The US and Japan provide the strongest environments for IT competitiveness, finds the Economist Intelligence Unit

Relatively few countries possess all the factors necessary to support a thriving information technology sector, but the United States, Japan, South Korea and the United Kingdom provide the strongest environments for IT competitiveness, a new study concludes.As reflected in the Economist Intelligence Unit’s “IT industry competitiveness index”, these factors include an ample supply of skills, an innovation-friendly culture, world-class technology infrastructure, a robust legal regime and well-balanced government support, not to mention a competition-friendly business environment. Those countries possessing most of these “competitiveness enablers” are also home to high-performance IT industries: all but four of the top 22 countries in the Economist Intelligence Unit index are also among the world’s top countries in terms of IT labour productivity.On the strength of its unique combination of scale and quality in the key areas that promote IT competitiveness, the US tops the index table. Asia-Pacific countries are well-represented, with Japan, South Korea and Australia among the top five index performers, and the UK heads the ranks of European countries, closely followed by Sweden and Denmark. All, however, face stark challenges in the effort to remain competitive: chief among them are ensuring a steady supply of talent for the industry, and securing the right level of support from government to promote competition and innovation.These are among the major conclusions of a new study, The means to compete: Benchmarking IT industry competitiveness, written by the Economist Intelligence Unit and sponsored by the Business Software Alliance. The index and report are the first attempt to compare countries’ performance in building an environment for IT industry competitiveness; 64 countries are covered across seven regions.Other key findings of the research including the following:
Few nations’ IT sectors can compensate for major environmental weaknesses. India and China have been able to parlay unique factors, such as workforce size, low wages or language attributes, into strong sector performance, compensating for glaring weaknesses in the business environment. Few other countries will be able to manage this feat. Moreover, India and China will need to improve on their enablers, as their cost advantages will erode.

  • Skills requirements are changing radically. Talented IT employees are in short supply everywhere, but the situation will get tougher, as the nature of skills needed is changing. In addition to technical knowledge, tomorrow’s IT employee will require expertise in project management, change management and business analysis, among other areas. Educational systems in only a few countries have made a firm start to adjust their training curriculum.
  • Skills-rich emerging markets are likely to move up the index table. Future rivalry to India and China will come from the likes of Russia, Brazil, Malaysia and Vietnam, as well as smaller nations such as Estonia, Lithuania and Chile. Most perform respectably in at least one aspect of IT competitiveness, and the skills base of each is improving. Carving niches in software development and services represents their best chance of moving up the table.
  • The legal regime is an important differentiator. Countries must balance open competition in IT with robust protection for intellectual property rights. The US and western Europe — thanks partly to the galvanising efforts of the European Union — stand heads above the rest in the degree of protection afforded and in enforcement. A vigorous IPR regime is not incompatible with an “open approach” to innovation in IT.
  • Eager governments must strike the right balance. Governments can do much to help create an environment in which IT firms will thrive, but it is a delicate balancing act. Through far-sighted policy, governments can help improve competitiveness. At the same time, they must avoid picking winners, among either IT firms or technologies. West European governments have been the most successful in striking the right balance.

“There is a strong link between the presence of IT industry competitiveness enablers in countries and the strength of their IT sector,” confirms Denis McCauley, Director, Global Technology Research with the Economist Intelligence Unit. “Governments and industry leaders must pay close attention to these enablers if they wish to boost the global competitiveness of their IT industries.””More and more, information technology is a leading driver of economic and social progress worldwide,” says Robert Holleyman, president and CEO of the Business Software Alliance. “These findings can serve as a roadmap for governments to capitalise on those factors which can strengthen their IT sectors and accelerate the benefits a thriving IT industry can deliver to the entire society.”

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