Economist Intelligence Unit e-readiness rankings
E-business is taking root just about everywhere—but some countries are pioneers, others laggards. Which are faring best in e-business, and what characterises their success? The answers can be found in the 2002 edition of the Economist Intelligence Unit's e-readiness rankings.
‘E-readiness’ is shorthand for the extent to which a country’s business environment is conducive to Internet-based commercial opportunities. It is a concept that spans a wide range of factors, from telephone penetration to online security to intellectual property protection.
‘Despite the dotcom bust, the Internet is still reshaping the way companies do business, and countries' e-readiness will be a vital feature of the global competitive landscape,’ says Daniel Franklin, Editorial Director of the Economist Intelligence Unit.
Covering the world's 60 largest markets, the rankings provide a useful guide for companies seeking to invest in technology-savvy countries, as well as governments looking to reap the benefits of the digital age. The US leads the pack, as it did in 2000 and 2001. However, due partially to changes in methodology, and mostly to developments in countries’ infrastructure, regulatory environment and economy, there have been significant shifts further down in the rankings. The Netherlands has moved into second place from tenth in 2001, for example, and northern Europe now claims most of the other top spots, thanks not only to sophisticated IT infrastructures and high mobile-phone penetration, but also to smart government policy and a good overall business environment. Asia, Latin America and Africa trail further behind, but a few standouts in each region have made significant gains: Venezuela, for instance, improved its ranking from 47th in 2001 to 37th in the current rankings.
Among the main conclusions suggested by the new rankings:
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Western economies take the lead. North America and Western Europe dominate the top ten places in our rankings, with Australia the lonely outsider. These countries score highest both because consumers and businesses have embraced the Internet, and because their economic and political stability and openness to foreign investment make them good bets for all kinds of business, particularly e-business.
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Other regions have pockets of promise. Outside of Western Europe and North America, e-business is less uniformly developed. Singapore and Hong Kong lead the pack in Asia, taking 11th and 13th place, respectively, while Vietnam and Pakistan languish at the bottom of the heap, in 56th and 57th place. The same is true of Latin American, where advanced Chile ranks 28th, while Ecuador stumbles into 50th place. In the Middle East and Africa, Israel alone ranks among the rankings’ top 30 countries.
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Bigger is not always better. The US may rule the roost, but many of the world’s largest economies, including Japan, Germany and France, are outpaced by smaller, more agile competitors, such as the Netherlands, Switzerland and Sweden. What sets these countries apart is the broad accessibility and affordability of the Internet, thanks to state-of-the-art IT infrastructure and high per capita income.
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Business culture is decisive. The US tops the rankings because of the degree to which the Internet has become embedded in commercial culture. Nowhere is so much business conducted over the Internet so routinely. This explains why the US scored highest in the category for e-business supporting services (the consulting and IT services and back-office solutions used to facilitate online business) as well as in the social and cultural category (which considers, among other things, the degree of innovation and entrepreneurship in business). It also explains why Singapore and Hong Kong rank as the most competitive telecoms markets in the world, and among the best equipped, yet don’t figure among the top ten countries. While high-grade infrastructure is important, more important is how people use it.
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Infrastructure is still evolving. Even top-ranked countries have not yet satisfied consumer demand for fast, cheap, secure and reliable Internet connectivity. High-speed, broadband services are not universally available and Internet-ready mobile phones are still in their infancy—even in mobile-crazed Scandinavia.
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Governments have wide influence. Internet business thrives when governments have a clear strategy—and money to spend—to develop IT infrastructure. But that’s not the only area for official involvement. Successful e-business depends on a strong legal framework that protects private property and encourages entrepreneurship. Increasingly, it also requires Internet-specific legislation. In the crucial category of legal and policy environment, Australia comes in first, followed by Sweden, Switzerland, Finland and the UK. Other countries—even those without a strong e-business culture, such as Mexico and Chile—are enacting smart Internet legislation, recognising that good laws promote industry growth.
This year, working in association with IBM’s Institute for Business Value, the Economist Intelligence Unit adjusted the rankings framework to take into account the shift away from the dotcom era’s emphasis on e-commerce to the new imperatives of corporate efficiency, security and global connectivity. The Economist Intelligence Unit was solely responsible for scoring the 60 countries.
The six categories that feed into the rankings (and their weight in the model) are: connectivity and technology infrastructure (25%); business environment (20%), using the 70 indicators covered by the Economist Intelligence Unit’s for 60 countries; consumer and business adoption (20%); social and cultural infrastructure (15%); legal and policy environment (15%); and supporting e-services (5%).