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Networked Readiness: Change in Methodology Shifts Rankings

By Howard Baldwin, Contributing Columnist

Where is broadband deployment most widespread and thus most successful? Countless surveys, including some that we’ve referred to on the Connected Life Exchange, show Asia as the undisputed leader — especially South Korea.

But INSEAD (formerly known as the Institut Européen d’Administration des Affaires) tweaked its methodology for tracking network readiness in its Global Information Technology Report (GTIR) between 2011 and this year, the rankings of its Networked Readiness Index (NRI) came out slightly different, and Asia’s presence faded.

Here are this year’s NRI top ten compared to last year’s:

2012 2011
Sweden Sweden
Singapore Singapore
Finland Finland
Denmark Switzerland
Switzerland United States
Netherlands Taiwan
Norway Denmark
USA Canada
Canada Norway
UK South Korea

Source: INSEAD

According to INSEAD, the GITR provides “a view of how the industry of technology is developing in each country and taken together; this provides a global view of the world’s economic and social development.”

To compile the NRI, INSEAD uses “a combination of data from publicly available sources and the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum in collaboration with partner institutes, a network of over 150 leading research institutes and business organizations.” The executive survey polls more than 15,000 executives.

Affordability Affects Network Readiness Results

What changed with this year’s NRI results?  Among other tweaks to its methodology, INSEAD focused more on affordability rather than readiness, and more on skills than actual usage. Its focus on infrastructure remained similar.

With that change, the Nordic countries — which also appeared in last year’s top ten — received higher scores because they offer tax deductions for buying computers. The report also noted that competition between global Nordic firms (including Ericsson and Nokia) brings pricing down in their home countries as well.

But the impact of affordability rippled through the list, so much so that INSEAD noted:

Defining technology standards by the existence of technology infrastructure is not enough; components such as affordability and skills are crucial to success. The “digital divide” still exists — not just in terms of infrastructure but also in terms of the skills necessary to make use of technology to better social and economic conditions. The main divide is between developed and non-developed countries (broadly, between the industrial northern hemisphere and the commodities-driven southern hemisphere); however, within regions there are also significant divides: within Asia Singapore is in the #2 position globally, while other Southeast Asian countries are at the bottom of the NRI list.

Other Factors: Skills

By focusing on skills over usage, the GTIR illuminates how readily a country’s citizens can take advantage of the technology. In other words, anyone with a mobile device can access the Internet, and that’s a step forward. But do they have the skills to capitalize on the Internet and improve their financial standing?

Do they have the skills to build a business, or to use the information they get online to make their pricing more efficient (as some farmers have done to check in which cities they can get the most for their crops)? That’s clearly where skills trump usage.

Given the continuing efforts of companies like Cisco and others to seed the technology capabilities of underdeveloped countries, it will be interesting to see how this list changes over time — and how quickly it does so. Without the shackles of legacy ICT systems, will underdeveloped countries be able to leapfrog developed countries?

Most important, even if education and infrastructure improves, will economic limitations — the ability for entrepreneurs to start businesses, knowing their work will be rewarded without the threat of corruption or intellectual property theft — still impact the results?

As the subtle shifts in INSEAD’s methodology reveal, it is frequently small changes that trigger big differences. For policymakers, this could involve taking steps to improve the educational system, reducing tariffs on networks, or allowing for larger deductions for computing equipment (both for home and business use). Those kinds of efforts could boost any given country’s ranking on this list, and any sign of progress is cause for celebration.

Soumitra Dutta, a co-author of the report, highlighted the key findings in an interview.

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