the business community.and factors that drive the productivity of an economy. Weaknesses in the political and regulatory environment,This reflects the longstanding efforts of the European the existence of large segments of the population with aUnion to narrow the digital divide in Europe and build low skill base, and poor development of the innovationan internal digital market, as corroborated by the launchsystem are all factors hindering the potential that ICTof a new Digital Agenda for Europe,3 one of the sevendevelopments could have on the regional economy.flagship initiatives of the European Commissions Europe Sub-Saharan Africa has continued to make2020 Strategy for growth and jobs for the presentsignificant efforts to build its ICT infrastructure, asdecade.reflected by important improvements in developing itsWithin the Commonwealth of Independent States, broadband infrastructure and the expansion of its mobileseveral countries have fully recognized the potentialnetwork coverage. As a result, ICT usage, while stillof ICTs to leapfrog and diversify their economies, and very low, has picked up slightly, as seen especially byimportant progress has been recorded since last year.an increase in the number of Internet users and also byAsia is home to some of the worlds wealthiest,the continued commitment of some governments in themost successful economies in the world and also to region to expand the number of available online services.some of its poorest. Unsurprisingly, a similarly profoundDespite this positive trend, the stubbornly high sharpdiversity characterizes Asias digital landscape, thus digital divide from more advanced economies, notablymaking it impossible to draw a uniform picture of thein terms of ICT-driven economic and social impacts,region. The most digitized and innovative nationsthepersists. A still-costly access to ICT infrastructure,The Global Information Technology Report Report 2013 | xiii@ 2013 World Economic Forum 15. Executive Summaryrelatively low levels of skills with low educationalPolicymakers can harness these varying effects ofattainments, and unfavorable business conditions fordigitization through three main measures that go beyondentrepreneurship and innovation are hindering the their current roles of setting policy and regulations. First,regions capacity to fully leverage the potential of thethey should create digitization plans for targeted sectorsincreasingly available ICT infrastructure. As a result, onlyin which they wish to maximize the impact of digitization.two countriesMauritius (55th) and South Africa (70th) Second, they should encourage the development of theare positioned in the top half of the rankings, while ninenecessary capabilities and enablers to achieve theseout of the bottom ten belong to the region. digitization plans. Finally, policymakers should workThe Middle East and North Africa region boastsin concert with industry, consumers, and governmentone of the most diverse performances in the world.agencies to establish an inclusive ICT ecosystem thatOn the one hand, Israel and several Gulf Cooperationencourages greater uptake and usage of digital services.Council states have sharply improved their overallperformances and have continued their investments toConvergent Objectives, Divergent Strategies: Amake ICTs one of the key national industries that attempt Taxonomy of National Broadband and ICT Plansto diversify and transform their economies. On the otherIn Chapter 1.3, Robert Pepper and John Garrity fromhand, several North African and Levant nations have Cisco Systems analyze the wide range of formaleither fallenor stagnated, in the best casesin theirbroadband policies around the world. A critical questionefforts to leverage ICTs as part of their economic andnow is whether the divergence in policy packages willsocial transformation process toward more knowledge-result in significant differences in the efficacy of plans.intensive activities and open societies.To begin this research and establish a foundationfor understanding the global landscape of nationalDigitization for Economic Growth and Job Creation:broadband and ICT plans, this chapter reviewsRegional and Industry Perspectivesplans around the world and presents a taxonomyChapter 1.2, contributed by Karim Sabbagh, Romanfor classification. The authors first detail the existingFriedrich, Bahjat El-Darwiche, Milind Singh, and Alex relationship among broadband, economic growth,Koster at Booz & Company, analyses the rise ofand employment. Next they analyze a cross-sectiondigitizationthe mass adoption of connected digital of national plans, their objectives, and their policyservices by consumers, enterprises, and governmentscomponents. Subsequently they propose a taxonomyas a key economic driver that accelerates growthexamining the degree of broadband supply- andand facilitates job creation. In the current contextdemand-side emphasis. This taxonomy establishes aof a sluggish global economy, digitization can play common language that can guide governments throughan important role in assisting policymakers to spur the development of national broadband plans and serveseconomic growth and employment. Booz & Companysas a baseline for evaluating the factors of success foreconometric analysis estimates that, despite theimplemented plans.unfavorable global economic climate, digitization has They find that as countries around the world haveprovided a US$193 billion boost to world economic developed national plans to accelerate broadbandoutput and created 6 million jobs globally over the pastadoption, the plans vary by both goals and policytwo years.5 recommendations. Their taxonomy of broad-based,However, the impact of digitization by countrysupply-driven, demand-driven, and emergent plansand by sector is uneven. Developed economies enjoyprovides a clear method for categorizing nationalhigher economic growth benefits by a factor of almost broadband and ICT plans on the breadth of their policy25 percent, although they tend to lag behind emerging options; the classification also provides a starting pointeconomies in job creation by a similar margin. Thefor the review and comparison of national plans. Further,main reason for the differing effects of digitization it can aid policymakers in countries with strategic planslies in the economic structures of developed andunderway as they work to increase broadband adoption.emerging economies. Developed countries rely chieflyon domestic consumption, which makes nontradableThe Importance of National Policy Leadershipsectors important. Across developed economies,Chapter 1.4, contributed by Phillippa Biggs and Annadigitization improves productivity and has a measurable Polomska at the ITU/UNESCO Broadband Commissioneffect on growth. However, the result can be job losses for Digital Development, evaluates recent growth inbecause lower-skilled, lower-value-added work is sent national broadband plans and the importance of nationalabroad to emerging markets where labor is cheaper. By policy leadership for driving the rollout of broadbandcontrast, emerging markets are more export-oriented networks, services, and applications. In light of recentand driven by tradable sectors. They tend to gain moreevidence