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Which Economies Showed the Most Digital Progress in 2020 ?

Which Economies Showed the Most Digital Progress in 2020 ?

1.More data privacy, less data protectionism

Economies that provide secure, frictionless digital experiences nurture the most positive, engaged consumers, creating the most active digital ecosystems. These ecosystems then generate more data, which is the lifeblood of a competitive digital economy, enabling a virtuous cycle of growth. Economies such as Singapore, Japan, Canada, and the Netherlands illustrate this approach well, with a combination of open data flows and strong privacy protection.

Meanwhile, economies such as China, Russia, Iran, and Saudi Arabia represent a paradox: While significant state investment and control over their digital ecosystems can lead to higher digital momentum, these economies also impede the free flow of data, resulting in missed opportunities to further boost that momentum through digital products and applications that rely on widely accessible data. The growing popularity of data localization laws (i.e., regulations that limit the transfer of data across international borders) is ultimately making data less accessible, which not only hinders global growth, but often also diminishes countries’ own competitiveness by raising costs for digital businesses, reducing competition, and encouraging rent-seeking behavior among domestic actors.

To start to address these challenges, policymakers would do well to measure, monitor, and understand the value of what we call the “New GDP”: a country’s Gross Data Product. Once they’ve begun to understand their New GDP, economies can begin to unlock its full value by encouraging open data flows while providing adequate privacy protections for their citizens.

2. Mobile internet access is necessary — but not sufficient.

Mobile internet access has been a strong driver of momentum for Break Out economies, and it is the fastest route to getting the third of the global population that doesn’t yet have internet connectivity online. India is the preeminent example: Its internet connectivity has doubled in the last four years, and the country is on track to add 350 millionsmartphones by 2023.

However, mobile phones are merely the first step in unlocking the benefits of digitalization. The pandemic has illustrated how the quality of both access (i.e., reliable broadband versus sporadic satellite connections) and devices (i.e., laptops and tablets well-suited to learning and working versus low-end mobile phones) is a key component of economic resilience in a time of heavy reliance on digital technologies. For example, when the pandemic shut down in-person schooling in India, many children had to resort to WhatsApp to communicate with their teachers. Although the messaging app was certainly better than nothing, the limited growth of India’s digital ecosystem beyond mobile phones created major inequalities in access to essential education.

Given these considerations, less digitally-advanced economies would do well to focus on improving access to affordable mobile internet — but should not lose sight of the need to also invest in better devices and faster, more reliable access. This strategy has contributed to the high momentum demonstrated by Break Out zone economies such as Kenya, India, and Vietnam. And of course, China leads the pack globally when it comes to mobile adoption, thanks to a combination of massive investments in 4G infrastructure and a competitive mobile device marketplace including Xiaomi, Oppo, Huawei, and Vivo.

While investing in mobile is a great first step for economies with limited existing digital infrastructure, policymakers should endeavor to expand their gaze beyond simply increasing the number of mobile devices, recognizing that longer-term growth will depend on the quality of internet access, the devices, and the overall consumer experience.

3. The innovation-inclusion tradeoff.

Once economies reach a higher level of digital evolution, they often encounter a tradeoff between maintaining their rapid momentum and fostering institutions that prioritize digital inclusion — that is, the equitable distribution of digital development across class, gender, ethnicity, and geography. While smaller economies such as Singapore and Estonia may have an easier time maintaining their innovative edge while still ensuring an inclusive digital environment, larger, more complex economies can struggle to balance innovation with the bureaucracy needed to responsibly regulate that innovation.

For example, European economies — most of which fall into the Stall Out zone — hold six of the top 10 spots on our Digital Inclusion index. These economies have pioneered inclusive public policies such as ensuring affordable internet access, providing assistive technologies for the disabled, and investing in workers’ digital skills, and they are at the forefront of developing regulations for data governance and privacy. Many of these initiatives have (rightly) become a standard for the rest of the world — but that focus on inclusion has somewhat slowed slowed the pace of new digital development in many of these economies. These tradeoffs may well be worth making, but governments and citizens alike will benefit from clearly understanding and planning for their potential impact on digital momentum.

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There is much that decision-makers from every country can learn from their positions on the 2020 Digital Evolution scorecard. But they can also learn from other countries — as benchmarks, role models, or even cautionary tales. For example, Singapore, Estonia, Taiwan, and the UAE have all established effective, self-reinforcing digital ecosystems through a combination of strong institutions and investment into attracting global capital and talent. They have also successfully leveraged these digital strengths to adapt to the challenges of the pandemic, demonstrating the importance of digital development for building economic resilience. Despite their small size, economies like these can serve as models for leaders around the world.

In addition, large economies with high digital momentum such as China, India, and Indonesia can serve as role models for other large developing economies, such as Brazil and Nigeria, that  may be looking to step up their digital momentum in the coming years. And smaller developing economies can look to midsize “leapfrog” nations such as Kenya, Vietnam, Bangladesh, Rwanda, and Argentina for examples of how digital momentum can rapidly transform an economy.

There are no one-size-fits-all solutions to digital evolution. Every country is unique, and the factors that enable one economy to succeed are far from certain to work in another. But despite these limitations, the 2020 Digital Evolution Scorecard can still offer clarity around the current state of both digital development and digital momentum around the world — as well as the impact of that digital evolution on countries’ responses to the pandemic. Insight into how the nations of the world have fared (and what policy choices helped them get where they are) is the first step for anyone interested in fostering digital growth and economic resilience — in their own community and around the globe.

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