IMD World Digital Competitiveness

Analysis of results

Dr José Caballero Senior Economist IMD World Competitiveness Center

Dr Christos Cabolis Chief Economist & Head of Operations IMD World Competitiveness Center

Marco Pistis Research Specialist IMD World Competitiveness Center

1. Introduction This year’s results see the US reclaiming the top position in the ranking, a testament to its robust performance across all three factors measured: knowledge, tech nology, and future readiness. The Netherlands takes second position, advancing four places by bolstering its standing in the knowledge and future readiness factors. Singapore ascends one position to claim third place by improving in the knowledge factor. Denmark, however, drops to fourth place, mainly due to the decline in future readiness and technology factors. Switzerland maintains fifth position, improving both technology and future readiness factors. Unsurprisingly, the top econo mies are characterized by the pillars of digital nations: digital talent, digital culture, and digital infrastructure. At the regional level, Eastern Asia continues to lead, with North America and Western Europe in pursuit. Eastern Asia outperforms in all digital factors, notably outshining North America and Western Europe in both technology and future readiness subfactors. While Western Europe and North America exhibit similar scores in these subfactors, regional disparities in the knowledge factor account for Eastern Asia and North America’s consistency as core hubs for digital innovation since the inception of the IMD World Digital Competitiveness Ranking (WDCR) in 2017. 2. Regional trends Regional digital competitiveness levels are mostly stationary in 2023 with few exceptions. Figure 1 pres ents the regional overall digital competitiveness ranking trend for the years 2019 to 2023. Over the past year, North America and Ex-CIS and Central Asia have slightly improved their levels of digitalization; Eastern Asia, Western Europe, and South America have, to varying extents, worsened their average digital rankings compared to 2022. Southern Asia & the Pacific, Eastern Europe, and Western Asia & Africa remain relatively stable in their overall average positions.

We are pleased to welcome Kuwait to the WDCR for the first time. As with last year’s edition, the economies of Russia and Ukraine are omitted from the ranking due to limited reliability of the data that was able to be collected. Our model of digital competitiveness considers that in order for digital nations to thrive, they must possess an effective digital infrastructure, digital skills and competences, together with a culture that embraces digital innovation. These elements are intimately related to the factors analyzed by the WDCR: the knowledge factor, quantifying the quality of human capital; the technology factor, capturing the excellence of techno logical infrastructure; and the future readiness factor, assessing the degree to which technology is adopted by governments, business, and society at large. They are all necessary for countries to excel in the adoption of technology–including artificial intelligence (AI)–and its various applications at the corporate and individual level. In what follows, we delve into the trends for digital competitiveness at both the regional and economy level. Our exploration this year pays special attention to findings concerning the cybersecurity measures undertaken by companies in the countries we study. In North America, digital competitiveness levels rise from an average 23 rd to 22 nd place, with the US and Mexico’s improvements compensating for Canada’s one position decline. Similarly, Ex-CIS and Central Asia’s average digital competitiveness position rises to 48 th (up one point from 2022). Eastern Asia remains the most digitally competitive region of the world. However, the average digital competitiveness ranking of the economies in this area (China, Hong Kong SAR, Japan, South Korea, and Taiwan) has declined by one position from 14 th to 15 th over the past year, confirming a declining trend that began

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