The UK has been praised as one of the world’s “digital elite” in new research unveiled by Mastercard and The Fletcher School at Tufts University. The Digital Evolution Index 2017 is a comprehensive study tracking the progress countries have made in developing their digital economies and integrating connectivity into the lives of billions.
The UK is identified alongside Singapore, Hong Kong, Japan, Israel, Estonia, UAE, and New Zealand as the so-called “Stand Out” economies, characterised by high levels of digital development and a fast rate of digital evolution. With momentum and innovation on their side, these exemplify the sweet spot of advancement and future growth.
The UK continues to show high levels of digital development, and remains on an upward trajectory. For example, London is now home to Europe’s fintech stars, producing creative new business models in finance, with the big established banks being on hand to offer expertise and back the start-ups.
With nearly half of the world’s population online, the research maps the development of 60 countries, demonstrating their competitiveness and market potential for further digital economic growth. The Index measures four key drivers and 170 unique indicators to chart each country’s respective course:
• Supply (or internet access and infrastructure).
• Consumer demand for digital technologies.
• Institutional environment (government policies/laws and resources).
• Innovation (investments into R&D and digital start-ups etc.)
Businesses, governments and civil society are working to bring everyone online, while also ensuring the security of the digital infrastructure. The report provides a way to assess digital “trust” as well as the state and rate of digital evolution with examples from around the world, giving countries the opportunity to learn from each other to further their advancement.
“Adoption, the quality of digital infrastructure and institutions, and innovation collectively shape a country’s digital competitiveness, but governments also play a key role. The report also found that consumers’ trust in digital technologies correlates with digital competitiveness,” said Bhaskar Chakravorti, senior associate dean of international business & finance at The Fletcher School at Tufts University, and founding executive director of Fletcher’s Institute for Business in the Global Context.
According to their overall digital evolution scores, Norway, Sweden, Switzerland, Denmark, Finland, Singapore, South Korea, the UK, Hong Kong, and the US make the top ten list of advanced digital economies, but given the current pace of innovation and change, being an advanced digital economy today doesn’t guarantee that status tomorrow. How open and supportive they are to innovation help determine their future growth potential.
>See also: What does 2017 hold for the digital economy?
Combining the pace and state of digital advancement, the research puts markets into four distinct categories:
• Stand out – Singapore, the UK, New Zealand, the United Arab Emirates, Estonia, Hong Kong, Japan, and Israel demonstrate high levels of digital development while continuing to lead in innovation and new growth.
• Stall out – Many developed countries such as in Western Europe, the Nordics, Australia and South Korea have a history of strong growth, but their momentum is slowing. Without further innovation, they are at risk of falling behind.
• Break out – Though still at relatively lower absolute levels of digital advancement, these countries demonstrate the fastest momentum, are poised for growth and are attractive to investors. China, Kenya, Russia, India, Malaysia, Philippines, Indonesia, Brazil, Colombia, Chile and Mexico exhibit this breakout potential.
• Watch out – Countries such as South Africa, Peru, Egypt, Greece and Pakistan face significant challenges, constrained both by low levels of digital advancement and a slow pace of growth.
“We all know technology can do more to improve economies and make our lives better, but growth is only achievable if everyone has confidence in the developing ecosystem,” said Ajay Bhalla, president, global enterprise risk & security, Mastercard.
“In our pursuit of a truly connected world, trust and security are critical to successful digital development. The UK is an exemplar in this.”
Minister of State for Digital Matt Hancock said; “This report shows the UK is the undisputed tech hub of Europe, and confirms our place as a digital world leader and as a centre for excellence in innovation and growth. The UK tech sector is attracting twice as much investment as any other European country, and only last week it was announced there had been a new record £5.6 billion investment in tech in London in the past six months. We are determined to ensure the UK continues to be best place to start and grow a digital business and our recent Digital Strategy and Digital Charter will help us achieve this.”
New this year: the trust factor
To date digital trust has proved difficult to understand, let alone measure, but it remains a keystone of the global digital economy. New to the 2017 report, the research team at The Fletcher School analysed 42 of the 60 countries in the Index around four key dimensions – behaviour, attitudes, environment, and experience – to understand the state of digital trust. Some of the findings include:
• Western and Northern European states lead in digital trust experience and environment scores, which reflect investments in strong security, privacy, and accountability measures, and in minimising friction.
• China, Switzerland, Singapore, and the Nordics score well on different metrics, but for vastly different reasons.
• The Chinese consumer is an outlier when it comes to demonstrating patient user behaviour in the face of friction, such as slow internet speeds.
Overall the research shows that in countries where their momentum score was higher, consumers were more tolerant of friction in their daily digital interactions and transactions, suggesting that momentum may be a vital factor in understanding consumer behaviour and trust.
Further, governments and businesses are considered the guarantors of trust, and are charged with facilitating trust among their citizens and consumers. The findings demonstrate that trust is critical to digital competitiveness, and that countries can only go so far without it.
Implications: how countries can win
More details and country-specific case studies can be found in the summary insights overview including:
• Use public policy as key to the success of the digital economy: this has implications ranging from Brexit negotiations to how India nudges its society towards a “less cash” future to the US-China competition for economic dominance.
• Identify what drives digital momentum: developed and developing economies ought to emphasise different ways to spur growth: innovation and institutions, respectively.
• Jumpstart small country growth by involving Government: they can grow quickly as early adopters by assembling the right ecosystems.
• Reinvent the digital stalwarts: the most digitally advanced countries can use their scale and existing connections in the world to reinvent themselves.
• Play digital catch-up by closing the mobile internet gap: the least digitally advanced countries must prioritize increasing internet access via mobile phones.
• Work harder to earn users’ trust: as nations become more digitally evolved and momentum slows, technology providers and policymakers may need to prioritise building trust to continue growth.
The UK’s largest conference for tech leadership, Tech Leaders Summit, returns in September with 40+ top execs signed up to speak about the challenges and opportunities surrounding the most disruptive innovations facing the enterprise today. Secure your place at this prestigious summit by registering here