Tuesday, August 14, 2007

Benchmarking IT Competitiveness

JETRO provided us with a link to the newly (2007) released The Means to Compete: Benchmarking the IT Industry Competitiveness, a report from the Economist Intelligence Unit, Ltd.

This report develops a methodology (explained in detail in the appendix) to rate countries' IT environment, then applies that methodology for 64 countries. The U.S. is cited as the most positive environment in the world for IT firms. That's by virtue of the U.S. ranking as leader or in the top five of all general aggregated categories. But it, like all others (Western European countries, Japan, South Korea, Australia, Taiwan), has weakness. In the U.S., it's the current paranoia about immigration, especially for talented and educated workers who are too frequently lumped into one group with illegal migrants.

The report contends "a skilled workforce is at the heart of any country's IT sector." Plus, with the constantly changing skills requirements, there are concerns that not enough graduates can be developed anywhere. Also, higher level skills have depended on job experiences, a path that's short-circuited with outsourcing. They cite training as an alternative to address that impasse.

The report takes the not unreasonable position that, while success of an industry depends on the aggregate performance of all firms, an individual firm's success is dependent on internal factors as well as the broader competitive environment. This is a shared attribute for all types of business development and investment: "a stable and open business environment."

The report draws into discussion two important aspects of this world-wide industry. One we hear about often is the promise of China and India. However, the report doesn't skip over the weaknesses of these economies and that they in turn have competitors (Russia, Brazil, Malaysia, Vietnam) seeking to take their place. As the report notes, economies that are starting from a blank sheet are able to leapfrog decades of industrial development without being hamstrung by legacy infrastructure.

One aspect frequently overlooked that is examined in this report is the strength of countries (Sweden, Canada, Netherlands, Finland) that excel in only certain aspects of IT, but have not or have not chosen to develop a more robust IT industry. These countries may simply be awaiting a public policy epiphany or leaders to become more broadly competitive.

And least we stovepipe IT, we should consider that "most of the change that's happening in other industries is enabled by IT."

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