for strong positive externalities to investmentsfrom digitizations effect on employment than from itsin broadband networks, rapid technological evolution,influence on growth.and a changing institutional environment, the chapterxiv | The Global Information Technology Report Report 2013 @ 2013 World Economic Forum 16. Executive Summaryexplores the changing role of policymakers in helping tofrom Cisco Systems, the impact of increasing usage offacilitate and set national policy. mobile data per 3G connection. This study finds that:A growing number of countries now recognize For a given level of mobile penetration, a 10 percentthe importance of policy leadership and a clear cross-increase in 3G penetration increases GDP per capitasectoral vision to maximize the economic and socialgrowth by 0.15 percentage points.returns to ICTs, as shown by strong growth in thenumber of national broadband plans. This chapter A doubling of mobile data use is associated with anprovides a brief overview of the growth in these plansincrease in the GDP per capita growth rate of 0.5and the key characteristics of good ones, with referencepercentage points.to several examples: the US, UK, and Polish nationalbroadband plans. These results suggest that policy activity shouldfocus on increasing 3G penetration and mobile dataFiber Broadband: A Foundation for Social andconsumption. This focus should include makingEconomic Growth spectrum available for mobile broadband andIn Chapter 1.5, Sean Williams from BT highlights the fact encouraging the substitution of basic mobile servicesthat, as the foundation for knowledge- and ICT-basedwith more-advanced 3G connections.jobs, fiber broadband has the potential to drive socialand economic growth and help create jobs. As Europe,Better Measurements for Realizing the Full Potentialand the wider developed world, look to emerge from theof Health Information Technologiesrecent financial crisis and downturn, such growth will be Healthcare has become an increasingly dominant topicvital. The issue is not whether fiber broadband can helpof discussion in recent years because of rising costsdrive social and economic growth, but how the visionand the need to improve the efficiency and quality ofof coverage as close as possible to 100 percent can behealthcare delivery. Although ICTs cannot, alone, provideachieved. the solution for overcoming these issues, they are seenThis chapter aims to advance the debate in twoby many governments as potentially playing a significantways: first, by reviewing recent independent research role as enablers of the changes required in healthfrom Regeneris, an economic development consultingsystems.firm, detailing the economic impact of high-speedIn light of this, a critical question now facingbroadband infrastructure on environments as diverse aspolicymakers is how to realize the full potential ofcapital cities and economically deprived rural regions. these technologies, particularly since the challenges toAnd second, by articulating technical and marketachieving widespread ICT adoption and use are provingsolutions that are fit for purpose in the current economicdaunting.climate. In Chapter 1.7, Elettra Ronchi from the OrganisationThe chapter recommends policy responses thatfor Economic Co-operation and Development (OECD),national governments and regional authorities shouldJulia Adler-Milstein and Genna R. Cohen from theimplement to put these solutions into action. University of Michigan, and Laura P. Winn and AshishK. Jha from the Harvard School of Public Health argueThe Economic Impact of Next-Generation Mobile that countries have much to gain by combining theirServices: How 3G Connections and the Use of efforts and sharing the burden of developing comparableMobile Data Impact GDP Growth measures for evidence-based policy in this sector. Risk,In Chapter 1.6, Chris Williams, Davide Strusani, Daviddelay, and cost can be minimized by learning from goodVincent, and David Kovo from Deloitte LLP argue thatinternational practices.the mobile telecommunication sector continues to offer The chapter reviews what is currently knownunprecedented opportunities for economic growth inabout the state of implementation of ICTs in the healthboth developing and developed markets, and that mobilesector across OECD countries and the benefits thatcommunication services have become an essential partcan be realized from these technologies, including theof how economies work and function. opportunities for economic growth. It then discusses As technology develops, mobile telephony has the efforts, led by the OECD, to develop a common setthe potential to impact economic development furtherof indicators, describing the policy motivation for thisthrough the provision of high-value 3G and 4G datawork, the process followed, the current status of theseservices accessed via smartphones, tablets, and measures, and the key remaining challenges.dongles that deliver mobile data services to businessesand consumers. For the first time, applying econometricanalysis, the authors studiy the impact, on GDPper capita growth, of consumers substituting a 2Gconnection with a 3G connection and, based on data The Global Information Technology Report Report 2013 | xv @ 2013 World Economic Forum 17. Executive SummaryRe-Establishing the European Unionsother essential assetsoil and water, for instanceitCompetitiveness with the Next Wave of Investmentexists in abundance and can help reduce conflict andin Telecommunications tension instead of proliferating discord.In Chapter 1.8, Scott Beardsley, Luis Enriquez, Wim In Chapter 1.9, Mikael Hagstrm and Ian ManochaTorfs, Ferry Grijpink, Stagg Newman, Sergio Sandoval, from SAS Institute Inc. identify how big data andand Malin Strandell-Jansson from McKinsey & Company analytics can help energize the economy throughargue that Europes fixed and mobile telecommunicationefficiency, innovation and creative gains, by:networks need a massive upgrade to satisfy burgeoning using big data to stimulate new ways of doingconsumer demand for new Internet services. McKinseybusiness;& Company estimates that modernizing the EU-15s fixedtelecommunication infrastructure to give all households using linguistic-based analytics to formulate policiesaccess to high-speed broadband will take 200 to 250 and target action plans to tackle unemploymentbillion, while revamping Europes mobile infrastructure tobefore problems manifest themselves;offer 4G services to 95 percent of the regions population using big data and analytics to match people to jobswould cost another 50 to 70 billion.and jobs to people more proactivelythe chapterUnless they make investments on this scale,draws on experiences at the national and stateEuropes economies risk losing technology leadershipgovernment level, and from working with financialacross the telecommunication value chain to Asia andinstitutions; andthe United States. High-speed network investment is far putting the tools and methods of analytics intoahead in both regions. For instance, around 64 percentthe hands of an existing workforce to industrializeof 4G mobile subscriptions worldwide are in Norththe service economy (the sleeping giant), muchAmerica, 33 percent in Asia Pacific, but only 3 percentas