Nations compete for capital, investment, knowledge, and innovation: who is number 1?
The race for technological advancement between countries never ends and Global Finance has fresh rankings for national technological strength based on a unique set of integrated metrics. The two basic measures of technolgical availability are internet users as a percentage of a country’s population and LTE users as a percentage of the population. The third metric is a Digital Competitiveness Score, created and compiled by the IMD World Competitiveness Center. This score is an amalgamation of factors including tech knowledge, preparedness for developing new technologies, and the capability to create and advance innovations. The final metric is the portion of GDP a country spends on research and development which serves as a representative indicator of how important technological development is to a given government.
Combining these metrics to produce a ranking of national tech strength leads to some interesting results. One is that Israel has taken the 10th spot, ahead of larger or more economically developed countries such as Singapore, Germany, the United Kingdom, and Hong Kong. Israel lags all these countries in smartphone penetration and Israel’s population does not score very highly on internet usage. However, Israel invests a much higher portion of its GDP into technological research and development than any other country on the list. It also experienced a rapid boom in tech start-ups and innovative companies, leading to significant growth in both its private and public tech sectors.
Another fascinating result is that resource-dependent countries have high scores in internet usage but low overall rankings. Countries such as the United Arab Emirates (18), Qatar (25), Saudi Arabia (40), and Russia (44) rank relatively poorly compared to other countries with lower GDP per capita and lower internet usage. The reasons are multifaceted, but lend credence to the “resource curse”: countries that rely on the export of natural resources for a large portion of their economy end up suffering from lack of innovation and development. Despite having nearly 100% of their populations connected to the internet, both the UAE and Qatar have low levels of innovation and invest only small portions of their GDP into research and development. This places these countries in a difficult position because with nearly 100% of their population connected to the internet, there is little room for improvement on this particular metric. By contrast, countries with dynamic multi-faceted economies such as Denmark (3), Japan (7), and Germany (13) that invest heavily into research and development are better prepared to reap the benefits.
An interesting feature of this year’s ranking is that countries with high internet use are likely to have such because of high economic development, but not necessarily technological development. Countries such as the United Arab Emirates (18), Qatar (25), Iceland (20), and Luxembourg(24) all have high proportions of their population that use the internet. However, these countries all score lower in LTE penetration, IMD World Competitiveness Center’s Digital Competitiveness Score, and their investment into research and development. Internet use as a percentage of population seems to be more strongly correlated with per capita GDP than to tech advancement. It is not just important to make the internet available to the population, but to provide further support for innovation.
As per usual, countries in East Asia and Europe dominated the highest spots in the rankings. Of the 20 top ranked countries, 10 were in Europe and 5 in East Asia, showing a strong regional element in the race for technological advancement. However, a critical thing to note is the variation of scores within Europe. Nordic countries such as Denmark (3) and Sweden (5) dominate the top 10 while Eastern European countries such as Hungary (36) and Poland (35) fall towards the lower end. In the middle are Western and Central European countries. It remains to be seen whether this wide disparity within Europe continues to grow or decline.
Global Finance 2022 Ranking of National Tech Strength
|18||United Arab Emirates||2.55|
|19||Hong Kong SAR||2.54|
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