Nations need to invest in digital future for long-term economic growth, report shows
Huawei Technologies and International Data Corporation’s Global Digitalization Index 2024 offers analysis and insights into 77 countries
Emerging smart digital technologies such as artificial intelligence (AI), fifth-generation mobile communications technology (5G) and cloud computing are rapidly changing our world and the ways in which we live, communicate and work.
As firms embrace the fourth industrial revolution – the continuing enhancement of traditional manufacturing practices through the use of data, interconnectivity, analytics and automation to achieve efficient and profitable growth – worldwide investment in information and communication technology (ICT) is rising, reaching US$4.9 trillion last year, a new report shows.
The Global Digitalization Index 2024, compiled by Huawei Technologies, a Chinese global provider of ICT and smart devices, and market research and analytical company International Data Corporation, also cites research by the World Economic Forum, which predicts digital technology and AI will drive 70 per cent of global economic growth over the next five years.
Global leaders and policymakers are also examining how best to measure the return on digital infrastructure investment, evaluate their ICT ecosystems and set up a strategy for expanding their digital footprint.
Digitalisation helps drive prosperity
The report aims to provide these answers by examining and quantifying the progress of digital development in 77 countries that make up 93 per cent of the world’s gross domestic product (GDP) and 80 per cent of the global population.
It has assigned a score for each of the countries, which have been grouped into three clusters – front runners, adopters and starters – based on their economic development, ICT industry maturity and factors such as connectivity, digital foundation, green energy technology, and support policies and ecosystems.
The report highlights that the maturity of a nation’s ICT industry is strongly correlated to its economic growth. For top-scoring front runner countries such as the United States, Singapore and China, a one-point increase in the report’s global digitalisation index (GDI) score can boost GDP per capita by US$945, which is 2.1 and 5.4 times more than the adopters and starters, respectively.
It also reveals that nations enjoy huge benefits from digital investment – suggesting that a US$1 investment in digital transformation could lead to a US$8.3 return in a country’s digital economy.
Although governments are aware of the importance of investing in digital infrastructures, the report says that, between 2019 and last year, highly digitalised countries increased their tech investments 18 times faster than less developed ones. This growing gap in digital infrastructure may further widen the global economic disparity if less technologically advanced nations fail to catch up.
Charting a digital path forward
Regardless of whether a country is at the forefront of digitalisation or still in the early stages of its ICT infrastructure development, it needs to have strategies in place to keep up with technological advances and continue to enhance its digital landscape.
The study provides front runners, adopters and starters with recommendations on the next steps of their digital transformation, and analyses how countries in these three groups are building capabilities and navigating challenges.
It cites the city state of Singapore as a model for digital development. Over the past three decades, it has allocated ample resources to develop its digital infrastructure, support research and development, revamp policies and nurture ICT talent.
Looking ahead, Singapore will need to maintain its competitive edge by continuing to transform its economy with AI and establishing a road map for green data centre development to support its net-zero goals.
For adopter countries, the focus should be on investing in expanding their connectivity coverage and supporting the development of foundational technologies, the report says. Thailand, for example, is driving its digital transformation by collaborating with telecoms companies to speed up its 5G network roll-out.
Meanwhile, the Thai government also has introduced plans so it is easier to invest in technological advances in cloud computing, big data, AI and 5G.
Starter nations, meanwhile, must prioritise efforts establishing their fixed and mobile broadband connectivity to drive digital economic activities, the report says. One good example is Kenya, which has made significant progress in developing its ICT sector. Thanks to its strategic investments in expanding its mobile network coverage, building a national fibre-optic network and digitalising government services, the nation’s thriving e-commerce sector now ranks third in Africa in terms of market penetration.
The report also stresses the importance of embracing green energy technologies to drive sustainability and reduce carbon emissions. Governments should also have clearly laid-out medium- and long-term ICT plans to set a strong foundation for digital economies to grow, it says.
Emerging economies must also enhance their efforts in ICT talent development and create more attractive job opportunities for graduates in the disciplines of science, technology, engineering and mathematics (STEM). The report says that while the proportion of STEM graduates is similar across all clusters, at about 25 per cent, their ability to retain talent varies dramatically.
In the more developed front runners group, 95 per cent of STEM graduates can find tech-related jobs, compared with 50 per cent in the adopters and 15 per cent among the starters. To halt the brain drain, less-digitally developed nations must increase investment in ICT industries and introduce more incentives and policies to retain tech talent.
Ultimately, all of these recommendations show that investment in the digital future is crucial for a nation’s long-term economic future and that the reward for remaining at the forefront of innovation is higher than ever.