Henry Fords innovation industrialized factoryin Europe. Value-added by the US telecommunicationproduction.industry grew in real terms by 18 percent from 2007 to2010, but only 7 percent in Europe. The chapter analyzes advances in ICTs andDownward pressure on both wholesale andcurrent applicationssuch as how a major retailretail prices is choking growth and profitability amongorganization comes to understand what customersEuropes telecommunication players, hindering themwant (what products, where, and when) and the flowfrom meeting their investment challenge. This chapterof this information back down their supply chain tooffers four ideas for shaping a region-wide policymanufacturers, based on demand. Such approachesframework that could lift those constraints:can help ensure we have qualified labor in the right Allow a reduction in the number of fixed and location at the right time. mobile operators. Europes consumers could be better served by an industry with fewer players that PART 2: CASE STUDIES OF LEVERAGING ICTS FOR are strong enough to make large investments butCOMPETITIVENESS AND WELL-BEING sufficiently plentiful to ensure vibrant competition.Part 2 presents deep-dive studies of selected nationalexperiences of leveraging ICTs or developing the Allow more pricing flexibility, so operatorssector, showcasing the main challenges faced and get a proportionate return from customers whothe articulation of strategies to overcome them. In this generate the most data traffic and take up the mostedition, the cases of Colombia and Rwanda, as well as bandwidth.a comparative case study of e-government in three Latin Restrict wholesale access regulation to a fewAmerican countries, are presented. basic services, and allow regulatory holidays. This would give operators a better chance of Colombias Digital Agenda: Successes and recouping their investments. Challenges AheadIn recent years, the ICT sector has gained importance Release more spectrum to operators, giving themin Colombian public policy because the government has more options for extending network capacity.given priority to the development of Plan Vive Digital,which seeks to give the country a technological leapThe Big Opportunity for Inclusive Growthforward that affects the economy and developmentThe social and economic environment is changing,in a positive way, reducing poverty and increasingand the way that business and government look at thecompetitiveness and productivity.economy must change with it. If not, we run the risk of In Chapter 2.1, Diego Molano Vega, Minister ofsocial exclusion and further economic slowdown.Information and Communication Technologies ofBig data is a new asset class that has greatColombia, identifies the four obstacles to achieving thepotential to help resurrect the global economy. Unlikexvi | The Global Information Technology Report Report 2013 @ 2013 World Economic Forum 18. Executive Summarywidespread use of the Internet in his country: (1) peopleobtaining access to credit. The Global Competitivenessand businesses do not perceive the Internet as useful; Report 20122013 published by the World Economic(2) the costs of installing the necessary infrastructure Forum ranked Rwanda the most competitive economy inare high; (3) the state has limited resources to invest in the East Africa Community (EAC) countries and third ininfrastructure; and (4) Colombians purchasing power issub-Saharan Africa. Rwanda also received top ranking inlimited. East Africa, and 7th in Africa among countries with activeTo achieve widespread Internet use, Plan Vive Digitalmobile-broadband subscriptions per 100 inhabitantshas defined some concrete goals for the year 2014: in 2011 in the United Nations Broadband Commission report.1. Triple the number of municipalities connected to In many respects, this progress has come as athe information highway. The aim is to extend the result of visionary leadership and good governanceinfrastructure to connect 1,053 of the countrys practices that have been embraced by Rwandasmunicipalities to the national fiber-optic network. leaders. Rwanda has systematically fought corruption,2. Connect 50 percent of micro-enterprises andwhich is one of the biggest impediments to developmentsmall- and medium-sized enterprises, and 50in Africa and everywhere in the world.percent of homes to the Internet.In its Vision 2020, developed in 2000, Rwanda set out on a journey to becoming a knowledge-based3. Increase the number of Internet connections economy. To this end, the government integrated ICTsfourfold. By 2014, we want to reach 8.8 million into its Vision 2020 to enable the country to leapfrog theInternet connections. key stages of industrialization and transform its agro- based economy into a service-oriented, information-rich Vive Digital aims to develop the countrys digital and knowledge-based one that is globally competitive.environment through its four principal components by: This integration came in the form of its national ICT1. expanding the infrastructure,strategy and plan, commonly known as the National2. creating new services at lower prices, Information Communication Infrastructure Plan (NICI3. developing digital applications and contents, andPlan), which Rwanda adopted in 2000 as an approach4. fostering ICT adoption and use.to use ICTs holistically for development. Each five-year phase (the NICI Plan includes four five-year phases The main goal is to establish a virtuous circle thatspanning 20 years) characterizes this strategy and iscan act as a method of feedback, in which a better aligned with the countrys overall development goals andinfrastructure will allow more and better services at lowervision.prices and also stimulate the development of content,The plan, now in its third phase, has deliveredapplications, and demand.a number of successes. These include a nationwide fiber-optic backbone network, a state-of-the art tier 3The Metamorphosis to a Knowledge-Based Society:data center, 96 percent cell phone/data coverage, andRwanda multipurpose community tele-centers, to mention but aChapter 2.2, by Alex Ntale from the Rwanda ICT few of the plans successes.Chamber and Private Sector Federation, AtsushiYamanaka from the Rwanda Development Board-ICT/E-Government in Latin America: A Review of theJapan International Cooperation Agency, and Didier Success in Colombia, Uruguay, and PanamaNkurikiyimfura from Rwandas Ministry of Youth and ICT,Although Latin America entered in the 21st centurypresent Rwandas remarkable journey from an agrarian with abundant initiatives aimed at introducing ICTseconomy to a knowledge-based one that has put thein the public sector, as evidenced by the numerouscountry at the forefront of the region in terms of ICTs. e-government solutions documented by the excelGov Rwandas economy has continued to grow at Awards, very few countries have been able to maintaincomparably good rates, averaging 8 percent per annum,a rhythm of progress comparable to the most advanceddespite a global recessionary environment starting innations in the world. Colombia, Uruguay, Panama, Chile,2008 and containing high inflationary pressures. Thisand occasionally Mexico and Brazil, have occupied agrowth in such adverse circumstances can be