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Digital processing 10 Apr 2019

Which countries are the most digitally advanced?

Thanks to DiGiX 2018, BBVA Research’s multidimensional digitization index, it is possible to compare which countries are the most advanced in this area, and discover their strengths and weaknesses. The index analyzes the economies of 99 different countries.  Top in the ranking are Luxembourg, the U.S. the Netherlands, Singapore and Hong Kong, while Malaysia, South Africa, Chile and Costa Rica are regional leaders.

The composite index DiGiX was created by BBVA Research and analyzed in the report Digital Economy Watch. This mechanism to measure the level of digitization of countries around the world is based on three main pillars: conditions of the supply (infrastructure and costs), conditions of the demand (user, government and enterprise adoption) and institutional environment (regulation). Each of these three areas are comprised of six key dimensions: infrastructure, affordability, user adoption, user adoption, enterprise adoption, regulation and government adoption.

The results show that Internet affordability does not explain the significant differences across countries, regardless of the level of development. This fact seems to indicate that the price is not a decisive factor in Internet adoption, as this service would be equally affordable in countries with higher and lower adoption rates.  On the other hand, the infrastructure dimension has a high variation and discriminates well among countries that are more or less digitized. “ Luxembourg is at the top of the ranking while most of the countries (except Hong Kong, Netherlands and Singapore) are far below, Cameroon is located close to the bottom of the ranking,” explains Noelia Cámara, a researcher in the Digital Regulation and Trends Unit at BBVA Research.

According to BBVA Research, some countries have reached digitization levels much higher than expected based on their income levels.  This is the case of Singapore, Korea, the U.S., the U.K., and northern and central European countries.

“Regulation and enterprise adoption seem to be the pinpoints that when reaching a threshold, might characterize those countries that are more advanced in their digital transformation,” the BBVA Research report says.

Digitization by region

The study also points to heterogeneous performance within regions. In North America, Mexico has significant room for improvement in “the dimensions of user and enterprise adoption and in regulatory aspects that guarantee a credible and secure environment to develop and carry out technological activities,” indicates Cámara.

In Europe, countries in the south, such as Italy and Spain, need to improve their regulatory frameworks to enhance digitization. This also applies to eastern European countries. Although they have digitization patterns that are similar to southern European countries like Spain and Italy, the biggest area for improvement is regulation. Meanwhile, the challenge for countries like Turkey, which are earlier along in their digitization process, entails massive Internet adoption among users.

Asian countries performance is more uniform, but China could advance even further if it improves its regulatory framework and digital adoption among businesses. In this regard, the same dimensions are key to improving the digitization of countries in Central America and South America. Chile stands out in this group for its higher performance in these areas.

Finally, African countries are generally lagging behind in their digital transformation. However, South Africa sets itself apart from its neighbors due to its efforts to embrace the govtech ecosystem.

Although the DiGiX metrics have been updated and published every year since 2016, comparing indicators over time should be done with caution, as the concept of digitization is constantly changing. For example, in 2016 this meant the percentage of the population covered by a mobile telephone network. In the current index, this was replaced by the percentage of the population covered by at least a 3G network, and will be updated to 4G or 5G in future analyses. “Thus, Digix is especially interesting to compare the state of digitization and its dimensions in different countries at a set point in time,” concludes Cámara.

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