Smaller, more nimble nations the real stars in digital race

NEW YORK (BLOOMBERG) - Larger economies may be in danger of losing the digital race to smaller and more nimble nations. Several Nordic countries, Switzerland and tech-centric South Korea are ahead of the United States and Japan, according to a digital economy ranking by researchers at Tufts University, in partnership with Mastercard.

When also factoring in nations' relative digital momentum, the real stars are New Zealand, Singapore and the United Arab Emirates. More than 170 indicators, including mobile broadband penetration, intellectual property laws and anonymised Mastercard data,  were used to rank 60 countries as of 2015, and to show how far they have progressed since 2008.

This score, which the researchers called the Digital Evolution Index, quantifies the interplay between demand and supply within the digital economy, the level of support provided by governments and institutions, and the pace of innovation.

New Zealand, which chairs the Digital 5, or D5 - a group of digitally-minded governments founded in 2014 - has lately been pitching itself to tech entrepreneurs as a safe space to develop away from geopolitical strife. 

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Other countries classified as "standouts" include Singapore, Estonia - a fellow D5 member where most public services are available online - and the United Kingdom, whose spend-happy digital consumers and vibrant Web economy may give it extra leverage as it negotiates a post-Brexit future.

Singapore is pursuing a variety of developments to make the city a "smart nation", a centre for Internet of Things technology and a destination for start-ups. It is leading the world in placing digital technology at the core of key industries, such as financial services and healthcare, the study observed.

Dr Bhaskar Chakravorti, senior associate dean of international business and finance at Tufts University's Fletcher School, said the advantages largely come down to political will and greater coordination in the digital environment. As an example, he pointed to electronic payment systems, where users, merchants and technology providers need to make the transition simultaneously.

The US' weakness is under-investment in digital infrastructure, despite a tech-savvy consumer class and venture capital dollars pouring into start-ups. The greater emphasis on broadband access in countries like Norway and Finland, the first to make it a legal right, is partly why they are at the top of the digital scoreboard. The Philippines and Indonesia are also among the top 15 fastest in digitising.

A version of this article appeared in the print edition of The Straits Times on July 14, 2017, with the headline 'Smaller, more nimble nations the real stars in digital race'. Print Edition | Subscribe