U.S. and Japan Keep IT Thriving

What does it take for a country to support a thriving IT sector? The United Sates, Japan, South Korea and the UK have all done a good job of figuring it out.

These countries stood out among the 64 nations reviewed in the IT Competitiveness Index, a benchmarking report conducted by the EIU (Economist Intelligence Unit), the research arm of the Economist magazine, and commissioned by the BSA (Business Software Alliance). The index was released on July 11.

Reviewing the quality of the IT and communications infrastructure, supply of local talent and the research and development environment, countries were compared on how well they supported the competitiveness of IT firms. The report argued that countries that pay close attention to these “competitiveness enablers” reap the rewards of highly efficient IT sectors, noting that all but four of the top index tier of 22 countries were among the world’s top 22 countries in terms of IT labor productivity.

The U.S. ranked among the top five countries in all index categories, including education, infrastructure and encouragement of innovation, as well as solid legal protection. Western European nations also made a strong showing, accounting for 11 of the top 20 in the overall index. Japan, South Korea, Australia and Taiwan had the most competitive environments in Asia-Pacific.

The results of the study were seen as refreshing news as concerns have mounted in recent years over the United States falling behind in technology advancement. In an article in the spring issue of Issues in Science and Technology, Congressman Bart Gordon, chair of the house committee on science and technology, lambasted the education system for not giving students the solid grounding in math and science needed to succeed in engineering careers.

“There is no getting around that the U.S. has great strengths. But there are some risks for the U.S. if it is being complacent about its leadership position,” Denis McCauley, director of Global Technology Research at the EIU, said in a teleconference on July 11.

“The U.S. has not promoted or encouraged the level of widespread adoption of broadband technology that its competitors have in terms of IT infrastructure. This limits the rapid uptake of broadband by businesses and households,” said McCauley.

No nations in the top rankings were without their shortcomings. India and China have been able to parlay their unique features, such as work force size, low wages and language attributes into strong IT sector performances, but the report has little faith that other countries would be able to use similar factors to replicate their success. As their cost advantage erodes, countries must demand greater innovation from their firms to stay competitive.

“In terms of China and India, we tend to look at things in per capita terms, and whenever you look at them that way, due to their massive population, they tend to fall down the list in terms of technology adoption because they have tremendous weakness in their overall environment. Infrastructure is limited to urban areas, and legal protections are not where they should be,” said McCauley.

Click here to read about how immigrants are fueling a tech boom.

Skill-rich emerging markets including Russia, Brazil, Malaysia and Vietnam and smaller markets such as Estonia, Lithuania and Chile are expected to pose a rivalry to India and China, as they were all found to have performed well in at least one aspect of IT competitiveness. Carving niches in software development and services is considered by the report to be the best way to move up the index table.

IT skills training used to overcome shortages as well as address the changing nature of skills were given priority in the report. The educational systems in only a handful of countries, including the United States and Australia, were seen as making a concerted effort to adjust their training curricula accordingly.

“The U.S. remains a magnet for overseas talent, and to receive training there is a goal of many. But there is a risk of backtracking on these achievements through the immigration policy, which has cut back on the number of people who can study here and also not making it easy for those who do to stay in the country,” said McCauley.

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