attributed place among the top 50 e-government countries in theto good governance, sound fiscal discipline, and the most recognized worldwide rankings.commitment from both the public and private sector to Chapter 2.3, by Miguel A. Porra from thebuild a more equitable country.Organization of American States, looks at three Latin In the World Banks Doing Business 2012 report, American countriesColombia, Uruguay, and PanamaRwanda is ranked number one in East Africa withand charts their respective paths to achieving success inrespect to starting up a business, registering property, establishing ICTs in public administration, and identifiesprotecting investors interests, enforcing contracts, andsome of their common elements.The Global Information Technology Report Report 2013 | xvii@ 2013 World Economic Forum 19. Executive SummaryFor the past five years, Colombia, Uruguay, non-Survey data variables included in the NRIand Panama have seen progress that not only computation this year.becomes empirical proof of the validity of most of therecommendations made by e-government authors andNOTESpractitioners but also positions these three countries as 1 Jipp 1963.a valuable reference for others around the world. 2 See World Economic Forum 2012.The three have built their success upon solid 3 See the European Commissions Digital Agenda, available atpolitical support that comes from the highest office, thehttp://ec.europa.eu/digital-agenda/.presidential, and goes to the next level, the ministerial. 4 See http://www.summit-americas.org/default_en.htm.In all three countries, presidents have shown their 5 The authors have estimated the GDP and employment impactcommitment not just with words but with actions. caused by the increased digitization in most countries and aggregated to get the global impact.Presidential decrees have sent an unmistakablemessage to citizens and government officers alike abouttheir unwavering commitment to bringing ICTs to the REFERENCESpublic administration.ITU (International Telecommunication Union). 2012. WorldTelecomunication/ICT Indicators Database (December 2012Usually, an immediate consequence of that edition.) Available at http://www.itu.int/ITU-D/ict/publications/political support is the availability of financial resourcesworld/world.html.to undertake the main initiatives. Unfortunately, Latin Jipp, A. 1963. Wealth of Nations and Telephone Density.Telecommunications Journal (July): 199201.America offers numerous examples of fruitless, well-designed e-government plans that, years after launching,Katz, R. 2012. The Impact of Broadband on the Economy: Researchto Date and Policy Issues. ITU Broadband Series, April. Geneva:are still waiting to see some financial investment that ITU. Available at http://www.itu.int/ITU-D/treg/broadband/ITU-BB-would allow the projects to be implemented. AlthoughReports_Impact-of-Broadband-on-the-Economy.pdf.Colombia, Uruguay, and Panama could have done World Economic Forum. 2012. The Global Competitiveness Reportmore in providing funding to e-government initiatives, 20122013. Geneva: World Economic Forum. Available at www. weforum.org/gcr.they clearly understood that nice documents with nobacking money produce no results. Smartly usinginternational cooperation and public-private partnerships,they managed to allocate financial resources to theire-government plans every year.The virtuous triangle of success in these threecountries adds another vertex in the careful attentionpaid to human resources. The systematic investmentin the qualification of government officers as well asa carefully designed institutional framework allowedColombia, Uruguay, and Panama to advance morequickly than other countries in the region.Other ingredients, such as the operational autonomyof AGESIC in Uruguay and AIG in Panama; theappropriation office in Colombia; the strong IT sector inUruguay; the international cooperation in Panama; theimplication of the private sector in Colombia; and thecommitment of three, well-qualified champions in thethree countries added the necessary spice to a recipemade of the best ingredients: political support, financialbacking, and qualified human resources.PARTS 3 AND 4: COUNTRY/ECONOMY PROFILESAND DATA PRESENTATIONParts 3 and 4 feature comprehensive profiles for eachof the 144 economies covered in this years Reportand data tables for each of the 54 variables composingthe NRI, with global rankings. Each part begins with adescription of how to interpret the data provided. Technical notes and sources, included at the endof Part 4, provide additional insight and informationon the definitions and sources of specific quantitativexviii | The Global Information Technology Report Report 2013 @ 2013 World Economic Forum 20. The NetworkedReadiness IndexRankings@ 2013 World Economic Forum 21. @ 2013 World Economic Forum 22. The Networked Readiness Index 2013 2012 rank2012 rank Rank Country/Economy Score (out of 142) Rank Country/Economy Score(out of 142)1 Finland5.98373Ukraine3.87752 Singapore5.96274Thailand 3.86773 Sweden 5.91175Romania3.86674 Netherlands5.81676Indonesia3.84805 Norway 5.66777Moldova3.84786 Switzerland5.665 78 Bosnia and Herzegovina 3.8084 7United Kingdom 5.64 1079Seychelles 3.80 n/a8 Denmark5.58480Egypt3.7879 9United States5.578 81 Cape Verde 3.7881 10 Taiwan, China5.47 1182Armenia3.7694 11 Korea, Rep.5.46 1283Albania3.756812Canada 5.44984Vietnam3.748313Germany5.43 1685Jamaica3.7474 14 Hong Kong SAR5.40 1386Philippines3.738615Israel 5.39 2087Serbia 3.708516Luxembourg 5.37 2188Rwanda 3.688217Iceland5.31 1589Morocco3.649118Australia5.26 17 90 Dominican Republic 3.628719Austria5.25 1991Ecuador3.58 96 20 New Zealand5.25 1492Kenya3.549321Japan5.24 18 93 El Salvador3.53 10322Estonia5.12 2494Lebanon3.539523Qatar5.10 2895Ghana3.519724Belgium5.10 2296Botswana 3.5089 25 United Arab Emirates 5.07 3097Liberia3.48 n/a26France 5.06 23 98 Gambia, The3.47 10127Ireland5.05 2599Argentina3.479228Malta4.90 26100 Guyana 3.45 9029Bahrain4.83 27 101Iran, Islamic Rep. 3.43 10430Malaysia 4.82 29102 Guatemala3.4298 31 Saudi Arabia 4.82 34103 Peru 3.39 10632Lithuania4.72 31104 Paraguay 3.37 11133Portugal 4.67 33105 Pakistan 3.35 10234Chile4.59 39106 Cambodia 3.34 10835Cyprus 4.59 32107 Senegal3.33 100 36 Puerto Rico4.55 36108 Venezuela3.33 10737Slovenia 4.53 37109 Honduras 3.329938Spain4.51 38110 Uganda 3.30 11039Barbados 4.49 35111 Namibia3.29 10540Oman 4.48 40112 Tajikistan 3.29 11441Latvia 4.43 41113 Nigeria3.27 112 42 Czech Republic 4.38 42114 Bangladesh 3.22 11343Kazakhstan 4.32 55115 Zambia 3.19 10944Hungary4.29 43116 Zimbabwe 3.17 12445Turkey 4.22 52117 Suriname 3.13 12146Panama 4.22 57 118Kyrgyz Republic3.09 11547Jordan 4.20 47119 Bolivia3.01 12748Montenegro 4.20 46 120Cte dIvoire3.00 12249Poland 4.19 49121 Gabon2.97 n/a50Italy4.18 48122 Mali 2.97 12651Croatia4.17 45123 Benin2.97 11752Uruguay4.16 44124 Cameroon 2.95 125 53 Costa Rica 4.15 58125 Nicaragua2.93 131 54 Russian Federation 4.13 56126 Nepal2.93 12855Mauritius4.12 53127 Tanzania 2.92 12356Azerbaijan 4.11 61128 Ethiopia 2.85 130 57 Brunei Darussalam4.11 54129 Malawi 2.83 11658China4.03 51 130Burkina Faso 2.80 13559Mongolia 4.01 63131 Algeria2.78 11860Brazil 3.97 65132 Libya2.77 n/a 61 Slovak Republic3.95 64133 Mozambique 2.76 12062Kuwait 