The great digital divide

15 Aug 2016

  • Technology

By: Nikola Hopkinson, Content Manager, ADMA

Innovating in the Digital Economy

Issues with broadband affordability, lack of business models created via information and communication technology (ICT) and venture capital availability in Australia make our nation the world’s 18th digital economy – falling two spots from 2015. At the brink of the Fourth Industrial Revolution – bringing together digital, biological and physical technologies – being at the forefront of innovation is vital for prosperity.

According to the Global Information Technology Report 2016 by the World Economy Forum (WEF), Australia could and should be doing more to leverage advances in technology.

So, why is Australia falling behind the rest of the developed world?

The Networked Readiness Index (NRI)

The NRI is the tool used by the WEF to:

“…assess countries’ preparedness to reap the benefits of emerging technologies and capitalize on the opportunities presented by the digital transformation and beyond.”

There are four categories in the assessment process:

1. Environment for technology development and use;
2. Network readiness, taking into account ICT infrastructure, affordability and skills;
3. Technology adoption/use by government, private sector and individuals; and
4. Social and economic Impact of new technology.

The report identified four key findings that emerged from the last five years of NRI data.

Firstly, the nature of innovation is changing. There has been a clear increase in the capacity to innovate globally; however, companies are zeroing in on innovation of a different kind – one based on new technologies and the new business models that these technologies bring.
Speed of innovation and bringing new inventions to market have become clear indicators of a company’s ability to stay at the top. At the core of success is specialised talent, driving digital innovation. Talent competitiveness and investing in educating and retaining innovators are therefore crucial to success in the Digital Age.

A number of missed opportunities are identified by the Report. Demand for digital products and services are being met by a relatively small number of companies.

“A widening and worrying gap is also emerging between growth in individual ICT usage and public-sector engagement in the digital economy, as government usage is increasingly falling short of expectations.”

There is also a gap between individual expectations and the public sector’s use and promotion of digital technologies. Governments also seem to be falling behind in the use of digital technologies for effective social impact.

Another issue that is emerging during the digital transformation of business and economies, is resilience. Developing a supporting framework for the new economic and social dynamics brought on by digital technologies is key to delivering sustainable and wide-reaching benefits.

The Report points to two dynamics emerging from new digital technologies that need to be at the forefront of policy development: competition in product markets and the labour market.

Flexible and supportive policy that includes speedy procedures for opening new businesses and bringing products to market, promoting ICT adoption and enforcing a competition regime will allow businesses to prosper and react quickly to changing markets.

Income distributions are increasingly polarised, with new technologies aiding automisation processes, resulting in income and job losses across a number of industries. There is a real need to invest in educating workers and create a more evenly distributed spectrum of skills.

The leaders

The top 7 leading digital economies in the world are:
1. Singapore
2. Finland
3. Sweden
4. Norway
5. United States
6. Netherlands
7. Switzerland

What are they doing differently?

Where does Australia stand?

As the 18th digital economy in the world, Australia is doing well in a number of categories.

The below image from the Report details Australia's overall scores in the four categories.

Networked Readiness Index

The government and public sector are among the top leaders in the world when it comes to providing online services. The country has also made improvements in terms of environment and individual usage, especially mobile broadband subscriptions - ranked at 10th in the world.

Australia’s shortcomings are in affordability, in particular in fixed broadband subscriptions - we come in at 100 out of 139 countries. Business adoption of ICTs and venture capital availability also present opportunities for improvement.

The Report suggests that the National Innovation and Science Agenda, introduced at the end of 2015 by the government, might help bridge some of these gaps.

As most Australians with an internet connection might suspect, we have a long way to go if we want to be one of the leading digital economies in the world. It’s encouraging to note that our government and public system offer world-leading online services and that the environment for the development of new technologies is improving.

So what can we do to launch ourselves up the ranks of the digital economy ladder?

Read the Global Information Technology Report 2016 for more information.

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CATEGORY Technology

SUB-CATEGORY Innovation

TYPE Article