Like any progress over time the advances in world digital evolution will have rapid forward movement with great potential – and some stall outs.
The U.S. and Germany, while long on advances, may be on the verge of a digital stall out – according to a new Digital Evolution Index compiled by The Fletcher School at Tufts University and Mastercard.
“Notably, two of the world’s most significant economies, the U.S. and Germany, are at the border of Stand Out and Stall Out, with a third, Japan, in the neighborhood,” according to the Index’s creators writing in the Harvard Business Review. “It is essential for them to recognize the risks of plateauing and look to the smaller, higher-momentum countries to explore how policy interventions could be effective in pushing a country into a zone of greater competitiveness. In the meantime, the UK’s digital momentum is stronger than its EU peers.”
And while the U.S., parts of Europe and Japan may be in danger of hitting a plateau in digital development, the Index creators say the rest of Asia – including especially China – appears to be advancing quite rapidly.
“Clearly, the most exciting region in the world, digitally speaking, is Asia, with China and Malaysia as exemplars,” say the Index authors. “We can expect to see plenty of investor and entrepreneurial interest in this region; it is critical that the political institutions are stable and supportive.”
India, on the other hand, needs to pay attention to its digital progress.
“India, with many policy-led pushes for digitization, including a Digital India campaign and initiatives to give a boost to digital payments, ought to pay attention to the overall low level of evolution in the country,” according to the Index. “This can act as a drag on any initiative. Broader, more systemic changes are needed to boost digital evolution in this type of environment.”
Kenya is leading the way in Africa. Latin America, take note.
“In Africa, while the two largest economies, Nigeria and South Africa, remain in Break Out and Watch Out zones, respectively, digitally savvy Kenya has picked up an impressive level of momentum by assembling a thriving ecosystem”, report the index creators. “In parallel, countries in Latin America can learn some lessons from smaller, faster-moving countries, such as Colombia and Bolivia.”
The Digital Evolution Index surveyed the digital “state and rate” of digital progress in 60 nations and measured the outcome of four primary drivers within which were counted over 170 drivers of digital progress.
“The (Index) framework segments the 60 countries into Stand Outs, Stall Outs, Break Outs and Watch Outs,” explains the Index executive summary. “Three countries are notable as standouts even within the Stand Out segment: Singapore, New Zealand, and the UAE. Each has a unique policy-led digital strategy and a narrative that may be considered by other nations as worthy of emulation or adoption. The Nordic countries and Switzerland are at the top of the DEI 2017 rankings. China, once again, tops the list of countries in terms of the pace of change in its digital evolution, or momentum.”
Its relative simple, two-word characterization in broad categories signifies much deeper assumptions:
- Stand Out countries are both highly digitally advanced and exhibit high momentum. They are leaders in driving innovation, building on their existing advantages in efficient and effective ways. However, sustaining consistently high momentum over time is challenging, as innovation-led expansions are often lumpy phenomena. To stay ahead, these countries need to keep their innovation engines in top gear and generate new demand, failing which they risk stalling out.
- Stall Out countries enjoy a high state of digital advancement while exhibiting slowing momentum. The five top scoring countries in the DEI 2017 ranking—Norway, Sweden, Switzerland, Denmark, and Finland—are all in the Stall Out zone reflecting the challenges of sustaining growth. Moving past these “digital plateaus” will require a conscious effort by these countries to reinvent themselves, bet on a rising digital technology in which it has leadership, and eliminate impediments to innovation. Stall Out countries may look to Stand Out countries for lessons in sustaining innovation-led growth.
- Break Out countries are low-scoring in their current states of digitalization but are evolving rapidly. The high momentum of Break Out countries and their significant headroom for growth would make them highly attractive to investors. Held back often by relatively weak infrastructure and poor institutional quality, Break Out countries would do well to foster better institutions that can help nurture and sustain innovation. Break Out countries have the potential to become the Stand Out countries of the future with China, Malaysia, Saudi Arabia, Kenya, and Russia leading the pack.
- Watch Out countries face significant challenges with their low state of digitalization and low momentum; in some cases, these countries are moving backwards in their pace of digitalization. Some of these countries demonstrate remarkable creativity in the face of severe infrastructural gaps, institutional constraints, and low sophistication of consumer demand. The surest way for these countries to move the needle on momentum would be to improve access to the internet for their masses by closing the mobile internet gap—that is, the difference between the number of mobile phones and the number of mobile phones with internet access.
Overall, summarizes the Index, any nation’s digital progress is highly dependent on that nation’s public policy toward the digital world and, as a driver in itself, public attitudes and support for digital progress.
“Highly evolved countries typically have had strong government/policy involvement in shaping their digital economies,” say the Index creators. “High momentum countries typically also have strong government/policy involvement. A sophisticated understanding of the state and drivers of the digital economy and its impact on the overall economy are essential for the success of a wide range of prominent policy imperatives such as: how Brexit negotiations are conducted; how India nudges its society towards a “less cash” future; and how the US and China compete for economic dominance.”