US Losing Its IT Chops

After ranking first in 2006, the United States has fallen to seventh place this year among 122 economies in its network readiness, or ability to leverage the opportunities of IT, according to a report released Wednesday by the World Economic Forum.

In its evaluation of each country’s ability to take advantage of the opportunities offered by technology for development and increased competitiveness, the World Economic Forum’s sixth annual Global Information Technology Report found that Denmark is now in first place, followed by Sweden, Singapore, Finland, Switzerland, the Netherlands and the United States. Iceland, the UK and Norway followed at spots eight, nine and 10, respectively.

The report was sponsored by Cisco.

Role of Government

“In recent years, the world has witnessed the power of [IT] in revolutionizing the business and economic landscape and empowering individuals, while fostering social networks and virtual communities,” said professor Klaus Schwab, founder and executive chairman of the World Economic Forum.

Denmark’s top ranking this year was attributed to its regulatory environment, government leadership and vision in leveraging IT for growth, and promotion of IT penetration and usage.

“Leveraging [information and communications technologies] is increasingly becoming an essential instrument for countries and national stakeholders to ensure continued prosperity for their people,” said Irene Mia, senior economist of the Global Competitiveness Network at the World Economic Forum and coeditor of the report.

Northern Lights

“Nordic countries have shown how an early focus on education, innovation and promotion of [IT] penetration and diffusion is a winning strategy for increased networked readiness and competitiveness. Denmark, in particular, has benefited from very effective government e-leadership, reflected in early liberalization of the telecommunications sector, a first-rate regulatory framework and large availability of e-government services,” she said.

The Networked Readiness Index examines countries’ preparedness to use IT effectively on three dimensions: the general business, regulatory and infrastructure environment for IT; individuals’, businesses’ and governments’ readiness to use and benefit from IT; and actual usage of the latest technologies available.

“It’s no longer debatable as to whether or not the global economy will become networked — the vast majority of industries are increasingly adopting networked business processes — and the discussion now focuses not on if, but how we get connected to maximize the benefits to business and society,” said John Chambers, Cisco’s president and CEO.

What Happened?

“Denmark has always had a high state of preparedness, an excellent regulatory environment, and government leadership and vision, so it doesn’t surprise me,” Yankee Group analyst Laura DiDio told TechNewsWorld. “It’s not enough to be the biggest consumers — and soon the United States will be supplanted in that by China and India.”

The United States has a bigger population and more businesses than any of the other countries in the top 10, DiDio added, which makes for a tougher environment.

“What you’re going to see is a big change in the next 3 to 5 years,” she predicted. “I would say that this list is very intriguing, but we’re going to see a lot more changes over the next few years as countries like India, China and New Zealand — which can go from having no infrastructure to state of the art, overnight — really come up strong. Asia-Pacific will gain ground.”

What Needs to Happen?

“I’m surprised we were in the No. 1 spot in 2006,” Safa Rashtchy, senior research analyst with Piper Jaffray, told TechNewsWorld. “The fact is, as much as we don’t like to admit it, we are not the leading edge of Internet and wireless technologies. Part of the reason has to do with our economy and lack of government support; it’s also a byproduct of the extremely competitive market we have.”

A lack of standards in the United States has delayed large-scale adoptions of platforms such as wireless technology, Rashtchy added. “But none of these things are a good excuse,” he said. “We need some sort of longer-term strategy for the next 20 to 50 years, or we’ll fall further behind.”

What that will require is government support for access, especially in municipalities, and more cooperation and consortia among different companies that can help promote standards, Rashtchy noted.

“I think we have to pay a lot of attention to quality,” DiDio said. “We need to study what the other guys are doing and put processes in place to emulate that success.”

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