Is IT a growth hormone?

Launched in 2001, the Global Information Technology Report provides country-by-country benchmarking of IT readiness. The Report, an important reference for many national IT programs, is discussed here with INSEAD’s associate dean Soumitra Dutta.

	Title:	The Global Information Technology Report 2010-2011
	Author:	Soumitra Dutta and Irene Mia
	Pages:	411pages
	Publisher:	INSEAD/World Economic Forum
	Price:	$0

Although ten years is short in a human lifespan, it represents an eternity in the fast-changing world of information technology. After all, ten years ago we were working on PCs with a fraction of their current computing power (remember Windows 98?). Apple was a fragment of its current stature. Mobile phones had extendable antennae. Tactile screens had been tried and failed…

In the context of this evolutionary maelstrom, INSEAD’s Professor Soumitra Dutta set about creating a benchmark index to track how different nations were preparing for their digital futures. “Back then, there was concern about the digital divide, and the interest and hype surrounding the Internet was starting to explode,” he explains. “So we felt there was a need for a framework for benchmarking and assessment.”

Thus was created the first edition of the Global Information Technology Report, whose cornerstone is the Networking Readiness Index (NRI). “Every year the study takes about six months of time to prepare, for both INSEAD and the World Economic Forum. The variables are fine-tuned. Extensive surveys are handled, both within the large IT community that the WEF cultivates, and within academia,” says Professor Dutta.

Purpose of the Index
The Index enables different countries to obtain neutral and objective evaluations of how they stand in terms of their IT abilities. In the 2011 edition of GITR, 138 countries are included – many of them across long time spans, enabling them to assess their evolution.

The Index is structured around three key information pillars: the IT environment, IT readiness, and finally the level of IT usage.

With 71 individual variables, this is an Index that requires serious number-crunching in its preparation. “This may explain why the NRI is very successful, judging by the number of countries that refer to it and the number of countries where it is adopted for planning purposes. Many countries use it extensively, namely for benchmarking, and to assess their strengths and weaknesses,” explains Professor Dutta.

2011 findings
Like many complex indices, the NRI index highlights evolutionary, not revolutionary, developments. Countries do not become IT superstars overnight. Nor do they lose their luster fast.  The top five countries (Sweden, Singapore, Finland, Switzerland and the USA, in that order) have been Index leaders for most of the previous ten GITR editions. The Index also shows an overall push to the top, as more and more countries move from the lower classed ‘proto-Internet’ stage of connectivity to the highest ‘intensive use’ stage.

The 2011 GITR also provides many pages of advice on ‘best practices’ in various areas of information technology applications around the world. Among the countries featured in this year’s edition are Costa Rica and Saudi Arabia.  The Report also includes extensive analyses of broadband development (which we will cover in our next instalment).

Diverging paths
Of concern to the authors are the sometimes diverging paths of some countries that were at the same Index level a few years ago.

For example, five years ago in the 2006 GITR Edition both Vietnam and Venezuela were at the same level, near the 30th percentile ranking, close to the bottom. Five years on, Vietnam has doubled its position into the 60th percentile, whereas Venezuela has dropped close to the 15th percentile.

What importance does this have? “There is a link (a correlation, if you will) between information technology preparedness and GDP,” explains Professor Dutta, “although one cannot establish a strict causality.”

So, although one cannot formally prove that IT investments automatically generate economic growth (GDP), strong suspicions favor that hypothesis – which means that IT investment has not yet reached diminishing marginal returns. Enough to make countries worldwide continue to refer to the GITR for guidance!

Interview of Soumitra Dutta conducted June 15, 2011.
Published June 2011 by Chris Fodor.