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ICT development can be key tool in turning round faltering economies

Professor Leonard Waverman, author of a study “Connectivity Scorecard 2009” shows, calls on governments to stimulate return to growth with investment in the “infrastructure for the 21st Century”

The Connectivity Scorecard 2009, commissioned by Nokia Siemens Networks, and written by Professor Waverman, Fellow of the London Business School, and with the consulting group LECG, measured the extent to which governments, businesses and consumers in 50 countries make use of connectivity technologies to enhance economic and social prosperity. Connectivity is defined as the bundle of infrastructure, complementary skills, software and informed usage that makes communications networks the key driver of productivity and economic growth.

The results showed that even the best connected countries in the world have no reason for complacency when it came to their use of ICT.

“At a time when governments around the world are looking to jump start their economies with a variety of stimuli packages, the Connectivity Scorecard shows that every single one of them, even the United States, has plenty of room to develop their ICT infrastructure and improve the actual use of it to the benefit of both the economy and society,” said Professor Waverman. “Communications networks are the infrastructure of the 21st century and these networks are very large construction programs. There is great potential for them in using ICT to stimulate growth.” 

The Connectivity Scorecard is unique in its broadening of the definition of connectivity to include not just infrastructure but also how effectively that infrastructure is being used. This “useful connectivity” it measures illuminates the extent to which countries are harnessing the potential of ICT.

“The concept of useful connectivity is a reminder that technology alone will not solve economic or social problems, rather it is a tool that can be used to achieve those aims. Judiciously applied that tool can be extremely powerful and the Connectivity Scorecard acts as an important guide to where and how countries might apply it to achieve the best results,” said Simon Beresford-Wylie, chief executive of Nokia Siemens Networks.

The Connectivity Scorecard 2009, which has doubled the number of countries covered in the ground-breaking 2008 study, ranks the United States first in the group of 25 innovation-driven economies, while Malaysia leads a table of 25 resource and efficiency-driven economies.

The rankings are determined by the measurement of each country against two criteria – infrastructure and usage plus skills – in the realms of business, government and consumer, with weightings of each of the three tailored to each country. Low scores reflect gaps in a country’s infrastructure, usage or both.

For each of the six components of the Scorecard, countries are benchmarked against the best in class in their tier; thus if a country was best in all dimensions, it would score a maximum of 10. The Scorecard, therefore, measures countries against the best ICT usage that currently exists rather than an ideal model.

Thus, the fact that the United States scores 7.71 illustrates that not only is there considerable room for improvement in comparison to its peers in aspects of its performance, but also that there is scope for development beyond that. The Scorecard finds, for example, that the United States achieves a somewhat low score in consumer infrastructure where 3G penetration, and even household broadband penetration, is moderate by standards of other innovation-driven economies

“The example of the United States shows very clearly that even the wealthiest and most technologically advanced countries still have a great deal to gain from further development of ICT infrastructure as well as the training and skills development to exploit those connectivity technologies to the limits of the potential,” said Ilkka Lakaniemi, head of global political dialogue and initiatives at Nokia Siemens Networks.

That need has already been recognized by the leadership of the US Congress which, in alignment with the objectives of the new US administration, is proposing, as part of its economic stimulus plan, multi-billion dollar investments in broadband “in under-served areas to strengthen the economy and provide business and job opportunities in every section of America, with benefits to e-commerce, education, and health care”.

While this initiative was welcome by Professor Waverman, he argued that there was room for further investment in the United States and beyond: “The issue is not just infrastructure in under-served rural areas, but also skills development, fibre in urban areas and wireless developments.”

Below the United States in the innovation-driven economy group, the Connectivity Scorecard confirms the reputation of Scandinavia as a technological power region with Sweden, Denmark and Norway all ranked in the top five, with the Netherlands, a new entrant in 2009, making up the top quintet. Japan (10th) and Korea (18th) repeat their surprisingly low performances of 2008 as do Germany (13) and France (15). The poor showing of southern European economies is also repeated as Italy, Spain, Portugal and Greece share the bottom slots in the table with eastern European nations.

In the resource and efficiency group of economies, Latin American nations make the strongest regional showing with Chile third behind Malaysia and Turkey, leading a group of five nations in the top 10. As was the case in 2008 Asian and African nations fare the worst. In 2009 an expanded group of south Asian nations – Sri Lanka, India, Pakistan and Bangladesh – occupy four slots in the bottom eight, while Nigeria finishes 25th and last. (The scores of the innovation-driven economies and the efficiency and resource-driven economies are not comparable, as different sets of criteria, taking account of different circumstances in the two sets of countries, have been used to determine scores.)

The six sub-category scores achieved by countries represent a statistical roadmap for each, highlighting areas of weakness in either their communications infrastructure, the application of that technology or, in many cases, both. As each of the scores represents a unique set of circumstances in each country, each roadmap follows a different path, however comparisons between similar countries (GNP, level of development) signals where policy and changes in behavior are required.

The report’s two central findings, however, apply to all: first, that every country, no matter how advanced its ICT Infrastructure could benefit from the further development of “useful connectivity” and second that to gain the optimal benefits ICT, infrastructure development must be accompanied by smart usage, which requires investment in skills, software and the tools required to make communications networks pathways to prosperity.

“All over the world, government ministers are consulting with their economics advisers on how to get their economies growing again. I believe the debate about the role ICT can play in stimulating growth is one that should be joined with great urgency. I am delighted that it is already happening in many countries, I would urge others to follow suit.” said Professor Waverman.

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