By Andrew Williamson
“When you can measure what you are speaking about, and express it in numbers, you can know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.”
So said the famous 19th century British scientist, Lord Kelvin.
The technology landscape is rapidly changing. Digital technology is advancing faster than ever before. But if we cannot accurately measure and compare the progress of digitalization in our countries, then policy decisions may be made with a poor understanding of what’s really happening in our economies.
It was my immense honour recently to host a forum at Huawei Connect 2024 in Shanghai. During the forum, we discussed these very issues and best practice policy to accelerate digitalization, with a group of international government partners, peers and industry experts.
One of the highlights of the forum was the launch of the Global Digitalization Index (GDI) 2024. The GDI is the new and more comprehensive progeny of the much respected and quoted Global Connectivity Index.
In collaboration with International Data Corporation (IDC), we have meticulously measured a multitude of metrics (42 separate indicators in total) of proven significance for enabling the growth and international competitiveness of a nation’s digital economy.
The GDI scores 77 countries, representing 93 per cent of global GDP and 80 per cent of the world’s population.
The calculated data and index suggest three broad county groupings based on their levels of digital economy development and factor endowment. We have termed the three clusters identified as Frontrunners, Adopters, and Starters. Our accompanying research report to the GDI provides each country cluster with distinct recommendations on how to best accelerate digital transformation.
Given the dynamic nature of the digital economy and the profound changes in the technology sector since 2020, we have re-calibrated and restructured our index. It is now based around four major pillars (composed individually of groups of indicators) which we believe to be the new primary drivers of high-quality digitalization across countries. They are as follows:
Ubiquitous connectivity has to be at the heart of a truly inclusive digital economy. Stable and high-speed connectivity to the Internet is a basic need and right for everyone. Ubiquitous ultra-broadband connectivity has become a reality thanks to multiple innovative technologies, such as 5G, 5G-A, fibre access, and the Internet of Things (IoT). Ubiquitous connectivity is helping more people connect with the wider world and attain more equitable development opportunities.
A strong digital foundation is the accelerator of a high value-added digital economy. As data have become a new factor of production, a digital foundation needs to be established to support the storage, processing, and computing of data. This foundation will consist of data centres, future-proofed computing power and cloud computing, which will serve as the catalyst for broader and deeper digital economy development.
Green energy is a new imperative for a sustainable digital economy. The global production of renewable energy is continuing to grow. Renewables contribute to an increasing proportion of electricity supply every year. Given the increased energy demands of frontier technologies such as generative AI, technology companies are increasingly looking to source clean, renewable energy supply as the optimal solution.
An attractive policy environment & strong native digital ecosystem provide the fertile soil for a healthy digital economy. Supportive policies and regulations, a favourable environment for innovation, an adequate supply of talent and a sustainable industry ecosystem are all essential for the healthy development of the digital economy. Governments need to prepare the fertile ground for digital transformation, as they are uniquely positioned to provide systematic support in terms of national organization, funding, conducive policies and regulations (that encourage business but protect individuals).
Our research in formulating and calculating the GDI also led us to a number of important findings. New contributions to the body of digital economy research. These are as follows:
The maturity of the ICT industry (as measured by the GDI score) is strongly correlated with GDP per capita. This does not of course imply a causal relationship, it will take several years of the GDI to verify that. But this chimes with other research. Furthermore, given the slope of the curve economic benefits may differ based on their current level of development. A one-point increase in GDI scores for the frontrunner countries for example, may produce over 5 times the economic value of a one-point increase in Starter countries.
Forward-looking digital infrastructure development serves as a new engine for economic growth.
Countries around the world are currently racing to broader digitalization. Our research suggests that a one-US-dollar investment in digital transformation results in a much greater than one multiplier, impact on the entire economy.
The ICT sector is progressing unevenly across countries. However, a drive to ubiquitous connectivity can help bridge the digital divide.
Fixed broadband and mobile broadband can work in concert to maximize the value of the digital economy. A robust digital foundation and ubiquitous connectivity can reinforce each other, creating a positive multiplier effect on economic development.
Countries must embrace green energy technologies to gear up for the sustainable growth of their digital economies and large-scale application of AI.
Supportive industry policies and well-paced planning create fertile ground for national digital economies to grow.
And finally, the proportion of STEM graduates in different countries is similar, but the conversion rate to ICT professionals varies greatly by country. We believe this should spur a call to action in order to better address these differences that directly inhibit progress in digital economic development.
I hope you all agree that we have gone a long way to meeting Lord Kelvin’s measurement challenge. We very much look forward to continuing these important discussions on the best way to track progress in digitalization and the impacts they make, with our stakeholders globally.
- Williamson is Vice President, Government Affairs and Economic Adviser, Huawei.