3.94 62134 Timor-Leste2.72 13263Mexico 3.93 76135 Mauritania 2.71 13964Greece 3.93 59136 Swaziland2.69 13665Georgia3.93 88137 Madagascar 2.69 13466Colombia 3.91 73138 Lesotho2.68 133 67 Macedonia, FYR 3.89 66139 Yemen2.63 14168India3.88 69140 Guinea 2.61 n/a 69 Sri Lanka3.88 71141 Haiti2.58 142 70 South Africa 3.87 72142 Chad 2.53 13871Bulgaria 3.87 70 143Sierra Leone 2.53 n/a 72 Trinidad and Tobago3.87 60144 Burundi2.30 137 The Global Information Technology Report Report 2013 | xxi@ 2013 World Economic Forum 23. @ 2013 World Economic Forum 24. Part 1The CurrentNetworked Readinessfor Growth and Jobs @ 2013 World Economic Forum 25. @ 2013 World Economic Forum 26. CHAPTER 1.1 When The Global Information Technology Report (GITR)and the Networked Readiness Index (NRI) were createdThe Networked Readiness some 12 years ago, the attention of decision makersand investors was on adopting business and financialIndex 2013: Benchmarkingstrategies that would allow them to develop in thecontext of a fast-moving but nascent Internet economy.ICT Uptake and SupportOver more than a decade, the NRI has provideddecision makers with a useful conceptual framework tofor Growth and Jobs in aevaluate the impact of information and communicationHyperconnected Worldtechnologies (ICTs) at a global level, and to benchmarkthe ICT readiness and the usage of their economies.Today, the world has undergone massive changes:BEAT BILBAO-OSORIO, World Economic Forum the Internet bubble has come and gone, and emergingSOUMITRA DUTTA , Cornell University countries such as China and India have becomeTHIERRY GEIGER, World Economic Forumprominent global providers and users of ICT equipmentBRUNO LANVIN, INSEADand services. Struggling to emerge from the financialcrisis, developed economies are striving to return tohigher levels of growth and competitiveness whilefighting stubbornly high unemployment rates, especiallyamong their youth. Both emerging and developedeconomies are focusing on innovation, competingglobally for talent, resources, and market shares.Information flows and networks have spread acrossborders in ways that could not be imagined before theonset of the Internet, the global adoption of mobiletelephony and social networks, and the rapid growth ofbroadband. Business models have been redefined, theworkplace has been redesigned, small startups haveevolved into large companies, and entire functions ofsociety (education, health, security, privacy) are beingrethought.ICTS, COMPETITIVENESS, GROWTH, AND JOBS: ACOMPLEX RELATIONSHIPThe links between ICTs (their tools, services, and models)on the one hand and the unwavering importance ofcompetitiveness, growth, and jobs on the other havenever before been the subject of so much attention andconcern. This is hardly surprising when one considersthe pull of technology: developed economies needto reinvent themselves to maintain or restore theircompetitiveness, retain or regain market shares, andcreate jobs; emerging and developing economies areseeking ways to improve productivity and find newsources of growth through new technologies. Finally,the world needs to collectively address environmentaland social challenges to ensure a more sustainabledevelopment path and a better quality of life for itspeople. On the push side, technological progresscontinues at a relentless speed. The growing availabilityof technology has empowered citizens of both developedand emerging economies with fairly good access to thedigital world. The rise of cloud computing has reducedthe competitive differentials in technology availabilityacross larger and smaller firms. Low entry barriers in theThe Global Information Technology Report 2013 | 3 @ 2013 World Economic Forum 27. Chapter 1.1: The Networked Readiness Index 2013digital space have sparked creativity and given rise to a the studies thereof. Rather, it highlights the valuableclass of young entrepreneurs around the world. It is clearcontribution of comprehensive models of ICT usage andthat ICTs offer higher benefit-to-cost ratios in all sectorsimpact such as the Networked Readiness Index (NRI).of production, while simultaneously offering new ways toThe ITU report concludes that this emphasizes thecreate value by better and more efficiently organizing theimportance of implementing public policies not only inuse of natural, financial, and human resources. the areas of telecommunications regulation, but also inNumerous studies have been presented in the education, economic development and planning, scienceliterature on the connections between ICTs on the and technology and others.3one hand, and development and growth on the other. For more than a decade, the NRI has includedAlthough the first analyses of the economic impactaspects of the ways ICTs are transforming the economyof fixed telephone density on economic growth wereand society. Among the expressions of transformationconducted more than three decades ago,1 such studiesis the development of new skills that are important inhave proliferated in recent years. Despite the ubiquity knowledge-based, information-rich societies and thatof ICTs in society and business, such research hasare crucial for employment. Despite the fact that ICTs arenot been easy. For one thing, the pace of adoption of becoming increasingly universal, the question of accessmany technologies (broadband, mobile, etc.) has beenand usage remains importantespecially for developingfast and recentthus limiting the validity of longitudinalcountries, given their need to narrow the digital divide.studies and making it difficult for data collection The NRI includes features related to access and usageagencies to keep pace with the definition and collectionthat cover not only affordable ICT infrastructure butof appropriate metrics. Also, it remains challenging to also digital resources, including software and skills. Inisolate the impact of ICT as its economic impacts haveaddition, the NRI includes proxies for assessing someoften occurred when combined with other broad socialof the economic and social impacts accruing from ICTs.and business changes. Thus, the Index facilitates the identification of areasA recent ITU report summarizes the overall findings where policy interventionthrough investment, smartfrom current research on the economic impact of regulation, and/or incentivescould boost the impact ofbroadband:ICTs on development and growth.THE NETWORKED READINESS FRAMEWORK: AFirst, broadband exhibits a higher contribution toHOLISTIC APPROACH TO MEASURE ICT ACCESSeconomic growth in countries that have a higher AND IMPACTSadoption of the technology (this could be labelled theGiven the potential high returns that ICTs can providecritical mass or return to scale theory). Second, in transforming a nations economy and its citizensbroadband has a stronger productivity impact in well-being, assessing ICT developments has been thesectors with high transaction costs, such as financialobject of much academic and policy attention in the pastservices, or high labor intensity, such as tourism anddecade. Several organizations have made significantlodging. Third, in less-developed regions, as postulatedefforts to measure and benchmark ICT deploymentin economic theory, broadband enables the