Analysis

Benchmarking the Future of the Network Economy

Preface


Nearly two years after the onset of COVID-19, one conclusion is clear—digital transformation has changed from a needed priority into a global imperative for all. Businesses, governments, education institutions, and individuals all rapidly shifted their processes online in the wake of lockdown measures. The overnight shift towards virtual living and working heightened our reliance on digital technologies and increased the demand for network infrastructure, reliable connectivity, and digital literacy.

The need for data and actionable insights towards network readiness and digital innovation offered the precise reason for the first Network Readiness Index (NRI) 20 years ago, and it is the very reason why the index is more relevant now than ever.

The NRI 2021 is the third edition of the updated model that addresses trust, governance, inclusivity, and the potential impact on Sustainable Development Goals (SDGs). We have introduced additional indicators for two reasons: first, to better capture the reach and impact of digital transformation, and second, to offer a holistic view of how technology use can enhance the development and competitiveness of economies.

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Bruno Lanvin Soumitra Duta

NRI 2021 Theme

Shaping the Global Recovery:

How digital technologies can make the post-Covid world more equal.

For this year’s report, the NRI reviews some of the effects induced by the COVID-19 pandemic that contributed to the new pace and depth of digital transformation. Although it is early to predict the full impact of the digital change induced by COVID-19, the NRI provides a first glance at the potential significance of accelerated digital technologies on governments, businesses, and individuals. The data from the NRI analysis examines how economies have dealt with and continue to fare in the face of present-day challenges. Promising initiatives are visible across several regions, including enhancements to the quality and timeliness of information and efforts to improve digital literacy and digital skills.

The information presented by the NRI can help determine the proper courses of action to ensure that the economic and social benefits of this enhanced digital revolution are distributed equally across the globe.

Key message from the NRI 2021

1. The pandemic turned digital transformation from a priority into a global imperative.

Over the past two years, the COVID-19 pandemic increased our dependence on technology and accelerated the inevitable process of digital transformation as many aspects of life moved online. The shift towards improved technological capability and integration presents an opportunity to build a better and more connected future in light of the “new normal”. However, as societies usher in the new era of accelerated digital transformation, it is important to consider whether global inequalities concerning technology access and usage will subside or continue to expand.

The swift shift towards an increased reliance on technology has caused recognizable social, economic, and political changes that will have a lasting impact.

2. The new landscape of digital transformation is creating new divides that question the previous progress made towards reducing older gaps between distinct groups.

Divides in access exist not just between regions and economies but also remain persistent between genders. The digital gender divide continues to present a significant barrier to meaningful participation in a digital society, a barrier exacerbated by the effects of the pandemic. The rapid digitalization triggered by the COVID-19 pandemic uncovered gender gaps in Internet access, digital skills, participation in STEM fields, and innovation leadership (Brookings Institution, 2021).

Equal access to digital technologies and skills is a step towards gender equality within the context of the Sustainable Development Goals. Greater inclusion of women and girls in these spaces can have far-reaching effects as it will encourage further participation in educational, economic, and entrepreneurial opportunities.

3. Technology can help equalize the global recovery.

As a growing number of large economies adopt massive stimulus and fiscal packages, anticipating the shape that the global recovery will form becomes easier. Four primary areas emerge as likely to receive the bulk of such recovery efforts:

  1. Health: Since the effects of the pandemic are still highly visible and sensitive, funding for vaccines and other treatments, in addition to the re-hauling of national health systems, will be in order.
  2. Greening of the economy: National economy's willingness and capabilities to fight climate change will likely increase.
  3. Infrastructure: Labor-intensive employment in infrastructure could help combine nation priorities to fight unemployment and 'rebuild better'.
  4. Digital transformation (of organizations and societies): Out of all four recovery aspects, digital transformation cuts across and impacts each of the first three.

If local and global inequalities start to grow again, it could diminish the long-term impact and sustainability of such stimulus packages. Fully leveraging technology and international cooperation should be top priorities for national economies as equalizing factors in the post-COVID recovery process (turning a K-shaped recovery to a global V-shaped one).

