March 28, 2007

'Technology readiness'. The term may not yet resonate as much as 'gross domestic product' or 'human development index' when it comes to evaluating the potential of a nation, but it is nevertheless rapidly becoming a vital statistic for economists and public sector planners.

One of the first bodies to spot the link between Information and Communications Technology (ICT) development and financial prosperity was the World Economic Forum, which in 2001 published its first Global Information Technology Report.

The annual report, produced jointly with INSEAD business school since 2002, ranks countries according to their Networked Readiness Index (NRI), a measure of ICT development based on 67 variables, and has become a major yardstick for measuring the potential for a nation's prosperity.

In recognition of the critical role of network technologies in contributing to a nation's NRI, Cisco Systems, Inc., has sponsored the report for a number of years.

Coinciding with the publication of this year's edition, 'Connecting to the Networked Economy', News@Cisco spoke to Yvon Le Roux, Vice-President of the Public Sector for Cisco in the European markets, and one of the report's authors, Irene Mia of the World Economic Forum.

What are the main trends evident in this year's report?

Irene Mia: The most striking feature of the ranking is the dominance of European and particularly Nordic countries among those with the highest NRI. Out of the top 10 nations in our table, eight are European and five are from the Nordics.

Denmark has the highest NRI of all, climbing to the top position for the first time as a culmination of an upward trend observed since 2003. It is followed by Sweden, which has gone up six places, and then Singapore, the only Asian country in the top 10.

The only other non-European country in the first 10 is the United States, last year's number one, which has dropped to number seven due to a relative deterioration in its political and regulatory environment, although it continues to rate top in many of the NRI's component parameters.

Elsewhere, it is worth noting the number of small Asian economies holding positions in the top 20. These places, namely Singapore, Hong Kong, Taiwan and Korea, all share with the Nordic countries a high level of ICT adoption coupled with strong and effective government leadership.

Finally, it is heartening to see a number of Latin and Central American countries reaping the benefits of their e-government strategies, with significant improvements in rank for Mexico, Uruguay, Argentina, Peru, Jamaica, Costa Rica, the Dominican Republic and Guatemala.

What examples do you see of government policy having a transformative effect on NRI?

Irene Mia: A number of the countries mentioned earlier have improved their placing as a result of forward-thinking government policy.

But perhaps one of the most striking examples is Estonia, which has this year entered the global top 20 after rising five places in the last two years.

Estonia must be praised for the progress it has made in a very short period and for showing the way, in networked readiness and general competitiveness alike, not only to the rest of the recent European Union accession countries but also to much of the Union's old guard.

The leadership role assumed by the Estonian government in promoting ICT use and penetration is so noteworthy that we have devoted an entire chapter to it in this year's report.

What does it imply to have a high or low NRI?

Yvon Le Roux: At Cisco we have long believed in a strong relationship between ICT adoption and productivity, and the Global Information Technology Report has confirmed this by showing there is in fact an 85 percent correlation between the two.

When we talk about productivity in the public sector, we are usually referring to a measure that improves citizen satisfaction and lowers costs, so it is clearly in the interests of a nation and its administration to strive for as high an NRI as possible.

What are the main barriers to ICT adoption and improved productivity?

Yvon Le Roux: In our own research, separate from the Global Information Technology Report, we have found that the main barriers tend to be organizational and employee-related.

In many cases, the principal problem is simply a lack of qualified personnel to help lead and staff ICT projects.

We have carried out extensive studies into current and projected networking skills gaps in a range of countries and have found that it is a major and worsening problem both for leading nations and those in emerging markets, particularly with regards advanced technologies.

Since networked readiness has been shown to be so critical in productivity and competitiveness, we have been trying to address the skills-gap problem with our worldwide Networking Academy® program, which this year celebrates its tenth anniversary across 168 countries.