adoptionand uptake, but few have aimed at equally assessingof more efficient business processes and leads to the returns that ICTs can actually provide to both thecapital-labour substitution and, therefore, loss of jobseconomy and society. Although data availability is(this could be labelled the productivity shock theory). still scarce in terms of ICT impacts, policy interest inFourth, the impact of broadband on small and medium measuring ICTs has shifted from measuring ICT accessenterprises takes longer to materialize due to the need toto measuring ICT impacts.restructure the firms processes and labor organizationLast year, after two years of research andin order to gain from adopting the technology (this isconsultations with ICT practitioners, policy and industrycalled accumulation of intangible capital). Finally, theexperts, and academia, the NRI introduced a neweconomic impact of broadband is higher when promotion subindex on ICT impacts that aimed at holisticallyof the technology is combined with stimulus of innovative assessing the way that countries go about leveragingbusinesses that are tied to new applications. In otherICTs and benefiting from them in terms of enhancedwords, the impact of broadband is neither automatic nor competitiveness and well-being. This evolution ensureshomogeneous across the economic system.2that the NRI framework remains at the forefront ofICT measurement. As one of the most authoritativeassessments of its kind, it has been adopted by severalThe concluding sentence above is important andgovernments as a valuable tool for informing theirgenerally valid for most other analyses of the economic competitiveness and policy agendas.impact of ICTs on development and growth. This inThe design of the framework for the calculation ofno way negates either the economic impact of ICTs orthe NRI (Figure1) has been guided by five principles:4 | The Global Information Technology Report 2013 @ 2013 World Economic Forum 28. Chapter 1.1: The Networked Readiness Index 2013Figure 1: The Networked Readiness Index frameworkDRIVERSIMPACTSEnvironmentInfrastructure IndividualEconomic Affordability Skills Business GovernmentSocialReadinessUsage1. Measuring the economic and social impacts given their need to narrow the digital divide. of ICTs is crucial. The NRI must includeEven within developed nations, the need to aspects of the way ICTs are transforming both provide high-speed broadband to all segments the economy and society. In the economy ofof the population has acquired importance in several countries, the ICT industry has becomerecent years. Some features of the NRI are increasingly important and now accounts for a related to access and usage; these cover not significant share of value-added and employment.only affordable ICT infrastructure but also digital In addition, ICTs interact closely with many otherresources, including software and skills. Moreover, sectors, thus enabling innovations to accrue andICT impacts can arise only if ICTs are widely used affecting productivity. Moreover, the impacts ofby all key actorsindividuals, businesses, and ICTs are also evident in the development of new governments. It is a society-wide effort. Those skills that are important in knowledge-based, actors demonstrating better preparedness and information-rich societies and that are crucial for greater interest are likely to use ICT more and employment. In society, ICTs allow citizens tomore effectively, contributing to a greater impact participate more actively and steadily in socialon competitiveness and development. and political debates and make the government4. All factors interact and co-evolve within an more accountable. They improve access to better ICT ecosystem. Those societies that can count and faster services, which, in turn, yield important on better-prepared actors and an enabling benefits. environment are more likely to benefit from higher2. An enabling environment determines therates of ICT use and impacts. At the same time, capacity of an economy and society to benefit those societies that benefit from higher rates from the use of ICTs. The success of a countryof ICT use and positive impacts will, in turn, be in leveraging ICTs and achieving the desiredmore likely to benefit from a push on the part of economic and social benefits will depend on its the different stakeholders to be better prepared overall environmentincluding market conditions,and keep improving the framework conditions the regulatory framework, and innovation- that will allow for more and stronger benefits prone conditionsto boost innovation andto accrue. As a result, a virtuous circle starts, entrepreneurship. where improvements in one area affect and drive improvements in other areas. Conversely, lags in3. ICT readiness and usage remain key drivers one particular factor also affect the evolution of and preconditions for obtaining any impacts. the other factors. Despite the increasing availability of ICTs, the question of access and usage remains important especially for developing countries,The Global Information Technology Report 2013 | 5 @ 2013 World Economic Forum 29. Chapter 1.1: The Networked Readiness Index 2013Figure 2: The Networked Readiness Index structureSubindexes PillarsPolitical and regulatory environmentEnvironmentBusiness and innovation environmentInfrastructure and digital contentReadiness AffordabilitySkillsThe NetworkedReadiness IndexIndividual usageUsage Business usageGovernment usageEconomic impactsImpactSocial impacts5.The framework should provide clear policythe results of the fourth subindex, ICT impacts. Theseorientations and identify opportunitiesfour subindexes are divided into 10 pillars composed offor public-private collaboration. The NRI54 individual indicators in total, according to the followingfacilitates the identification of areas wherestructure (see also Figure2):policy interventionthrough investmentincluding public-private partnerships, smartA.Environment subindexregulation, or the provision of incentivescould 1. Political and regulatory environmentboost the impacts of ICTs. This is important 2. Business and innovation environmentbecause the development and general uptakeof ICTs depend on the capacity of a country toB.Readiness subindexprovide an institutional framework with reliable 3. Infrastructure and digital contentand efficient rules and regulations; favorable 4. Affordabilitybusiness conditions for the founding and growth5. Skillsof new (social and commercial) enterprises;an innovation-prone environment, capable of C.Usage subindexdeveloping and absorbing new knowledge; and6. Individual usagean ICT-friendly government policy. 