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Scandinavia consolidates lead in fifth annual Economist Intelligence Unit e-readiness rankings


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Armonk, NY - 19 Apr 2004: Global prospects for the information and communications technology (ICT) industry look sprightlier than they have for a while. Enterprises are taking advantage of Internet protocol-based services, mobile-phone usage is mushrooming in developing and developed economies alike, and broadband is taking off. But despite the proliferation of cheaper, more reliable technologies, the global e-business environment remains uneven, according to the 2004 edition of the Economist Intelligence Unit e-readiness rankings, conducted in co-operation with IBM's Institute for Business Value. (See table below or visit eb.eiu.com/err2004 to download a free report of the rankings.) Countries that are able to coordinate development programmes across different agencies and learn from global best practices will make swifter advances, the report concludes.

Since 2000, the Economist Intelligence Unit has published an annual e-readiness ranking of the world's 60 largest economies. A country's "e-readiness" is a measure of its e-business environment, a collection of factors that indicate how amenable a market is to Internet-based opportunities. We have made two additions to this year's ranking: broadband penetration as a scored criterion; and in recognition of the European Union's eastward expansion, Estonia, Latvia, Lithuania and Slovenia have been added to the four accession countries already in the annual ranking (Czech Republic, Hungary, Poland and Slovakia).

The Economist Intelligence Unit developed the criteria for the e-readiness rankings with IBM's Institute for Business Value. "Economic development is largely predicated on the effective and innovative use of technology," said Peter Korsten, director, IBM Institute for Business Value. "The e-readiness rankings provide valuable insight into how governments can influence the rate and nature of adoption of technology and applications. Equally, they provide business leaders with information that can help guide decisions on where to invest to grow their companies."

Among the main conclusions suggested by this year's rankings:

Scandinavia dominates. Scandinavia-Denmark (in 1st place), Sweden (3rd), Norway (4th) and Finland (5th)-has emerged as the region to beat in our annual rankings, overtaking earlier adopters including the US, Australia and Canada. The UK came second. (In the 2001 rankings, the top four countries were, in order, the US, Australia, the UK and Canada.) What sets Scandinavia apart is the extent to which the Internet has reshaped business transactions, the eagerness with which citizens have incorporated Internet technology into their daily routines, and the extent to which Scandinavian governments have driven development.

Asian contenders step forward. Singapore (7th) has made the greatest advance in this year's ranking, up five places over last year. Like its Asian neighbours, Hong Kong (9th) and South Korea (14th), Singapore is a world leader in broadband rollout and benefits from strong government-industry cooperation.

Broadband has an impact. To reflect its role as an e-business driver, we have modified our scoring methodology to include broadband penetration, replacing an indicator on fixed-line rental rates. For most countries-particularly the top-ranked ones-the change has had a dampening effect on overall scores, because broadband adoption is still very low. With the exception of Spain (21st) and Israel (22nd), which have excelled on other criteria such as IT investment, the scores for all top 25 countries have slipped, largely due to this change in methodology. In a digital world, new technology will constantly move the goalposts.

 

Coordination and competition pay off. Governments that coordinate with industry associations, with the ICT service and manufacturing sectors, with local governments, and with other national governments, show that learning from each other and progressing toward common goals is the fastest and cheapest way to e-readiness. The European Union is showing what coordination can accomplish. And for the ever-competitive Asian tigers, observing and emulating best practices in neighbouring countries is standard practice.
 EU entrants stand to gain. This year's EU accession countries-Estonia (26th), the Czech Republic (27th), Hungary (30th), Slovenia (31st), Latvia (34th), Poland (36th), Lithuania (38th) and Slovakia (39th) (as well as Cyrus and Malta, not included in our ranking)-already have decent infrastructure and e-business environments. In Estonia, the majority of Internet users are broadband subscribers, and all public schools have broadband access. These countries will immediately benefit from the EU's coordinated approach to development.

Developing countries leverage e-assets. Countries that have all Internet enablers working in tandem (complete technology infrastructure, and favourable policy, business and social environments) are the most e-ready. But even where some of these pieces are missing, proactive governments and smart businesses can use the Internet to improve services and create new opportunities. Examples include e-government advances in Mexico (39th) and Romania (50th), and the creation of software and outsourcing niches in India (46th), South Africa (32nd) and Bulgaria (42nd).