4. Network readiness requires holistic approaches.

The leading countries in network readiness have balanced, dynamic economies that excel in multiple areas and demonstrate strong performances across all pillar dimensions of the NRI. Similar to previous years, seven of the top 10 overall ranking economies also rank in the top 10 in at least three of the four primary NRI pillars. Performance trends demonstrate the importance of adopting a holistic approach towards advancing network readiness, as the four primary pillar areas are interdependent and reinforce each other.

For example, as new technologies emerge during this era of digital transformation, factors such as governance and regulation (as well as mechanisms for disseminating these technologies among individuals, businesses, and governments) must keep pace. As the new digital economy becomes more established, the ability to integrate people and technology within the proper governance structures is key to fostering resilience and sustainability.

5. Technology readiness remains fair at the regional level.

Although economies in higher-income region clusters remain the most network-ready, some of the most noteworthy efforts in overall performance identified this year are among the African countries of the middle and lower-income groups. Economies like South Africa ( 70th), Rwanda (101st), Nigeria (103rd), Mali (118th), and Madagascar (120th) display performances in certain NRI dimensions that are at par or even above some economies in the more developed regions of Asia and the Pacific, the Arab States, and Europe.

In particular, economies that outperformed expectations showed higher prowess in governance, people, and technology. Still, this trend is less clear regarding impact, evidencing some of the pressing issues often endemic to emerging economies.

6. Clear digital technology champions are helping bridge income group gaps.

China (29th), Ukraine (53rd), Vietnam (63rd), India (67th), and Rwanda (101st) are a few of the economies that continue to close the performance gap between income groups. China is the only upper-middle-income group economy that approached the cluster of high-income group economies featured in the top 25. In particular, China’s output in areas of digital technology associated with people and impact is above the high-income group median performance.

Similarly, Ukraine (a lower-middle-income group economy) stands out with a performance above the mean of the upper-middle-income group in all four primary pillars of network readiness (Technology, People, Governance, and Impact). Lower-middle-income group peers Vietnam and India display similar results in technology and impact, while Rwanda (a low-income group economy) closes the gap with the lower-middle-income economies when it comes to governance.

7. Connectivity is not an end in itself—it is a tool designed to create value for societies.

Even among regions that have achieved Internet connectivity, barriers such as the speed of connection, availability, affordability of connected devices, and fragmented regulatory environments persist, barring individuals from leveraging the power of digital technologies to create economic and social value. While connectivity is critical, it is also important to go beyond and focus on additional aspects such as education (to improve skills and support content creation) and policies that support technological investments and innovation in businesses, both small and large.

Lastly, it is crucial that economy’s tackle the digital divide to ensure Internet access contributes to equal opportunity, rather than becoming a means that increases social and economic inequality.

Key Results


The Top 10

Compared to previous years, the ranking of the top 10 performers in the NRI 2021 experienced some significant shifts in its composition. While the countries within the top 10 remain the same, specific countries made notable movements within the upper group. In particular, the Netherlands climbed three spots to take the top position from Sweden, which has held the number one position since 2019. The United States also shifted, increasing four rankings to earn a place among the top five for the first time in the 2019-2021 period. With Singapore falling out of the top five, four out of the five most network-ready economies in 2021 are from Europe.

The top 10 performers all demonstrate solid performance metrics across the highest number of dimensions of the NRI. They all rank as the top 20 countries on each of the four primary pillars (Technology, People, Governance, Impact) and on at least two-thirds of the twelve sub-pillars. In particular, top performers rank well on the prominent indicators of Future Technologies, Economy, and Trust. All of the top 10 countries are high-income economies characterized by significant investment in emerging technologies and successful adoption of information and communications technologies (ICTs) by governments, businesses, and individuals. In terms of regional distribution, Europe leads with eight top ten countries, while Singapore and the United States represent the only economies located in Asia and the Pacific and the Americas, respectively.

Pillars
Economy NRI Rank NRI Score Technology People Governance Impact
Netherlands 1 82.06 3 7 2 3
Sweden 2 81.57 4 4 5 2
Denmark 3 81.24 7 2 3 7
United States 4 81.09 1 5 7 16
Finland 5 80.47 10 3 4 5
Switzerland 6 80.20 2 12 11 6
Singapore 7 80.01 8 9 12 1
Germany 8 78.95 5 8 13 10
Norway 9 78.49 13 6 1 11
United Kingdom 10 76.60 6 16 14 9

Regional Leaders

The top three countries in each region capture the performance divide that exists among different regions. Europe continues to lead with four countries in the global top five, while Africa remains the most laggard regional group. The Netherlands is the top performer in Europe as well as the top performer in the overall NRI rankings. The United Arab Emirates, Singapore, the Russian Federation, and the United States continue to lead in their respective regions. South Africa earned the top position in Africa this year.

