Wednesday, May 30, 2012

Why Can’t the U.S. Keep Pace With Europe on IT?

Despite the work the U.S. has done the past decade to make information technology ubiquitous, a digital divide persists between America and some of the fast-advancing European countries.

Interestingly, while the country’s large land area is still one of the main factors impeding the U.S. government’s ability to successfully leverage its IT capabilities to a maximum, the biggest reason for the country’s underperformance has been its “less than satisfactory” political and regulatory environment, according to The Global Information Technology Report 2012 [PDF].

That opinion was echoed by Beñat Bilbao-Osorio, associate director and senior economist at the World Economic Forum and one of the report’s authors. Although the U.S. is excelling on many technology fronts from a global perspective, Bilbao-Osorio said the American government still hasn’t been able to make the best use of IT and technology infrastructure.

The Global Information Technology Report 2012 revealed that despite efforts during the past decade to develop IT infrastructure in developing economies, a new digital divide persists in terms of IT impacts.

The U.S. secured 8th place overall in the report’s rankings on countries’ effective use of IT. Yet despite placing in the top 10 for six parameters that went into the overall calculation, the U.S. failed to make the top 3 in any of them.

Sweden placed No. 1, followed by Singapore, Finland, Denmark, Switzerland, Netherlands and Norway. The Nordic countries are dominating.

“That means that although U.S. is at the forefront, there is still a lot of room for improvement,” Bilbao-Osorio said.

Even as the country boasts an environment that’s generally conducive for successfully leveraging IT, Bilbao-Osorio said the political and regulatory framework still presents some impediments. These include dysfunctional lawmaking institutions and burdensome regulations.

“We looked at various indicators and realized that for any country and its government, the determinant factors — regarding the successful use of ICT [information and communications technology] — include the functioning of the legal system and how the business community perceives the political and regulatory system is functioning,” Bilbao-Osorio said. “On that count, the U.S. fails to impress because we found that the business community, in particular, does not have enough confidence in the politicians to effectively address the problems that the country faces both in terms of economy as well as ICT.”

According to Bilbao-Osorio, that’s a serious concern because as ICT is increasingly ubiquitous, the focus moves from how to provide access to how to make the best use of technology. “After all, effective use of ICT also ensures improvement of business innovation, governance, citizens’ political participation and social cohesion,” he said.
Contributing Factors
Indeed, some of The Global Information Technology Report 2012’s findings about the U.S. are provocative. For instance, the report said that although the nation has very good and affordable ICT infrastructure, the U.S. hasn’t been able to use it to upgrade the skill set of its population — placing a lowly 32nd on that count among the 142 economies studied by the report.

In terms of individual usage, the U.S. is not playing a leading role, as indicated by an 18th-place rank. Providing a comparison, the report said Sweden posts penetration rates of approximately 90 percent for Internet and PC ownership, but the U.S. does not exceed 75 percent.

Pointing at the country’s capacity for innovation, the report said that for two decades the U.S. had only one challenger — Japan. Today’s landscape is uber-competitive, as several “Asian Tiger” nations, the Nordics, Switzerland, and Israel are emerging as innovation powerhouses threatening to supersede the U.S. “Accounting for their size, some of these economies are actually more prolific than the United States as measured by the number of patent applications per population,” the report said.

Some of these factors are outside of U.S. control. Bilbao-Osorio said the U.S. “slide” has been amplified by the rapid strides made by some other nations. “More than what the U.S. is not doing, I think it is the advancement in other countries that has widened the gap between the U.S. and others,” he said.

“Take the instance of Nordic countries, which have been not only able to create very robust ICT systems, but also innovation systems and integrate ICT fully into those innovation systems. Besides, there’s the issue of vastness as well; the geography of the U.S. also makes it difficult to have ICT and innovation spread evenly across the country compared to countries that are smaller in size, where it is easier to have homogenous development of innovation,” Bilbao-Osorio noted.

According to him, countries that are performing better than the U.S at leveraging ICT for competitive advantage are those that managed to mobilize all the different actors of the society and pull them in the same direction. These actors include the government, business and individuals. “Unfortunately this is something that the U.S. government has not been able to do satisfactorily,” Bilbao-Osorio asserted.

Bilbao-Osorio gave an example: “While the U.S. government has been quite active in providing a lot services online — it ranks No. 2 — the business community still perceives that the vision of the government to fully embrace ICT (for not only providing services but also for providing conditions to transform the economy) has been a lot less than satisfactory compared to the Nordic countries.”
“It is very difficult to know why the business community feels that way; we do not have enough information,” he added.

However, Bilbao-Osorio also thinks that the country’s policies are heading in the right direction. “The U.S. policies are on track; it is just that the country has to instill a little more confidence among the other actors, primarily the business, to make them believe in the government’s policies.”

“And the government can do that by actions, by being ahead of the curve and by identifying the potential challenges and address them. The government has to be at the constant quest for excellence,” Bilbao-Osorio said.

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