7. Business usage 8. Government usageELEMENTS OF THE NETWORKED READINESSD.Impact subindexINDEX 9. Economic impactsThe networked readiness framework translates into10. Social impactsthe NRI, comprising four subindexes that measure theenvironment for ICTs; the readiness of a society to useICTs; the actual usage of all main stakeholders; and,The final NRI score is a simple average of the fourfinally, the impacts that ICTs generate in the economy composing subindex scores, while each subindexsand in society. The three first subindexes can bescore is a simple average of those of the composingregarded as the drivers that establish the conditions forpillars. In doing this, we assume that all NRI subindexes6 | The Global Information Technology Report 2013@ 2013 World Economic Forum 30. Chapter 1.1: The Networked Readiness Index 2013make a similar contribution to networked readiness. the quality of the educational system, the level of adultAppendix A includes detailed information on the literacy, and the rate of secondary education enrollment.composition and computation of the NRI 2013, while webriefly describe the different subindexes below.Usage subindexThe usage subindex assesses the individual efforts ofEnvironment subindexthe main social agentsthat is, individuals, business,The environment subindex gauges the friendlinessand governmentto increase their capacity to use ICTsof a countrys market and regulatory framework in as well as their actual use in their day-to-day activitiessupporting high levels of ICT uptake and the emergencewith other agents. It includes 16 variables.of entrepreneurship and innovation-prone conditions. AThe individual usage pillar (seven variables)supportive environment is necessary to maximize the measures ICT penetration and diffusion at the individualpotential impacts of ICTs in boosting competitiveness level, using indicators such as the number of mobileand well-being. It includes a total of 18 variables phone subscriptions, individuals using the Internet,distributed into two pillars. households with a personal computer (PC), householdsThe political and regulatory environment pillar with Internet access, both fixed and mobile broadband(composed of nine variables) assesses the extentsubscriptions, and the use of social networks.to which the national legal framework facilitates ICT The business usage pillar (six variables) captures thepenetration and the safe development of businessextent of business Internet use as well as the efforts ofactivities, taking into account general features of the the firms in an economy to integrate ICTs into an internal,regulatory environment (including the protection afforded technology-savvy, innovation-conducive environment thatto property rights, the independence of the judiciary, andgenerates productivity gains. Consequently, this pillarthe efficiency of the law-making process) as well as more measures the firms technology absorption capacity asICT-specific dimensions (the passing of laws related to well as its overall capacity to innovate and the productionICTs and software piracy rates).of technology novelties measured by the number ofThe business and innovation environment pillar (ninePatent Cooperation Treaty (PCT) patent applications.variables) gauges the quality of the business framework It also measures the extent of staff training available,conditions to boost entrepreneurship, taking into account which indicates the extent to which managementdimensions related to the ease of doing businessand employees are more capable of identifying and(including the presence of red tape and excessive fiscaldeveloping business innovations. New this year, we havecharges). This pillar also measures the presence of split the e-commerce variable from previous editions toconditions that allow innovation to flourish by including distinguish the business-to-business dimension fromvariables on the overall availability of technology, thethe business-to-consumer one, as some noticeabledemand conditions for innovative products (as proxied differences between the two dimensions exist in severalby the development of government procurement of countries.advanced technology products), the availability of ventureThe government usage pillar (three variables)capital for financing innovation-related projects, and theprovides insights into the importance that governmentspresence of a skilled labor force.place on carrying out ICT policies for competitivenessand to enhance the well-being of their citizens, theReadiness subindexefforts they make to implement their visions for ICTThe readiness subindex, with a total of 12 variables, development, and the number of government servicesmeasures the degree to which a society is prepared to they provide online.make good use of an affordable ICT infrastructure anddigital content.Impact subindexThe infrastructure and digital content pillar (five The impact subindex gauges the broad economicvariables) captures the development of ICT infrastructure and social impacts accruing from ICTs to boost(including mobile network coverage, international Internetcompetitiveness and well-being and that reflect thebandwidth, secure Internet servers, and electricity transformations toward an ICT- and technology-savvyproduction) as well as the accessibility of digital content.economy and society. It includes a total of eightThe affordability pillar (three variables) assesses the variables.cost of accessing ICTs, either via mobile telephony or fixed The economic impacts pillar (four variables)broadband Internet, as well as the level of competition inmeasures the effect of ICTs on competitiveness thanksthe Internet and telephony sectors that determine this cost.to the generation of technological and non-technologicalThe skills pillar (four variables) gauges the ability innovations in the shape of patents, new products orof a society to make effective use of ICTs thanks toprocesses, and organizational practices. In addition, itthe existence of basic educational skills captured by also measures the overall shift of an economy towardmore knowledge-intensive activities. The Global Information Technology Report 2013 | 7 @ 2013 World Economic Forum 31. Chapter 1.1: The Networked Readiness Index 2013Figure 3: Breakdown of indicators used in the Networked Readiness Index 2013 by data source EXECUTIVE OPINIONINDICATORS FROM SURVEYOTHER SOURCES TOTAL: 54 INDICATORS 27 INDICATORS27 INDICATORS(50%)(50%)The social impacts pillar (four variables) aims atorganizations such as International Telecommunicationassessing the ICT-driven improvements in well-being Union (ITU), the World Bank, and the United Nations.thanks to their impacts on the environment, education,International sources ensure the validation andenergy consumption, health progress, or more-active comparability of data across countries.civil participation. At the moment, because of dataThe remaining 27 variables capture aspects thatlimitations, this pillar focuses on measuring the extent to are more qualitative in nature or for which internationallywhich governments are becoming more efficient in thecomparable quantitative data are not available for a largeuse of ICTs and providing increasing online services to enough number of countries, but that nonetheless aretheir citizens, and thus improving their e-participation. crucial to fully measure national networked readiness.It also assess the extent to which ICTs are present inThese data come from the Executive Opinion Survey (theeducation, as a proxy for the potential benefits that are Survey), which the Forum administers annually to overassociated with the use of ICTs in education. 