Note: Global ranks in parentheses. CIS = Commonwealth of Independent States.

Income Group Leaders

The top performers of each income group reflect the strong correlation between income levels and network readiness present in the NRI 2021. High-income groups dominate the top quartile and earn the top three spots in the overall index ranking. China is the only country in the upper-middle-income group economies to rank in the upper quartile. Ukraine and Vietnam are the only lower-middle-income economies that make it into the upper half of the NRI rankings.

High Income Countries Upper-Middle Income Countries Lower-middle Income Countries Low Income Countries
1. Netherlands (1) 1. China (29) 1. Ukraine (53) 1. Rwanda (101)
2. Sweden (2) 2. Malaysia (38) 2. Viet Nam (63) 2. Tajikistan (111)
3. Denmark (3) 3. Russian Federation (43) 3. India (67) 3. Gambia (113)

Note: Global ranks in parentheses.

Continuing to improve the NRI model


The pace of digital transformation demands a continual reexamination of the sources that enrich the NRI model. Similar to the renewal process of 2019, the NRI team examined multiple general and technology-specific sources to identify novel indicators that can help measure and assess the dynamic landscape of digital transformation and network readiness.

Improvements to the NRI occurred through the replacement, development, or inclusion of coherent metrics, but the main concept underlying the NRI model remained constantPrimary updates to the NRI 2021 apply across five sub-pillars: Access, Future Technologies, Individuals, Businesses, Economy, and SDG Contribution. A total of 60 indicators populate all 12 sub-pillars in the NRI. Details about any improvements within the complete list of indicators are found in Appendix I: Technical Notes and Appendix II: Sources and Definitions of the report.


Technology

Technology is at the heart of the network economy. Therefore, as a primary category of the NRI, the Technology pillar seeks to assess the level of technology that is a sine qua non for a country to participate in the global economy. Three sub-pillars accomplish the Technology pillar’s purpose:

  • Access: The fundamental access level to ICT in countries, including issues about communications infrastructure and affordability.
  • Content: The type of digital technology produced in countries and the content/applications that can be deployed locally, including research on the subject derived from scientific and technical articles.
  • Future Technologies: The extent that countries have prepared for the future of the network economy and new technology trends such as Artificial Intelligence (AI) and the Internet of Things (IoT).
Technology

People

The prevalence and quality of technology reflect countries' (and any organization's) skill, access, and ability to utilize technology resources in productive ways. Therefore, the People pillar measures how people apply ICT at three levels of analysis: individuals, businesses, and governments.

  • Individuals: How individuals use technology and leverage their skills to participate in the network economy.
  • Businesses: How businesses use ICT and participate in the network economy.
  • Governments: How governments use and invest in ICT for the benefit of the general population.
People

Governance

Governance refers to the structures that uphold an integrated network for the safety and security of its users. Therefore, the Governance pillar concerns the establishment and accessibility of systems that promote activity within the network economy across three levels:

  • Trust: The safety of individuals and firms in the context of the network economy, reflected in an environment conducive to trust and the trusting behavior of the population.
  • Regulation: The extent to which a government promotes participation in the network economy through regulation, policy, and planning.
  • Inclusion: The digital divides within countries where governance can address issues such as inequality based on gender, disabilities, and socioeconomic status.
Technology

Impact

Readiness in the network economy is a means to improve the growth and well-being of society and the economy in general. Therefore, the Impact pillar seeks to assess the economic, social, and human impact of participation in the network economy across three levels:

  • Economy: The economic impact of participating in the network economy.
  • Quality of life: The social impact of participating in the network economy.
  • SDG contribution: The impact of participating in the network economy within the context of SDGs. ICT has a critical role within the network economy and receives particular focus with indicators integrated across health, education, and the environment.
People

Detailed results of NRI 2021

Download the NRI 2021 Report