Study: 'E-Readiness' Gap Threatens Economic Growth

An analysis of 42 countries' current ability to participate fully in the digital economy paints a grim picture for most of them. The authors of the report said the situation is so bad that, unless key countries act quickly, world economic expansion could stagnate.

The report examined the 42 countries for what the authors called "e-readiness." Each country was rated based on five categories -- the availability and access to networks; government and industry leadership in fostering electronic business and electronic government; the strength of laws protecting intellectual property rights; the availability of workers to support electronic business; and the electronic business climate.

The study was prepared by McConnell International LLC, a new Washington-based consultancy owned and managed by the former leader of the International Y2K Cooperation Center.

The results show the "e-readiness" situation in the 42 countries, including Argentina, China, Italy, Spain and South Africa, is more serious than the year 2000 (Y2K) problem turned out to be, Bruce McConnell, president of McConnell International, said at a news conference here Tuesday.

"Our prediction in Y2K was that there would be few disruptions around the world. I wish we could say the same here," McConnell said. "In fact, we are concerned that the technology-led growth of the global economy is at risk unless countries take prompt action."Countries chosen for the study are those where information technology industry leaders are looking to expand, and whose success is the most critical to achieving the next phase of global economic growth. The 42 countries comprise nearly three-quarters of the world's population and produce one-quarter of global goods and services.

Overall, 46 percent of the ratings show substantial improvement is needed to support electronic business and electronic government. Only eight of the countries -- Costa Rica, Malaysia, South Korea, Taiwan, Estonia, Hungary, Italy and Portugal -- received the highest rating in at least one of the five categories.

Twenty-three countries, including China, Indonesia, Russia and South Africa, require substantial improvement in at least two areas before electronic business and electronic government will flourish, according to the study.

Despite the mostly negative assessment, McConnell said growing demand in the markets of the countries studied creates many opportunities. Only a few countries -- Ecuador, Indonesia, Vietnam, Kenya, Nigeria, Saudi Arabia and Tanzania -- received the lowest rating in all five categories.

Some of those seven countries, however, have shown recent improvements in some areas. In addition, McConnell noted, most countries' ratings indicated "pockets" of positive developments in one or two categories.

"These represent fabulous opportunities for businesses getting in on the ground floor of this next phase of development," he said. "To do that, they have to pay attention to the overall environment and carefully evaluate the risks. But with the knowledge of the risks and some good local partners, there are some great opportunities to make money and move the world along in the right direction."The report recommends countries invest in education, deregulate their telecommunications industries, improve the transparency of their governments, foster competition, promote wireless Internet access, enforce regulation and open up their financial structures.

McConnell was joined at the news conference by Carlos Primo Braga, manager of the World Bank's Information for Development Program; John Hamre, president and chief executive officer of the Washington-based Center for Strategic and International Studies; and Harris Miller, president of the both the Information Technology Association of America (ITAA), based in Arlington, Virginia, and the World Information Technology and Services Alliance, based in Vienna, Virginia.

Hamre said he had spoken recently with senior representatives of at least a dozen countries, and all of them linked their future to the digital economy.

"But when they go home, they bump into the traditional (power) structures," Hamre said. "They aren't prepared to expose themselves to the tough pressures of the international marketplace."Harris said countries have to understand that governments set the conditions for allowing the digital economy to spread.

During a recent visit to Mexico, which ranks 41st in the world in telephone lines per household, it was disappointing to hear a government regulator extol the virtues of monopolies, he added.

"What we find up until now is, frankly, that many governments simply don't get it," Harris said. "You cannot be a leader of the Internet economy when you are 41st in the world for (phone) lines per household."If the middle classes in the countries studied started adopting new technologies that would inevitably lead to the rest of the society very quickly adopting it, he believes.

McConnell International collected data for the analysis by interviewing 300 people in the 42 countries. Some of the information was gathered in face-to-face meetings with government officials. The company also interviewed people in the countries by phone and via e-mail. Some of those consulted were private industry officials.

The 42 countries rated are Argentina, Brazil, Bulgaria, Chile, China, Costa Rica, Czech Republic, Ecuador, Egypt, Estonia, Ghana, Greece, Hungary, India, Indonesia, Italy, Kenya, Latvia, Lithuania, Malaysia, Mexico, Nigeria, Pakistan, Peru, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Slovakia, Slovenia, South Africa, South Korea, Spain, Taiwan, Tanzania, Thailand, Turkey, Ukraine, Venezuela and Vietnam.

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