Groundbreaking Research Measures Resilience of Digital Economies
The year 2020 — the year of the COVID-19 pandemic — defied description. There have been over 95.8 million COVID-19 cases and over two million deaths worldwide since the pandemic began. In addition to concerns of public health, local and national economies have suffered considerably. The International Monetary Fund expects the global economy to contract by 4.4 percent and many countries around the world are on the brink of recession. Beneath these statistics are individual lives lost, families displaced, and livelihoods uprooted.
The Digital Intelligence Index, the latest large-scale research report from The Fletcher School’s Digital Planet, notes that as we cautiously tip-toe into 2021, digital evolution will be an essential contributor in not only forging a path out of the pandemic but in fostering economic resilience and social equity around the globe.
“The pandemic may be the purest test of the world’s progress towards digitalization,” Bhaskar Chakravorti, dean of the global business program at Fletcher and director of Digital Planet, said. “We have a clearer view on how dynamic digital economies can contribute to economic resiliency during a time of unprecedented global turmoil and can be positioned for recovery and change.”
Amidst all of the turmoil of 2020, one trend emerges clearly: digitalization helped people work, learn, shop, and socialize safely whilst holding on to some semblance of normalcy. At the same time, however, the pandemic has also exacerbated pre-existing inequalities, leading many in the global economy to question how business and policymakers might work together to address these critical gaps. Even as states begin to roll-out their vaccine distribution plans, and as we collectively develop and navigate a path out of the pandemic, decision-makers must recognize the critical role digital technologies are playing during this turbulent time and fully utilize them to ensure a more inclusive and resilient future.
It is in this context that Digital Planet, through its multi-year partnership with Mastercard, created the Digital Intelligence Index, a data-driven, holistic evaluation that charts the progress of 90 countries' digital economies. The research combines more than 358 indicators in two main areas: digital evolution and digital trust.
“Digital evolution captures the state and rate of a country’s digital evolution and identifies various implications for investment, innovation, and policy” explained Chakravorti. Digital Evolution encompasses four key factors, including supply conditions, demand conditions, institutional environment, and innovation and change. “Digital Trust, on the other hand, considers the trustworthiness of an economy’s digital ecosystem, the level and types of friction in digital experiences, the depth of engagement among internet users, and the level of trust in the digital ecosystem expressed by citizens,” said Chakravorti.
“The resulting framework, which follows-up on our previous research studies of digital evolution in 2017 and 2014, captures the evolution of digital progression across the world,” said Director of Research at Fletcher's Institute for Business in the Global Context Ravi Shankar Chaturvedi. “The report,” he said, “sheds insight on key factors driving change and momentum and unpacks what this means for economies facing the challenges of a global pandemic and post-pandemic future.”
The Digital Intelligence Index finds that of the 90 countries studied, those with the most dynamic digital economies –– such as the United States, South Korea, Taiwan, UAE and Germany –– significantly outperformed the other 85 in regards to economic resiliency and technological growth amidst lockdowns. These nations feature high levels of talent, active R&D collaboration between industry and academia and a strong record of creating and bringing digital products into the mainstream.
“With nearly two thirds of the world’s population online today, access to the internet alone is simply not enough,” said Christina Filipovic, senior research analyst and Fletcher MIB alumna. “Aspects such as the quality of access, effective use of digital technologies, accountable institutions, robust data governance policies, and trust are greater factors in determining digital competitiveness and sustainability.” Young demographics, she said, show considerable potential in driving digital change globally, and the research shows that young people in emerging economies are demonstrating high levels of digital engagement –– a bright spot for governments attempting to expand digitalization in their economies.
Mastercard’s own President of Cyber & Intelligence Ajay Bhalla sees this new research out of Fletcher’s Digital Planet as groundbreaking for businesses and governments, alike. “Never before has there been such an acute need to understand the factors that drive digitalization and digital trust,” said Bhalla. “With that knowledge, businesses and governments can work together to help all 7.6 billion people around the world benefit from the vast opportunities a digitally advanced economy can bring. Whilst much remains uncertain today, it is clear that digital success will be a key building block in our collective recovery.”
Fletcher’s proprietary research also offers an interactive platform, which allows users to compare economies on various parameters, find patterns, draw conclusions on policy intervention, and study the potential for inclusive development through the lens of the digital economy. To explore how the 90 economies studied stack up against each other along the broader measures of digital evolution and digital trust, check out the interactive DII research tool.
Download the full Digital Intelligence Index report.
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