15,000 business leaders in all economies included inIn general, measuring the impacts of ICTs isthe Report.4 The Survey represents a unique source ofa complex task, and the development of rigorous insight on many critical aspects related to the enablingquantitative data to do so is still in its infancy. As a result,environment, such as the effectiveness of law-makingmany of the dimensions where ICTs are producing bodies and the intensity of local competition; to ICTimportant impactsespecially when these impacts are readiness, such as the quality of the educational systemnot translated into commercial activities, as is the case and the accessibility of digital content; to ICT usage,for the environment and for healthcannot be coveredsuch as capacity to innovate and the importance ofyet. Therefore this subindex should be regarded as agovernment vision for ICTs; and to impact, such as thework in progress that will evolve to accommodate newimpact of ICTs on developing new products and servicesdata on many of these dimensions as they become and improving access to basic services.available. The NRIs coverage every year is determined bythe Survey coverage and data availability for indicatorsCOMPUTATION METHODOLOGY AND DATAobtained from other sources, mostly internationalIn order to capture as comprehensively as possible allorganizations. This year the Report includes 144relevant dimensions of societies networked readiness,economies, two more than in the 2012 edition. Fivethe NRI 2013 is composed of a mixture of quantitative new countries are included: Gabon, Guinea, Liberia,and survey data, as shown in Figure3.Seychelles, and Sierra Leone. Libya was re-included Of the 54 variables composing the NRI this year, 27after a year of absence. Three previously coveredare quantitative data, collected primarily by international countries had to be excluded from this years Report:8 | The Global Information Technology Report 2013 @ 2013 World Economic Forum 32. Chapter 1.1: The Networked Readiness Index 2013Survey data could not be collected in Belize or Angola;second group of economies that posts a remarkablein Syria, the political situation did not allow the Survey performance is the Asian Tigers: Singapore, Taiwanto be carried out. In the case of Tunisia, we decided(China), the Republic of Korea, and Hong Kong SAR.not to report the results this year because an important The latter, the lowest-ranked of the four, comes in at 14thstructural break in the data makes comparisons withplace. All boast outstanding business and innovationpast years difficult. We hope to re-include theseenvironments that are consistently ranked among thecountries in the future. most conducive in the world. The Tigers also stand out More details on variables included in the Index and for their governments leadership in promoting the digitaltheir computation can be found in Appendix A and in theagenda, and the impact of ICTs on society tends to beTechnical Notes and Sources section at the end of thelarger in these economies.Report.Overtaking Singapore and neighboring Sweden, Finland (1st) reaches the top of the NRI rankings forTHE CURRENT NETWORKED READINESSthe first time, thanks to improvements across theLANDSCAPE: INSIGHTS FROM THE NRI 2013board. The country shows progress on two-thirds ofThis section provides an overview of the networked the 54 indicators of the NRI and posts a very consistentreadiness landscape of the world as assessed byperformance across all categories of the NRI. Finlandthe NRI 2013. It It presents the results of the topappears in the top three of each of the four subindexes10 performers and selected countries by region, in and in the top 10 of nine of the 10 pillars, toppingthe following order: Europe and the Commonwealth two (skills and economic impacts). Among the 144of Independent States, Asia and the Pacific, Latin economies, only Sweden achieves as impressive aAmerica and the Caribbean, sub-Saharan Africa, and level of excellence and consistency. Finlands lowestthe Middle East and North Africa. Tables 1 through 5 rank among the 10 pillars is its 19th position in thereport the 2013 rankings for the overall NRI, its four affordability pillar, which can hardly be considered asubindexes, and its ten pillars. In addition, the Country/ weakness given that, among high-income countries,Economy Profiles and Data Tables sections at the end ICT services in Finland are among the most affordableof the Report present the detailed results for the 144 (it comes in 5th, with Iceland and Sweden leadingeconomies covered by the study and the 54 indicators the category). As set out in the governments Digitalcomposing the NRI. To complement the analysis of the Agenda for 20112020, Finland has set in motion aresults, Box1 discusses the persisting new digital divide virtuous digital circle offering exceptionally conduciveacross and within regions as revealed by the NRI results,institutional (3rd) and business (7th) environments, world-and Box2 examines increasing returns to ICT, skills, andclass infrastructure (2nd), and arguably one of the bestinnovation investment and suggests that an investmenteducational systems in the world. As a result, ICTs arethreshold in these three areas may exist and thatubiquitous and penetration rates are among the highestwithout reaching it, the return may be negligible. Finally,globally. Ninety percent of households are equippedAppendix A of the present chapter details the structurewith a computer and 90 percent of the population useof the NRI and describes the method of calculation.the Internet, mostly at broadband speeds. Finland is an innovation hub, boasting the worlds highest numberTOP 10 of PCT applications per capita in the domain of ICTs,Two groups of economies dominate the top ranks of theand the third highest when considering all domains.NRI: Northern European economies and the so-called But the impact of ICTs extends well beyond innovation,Asian Tigers. Among the Northern European countries, permeating the entire economy and society. Forfour of the five Nordic economies represented in instance, Finland ranks 1st on the indicator capturing thethe NRIFinland, Sweden, Norway, and Denmark (in extent to which ICTs create new services and products.rank order)continue to feature in the top 10. Iceland,Singapore remains 2nd overall, while slightlythe last of the Nordics, is not too far behind, at 17thimproving its score. The city-state ranks 1st in a recordplace (see Table1). The performance of this group infour pillars, while Finland leads only two. Singaporeterms of readiness is particularly outstanding. All five shows the way in the environment subindex, earning theNordics feature in the top 10 of this subindex. Within top spot in both the political and regulatory environmentthis subindex, on the infrastructure and digital content pillar and the business and innovation environmentpillar, four countries occupy the top positions. Overall,pillar. The extreme efficiency and business friendlinessthe four Nordic economies, the Netherlands, and theof its institutional framework, strong intellectual propertyUnited Kingdom comprise no less than six Northernprotection, intense competition, and high universityEuropean countries among the top 10. As highlightedenrollment rate lead to these outstanding outcomes.in the previous edition and elsewhere in this Report,Singapores readiness (11th) is also world class, thank