Economist Intelligence Unit e-readiness rankings, 2004
2004 e-readiness ranking (of 64) 2003 ranking Country 2004 e-readiness score (of 10) a 2003 score
1
2

Denmark

8.28
8.45
2
3 (tie)

UK

8.27
8.43
3
1

Sweden

8.25
8.67
4
7

Norway

8.11
8.28
5
6

Finland

8.08
8.38
6
3 (tie)

US

8.04
8.43
7
12

Singapore

8.02
8.18
8
3 (tie)

Netherlands

8.00
8.43
9
10 (tie)

Hong Kong

7.97
8.20
10
8

Switzerland

7.96
8.26
11
10 (tie)

Canada

7.92
8.20
12
9

Australia

7.88
8.25
13
13

Germany

7.83
8.15
14
16

South Korea

7.73
7.80
15
14

Austria

7.68
8.09
16
15

Ireland

7.45
7.81
17
17 (tie)

Belgium

7.41
7.78
18
19

France

7.34
7.76
19
17 (tie)

New Zealand

7.33
7.78
20
20

Taiwan

7.32
7.41
21
23

Spain

7.20
7.12
22
25

Israel

7.06
6.96
23
21

Italy

7.05
7.37
24
22

Portugal

7.01
7.18
25
24

Japan

6.86
7.07
26
n/a

Estoniab

6.54
n/a
27 (tie)
26

Greece

6.47
6.83
27 (tie)
27

CzechRepublic

6.47
6.52
29
28

Chile

6.35
6.33
30
29

Hungary

6.22
6.23
31
n/a

Sloveniab

6.06
n/a
32
31 (tie)

South Africa

5.79
5.56
33
33

Malaysia

5.61
5.55
34
n/a

Latviab

5.60
n/a
35
36

Brazil

5.56
5.25
36
30

Poland

5.41
5.57
37
35

Argentina

5.38
5.41
38
n/a

Lithuaniab

5.35
n/a
39 (tie)
34

Slovakia

5.33
5.47
39 (tie)
31 (tie)

Mexico

5.33
5.56
41
37

Colombia

4.76
4.86
42
40

Bulgaria

4.71
4.55
43
42

Thailand

4.69
4.22
44
38

Venezuela

4.53
4.75
45
39

Turkey

4.51
4.63
46
46

India

4.45
3.95
47
41

Peru

4.44
4.47
48
45

Saudi Arabia

4.38
4.10
49
47

Philippines

4.35
3.93
50
43

Romania

4.23
4.15
51
51

Egypt

4.08
3.72
52 (tie)
50

China

3.96
3.75
52 (tie)
44

Sri Lanka

3.96
4.13
54
54

Ukraine

3.79
3.28
55
48

Russia

3.74
3.88
56
49

Ecuador

3.70
3.79
57
52

Iran

3.68
3.40
58
55

Nigeria

3.44
3.19
59
53

Indonesia

3.39
3.31
60
56

Vietnam

3.35
2.91
61
58

Algeria

2.63
2.56
62
57

Pakistan

2.61
2.74
63
59

Kazakhstan

2.60
2.52
64
60

Azerbaijan

2.43
2.37

a The tendency of 2004 scores to be lower than 2003 scores is mainly due to a change in our methodology to include broadband penetration, which is still very low in most countries.

bEstonia, Latvia, Lithuania and Slovenia are new to the annual rankings and were not ranked in 2003. The year-on-year drop in rank for countries below these is due largely to the addition of four new competitors.

Source: Economist Intelligence Unit

Methodology: How the scores were derived
Nearly 100 quantitative and qualitative criteria, organised into six distinct categories, feed into the e-readiness rankings. The six categories (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 business environment rankings for 60 countries; consumer and business adoption (20%); social and cultural environment (15%); legal and policy environment (15%); and supporting e-services (5%).

Since launching the rankings in 2000, we have repeatedly upgraded and refined our methodology. This year, we added a criterion on broadband penetration and removed one that looked at telephone rental rates, which had a dampening effect on most country's scores. The majority of data is sourced from the Economist Intelligence Unit and Pyramid Research. Qualitative criteria are assessed by the Economist Intelligence Unit's extensive network of country experts, and their assessments are reviewed by our top economists. For more information on the methodology, please refer to our white paper, available in PDF format, at eb.eiu.com/err2004

For this and previous e-readiness rankings, the Economist Intelligence Unit worked in association with IBM's Institute of Business Value, a leader in e-business strategy. IBM worked together with the Economist Intelligence Unit to build the rankings model. The Economist Intelligence Unit is entirely responsible for the rankings and the related white paper.

About IBM

With consultants and professional staff in more than 160 countries globally, IBM Business Consulting Services is the world's largest consulting services organization. IBM Business Consulting Services provides clients with business process and industry expertise, and the ability to translate that expertise into integrated, adaptive, on demand business solutions that deliver bottom-line business value. For more information, visit www.ibm.com/bcs.

About the Economist Intelligence Unit

The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of over 500 analysts, we continuously assess and forecast political, economic and business conditions in 195 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.

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