As digitally-developed economies around the globe continue to make larger investments in ICT, digitally-developing economies are also accelerating growth by investing strategically in ICT capabilities and their digital transformation journeys – yet the gap between the two continues to grow.
Those are some of the findings from the latest Huawei Global Connectivity Index (GCI) 2017, the fourth annual study that shows how countries are progressing with digital transformation based on 40 unique indicators covering five technology enablers: broadband, data centers, cloud, big data and Internet of Things. Huawei says that investing in these five key technologies enables countries to digitize their economies.
According to GCI 2017, overall global progress towards a digital economy is picking up speed. The world’s GCI score is up four percentage points since 2015, while the report shows that ICT has become an engine of economic growth.
Of the 50 countries analyzed, 16 are considered Frontrunners in digital transformation, 21 are Adopters, while the remaining 13 are Starters. Frontrunners (average GDP per capita of $50,000) are mostly developed economies that continually boost the digital user experience, using big data and IoT to develop more intelligent, efficient societies. Adopters (average GDP per capita of $15,000) are focused on increasing ICT demand to facilitate industry digitization and high-quality economic growth. Starters (average GDP capita of $3,000) are in the early stage of ICT infrastructure build-out, and focus on increasing ICT supply to give more people access to the digital world.
The report’s findings indicate that economic planners should give priority attention to widening inequality, noting the digital divide is becoming a “digital chasm”:
“By examining three years of GCI data, we see growing inequality, an ICT version of the ‘Matthew Effect’ – the sociology theory that states: ‘the rich get richer and the poor get poorer’. This suggests, groups or individuals that have an accumulated advantage over time not only succeed, but leverage their initial advantage to pull farther and farther ahead of competitors. Policy makers need to understand that this widening digital divide will impact every sector of the economy and society. Nations that cannot build sustainable economic growth may also have difficulty in feeding, educating and providing job opportunities for their people.”
Key areas where inequality is an issue include mobile broadband subscriptions, IT workforce per capita, ICT investment per GDP, apps download per capita and IoT installed base per capita. Huawei notes that a 1 point increase in GCI score is equivalent to a 2.1% increase in competitiveness, a 2.2% increase in national innovation, and a 2.3% increase in productivity.
The report said a nation that increased investment in ICT investment in infrastructure by an additional 10% annually from 2017 to 2025 can benefit from a multiplier effect. “Using this economic impact model we find that every additional $1 of ICT infrastructure investment could bring a return of $3 in GDP at present, $3.70 in 2020 and the potential return increases to $5 in 2025,” the report said.
“The widening gap has had a significant impact on countries as they develop and work their way toward digital transformation,” said Kevin Zhang, President of Huawei corporate marketing. “To stay competitive, nations at an early stage of digital transformation will need to prioritize ICT infrastructure development, especially broadband connectivity and cloud adoption to a strategic level in economic planning to activate local resources and reach sustainable growth. At the same time, nations aiming to capitalize on their Frontrunner status will want to prioritize cloud as a potent catalyst to initiate a chain reaction of transformation through big data and IoT.”