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Published: August 28, 2012
 / Autumn 2012 / Issue 68

 
 

Digitization and Prosperity

Governments can also elevate the digitization agenda by creating an effective system that measures, tracks, and demonstrates the impact of every dollar invested in it. Economies at all four stages of development are still developing and refining the relevant metrics. For example, the United States’ National Broadband Plan was approved by the Federal Communications Commission in 2010. It includes dozens of specific measures to improve regulations and standards, with six overarching goals: bringing high-speed Internet to 100 million more homes, providing leadership in mobile innovation, developing a more robust broadband network, ensuring more affordable broadband service, establishing nationwide wireless access for first responders, and enabling a clean energy economy.

2. Developing a better governance model. Governments play four complementary roles in fostering digitization. They set policy, regulate companies and activity, invest in developing the sector, and “e-enable” public services (bring them online, along with appropriate links to private-sector services). Each role is distinct but must be coordinated with the others. To ensure synergies and efficiencies, most countries place all four functions within a single organization, as the United Kingdom and Qatar have done.

The most effective governance structures involve open and appropriate collaboration among private companies and agency officials, through industry forums and policy consultations. (See “School Reform for Realists,” by Andrea Gabor.) The frameworks for public–private partnerships that can manage investments that are less immediately attractive should be clear. For example, governments may decide to fund broadband deployment in remote regions, but let the private sector target the urban areas.

Most developed countries have seen direct benefits from strong sector governance. Singapore, for example, executed its digitization plan in 2006, and its ICT sector had grown by 13.6 percent by 2008, due in part to the country’s robust governance. Developing countries can accelerate development of their ICT sectors by establishing a policymaking function and investing early in a sector-development arm. Saudi Arabia, for instance, advanced rapidly through the stages of digitization by ensuring fulfillment of all regulatory and oversight roles at the national level.

3. Adopting an ecosystem philosophy. It’s not possible to stop the convergence of the telecommunications, media, and technology industries, or the integration of the value chain, including infrastructure, applications, and usage. Even in relatively small countries, like Qatar, Singapore, and the Netherlands, ICT companies are looking beyond their local markets to expand their business. (See “The Global ICT 50: The Supply Side of Digitization,” by Olaf Acker, Florian Gröne, and Germar Schröder.) These changes in the technology and media ecosystem will mean abandoning or changing many established government practices.

For example, emerging economies have often abetted investment in telecommunications infrastructure, and as a result this sector is fairly well developed. In many of these countries, however, other kinds of information technology still lag. For instance, in the United Arab Emirates, non-telecommunications spending accounts for 21 percent of total ICT spending, compared with 37 percent in developed markets such as Finland; this means that the untapped ICT opportunity beyond telecommunications in emerging economies (for services such as enterprise computing) is significant.

Policymakers also need to foster local capabilities in creating content and applications. In Estonia, for example, innovative software and hardware companies have been in place since the 1990s; they contributed more than €500 million (US$473 million) in annual revenues by 2001, and have created more than 400,000 jobs overall. Their success encouraged Estonia to launch a development fund in 2007 to further develop its knowledge economy, investing in resources such as ICT parks and innovation centers, and setting up particular export-oriented projects, such as an “Estonia–India foresight project” with a concentration on cybersecurity.

 
 
 
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Resources

  1. Roman Friedrich, Michael Peterson, and Alex Koster, “The Rise of Generation C,” s+b, Spring 2011: How digitization is fostered by people born after 1990: a connected, communicating, content-centric, computerized, and community-oriented cohort.
  2. Art Kleiner, “Philip Bobbitt: The Thought Leader Interview,” s+b, Spring 2004: A long-range view of the evolution of the concept of government, with immense implications for digitization and business leadership in general.
  3. Karim Sabbagh, Roman Friedrich, Bahjat El-Darwiche, and Milind Singh, “Maximizing the Impact of Digitization,” Booz & Company white paper, 2012: The paper from which this article was adapted, with more detail on the relationship between digitization and measures of quality of life and economic growth.
  4. For more thought leadership on this topic, see the s+b website at: strategy-business.com/technology.