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Interview with Augusto Lopez-Claros, Chief Economist, World Economic Forum, on the launch of the Global Information Technology Report 2005-2006
 The US has climbed four places this year to bump Singapore out of the top spot in ICT. What happened over the past 12 months?
I would not attach undue importance to the inevitable shift in ranks that you see near the top from one year to the next. The United States has had the first position in 3 of the last five years, confirming this year its eminent position as an ICT powerhouse.
The United States’ impressive performance is driven by an outstanding ICT physical infrastructure, a broadly supportive market environment and high levels of business and government usage of the latest technologies. It also continues to lead the world in technological innovation, helped by the excellent quality of its institutions of higher education and extensive levels of cooperation between its research centres and the business community.
The US also stands out for the ready availability of venture capital – key for start-ups to develop and prosper in what can be a risky sector. Also noteworthy is the prominent role assumed by the private sector in research and development and cooperation with the public sector in innovation and ICT penetration.
There is much talk these days about the impact of macroeconomic imbalances on the underlying strength of the US economy, the future of the dollar, and so on. However, our data suggest that the US derives considerable strength from its capacity for innovation and continues to be a magnet for the rest of the world for human talent and capital.
What is the secret of the Nordic countries that consistently keeps them at the top of the rankings year on year?
The Nordic countries have consistently held top ten positions over the last five years and enjoy high ICT penetration rates. Their high rankings reflect the same set of factors that have propelled these economies to the top of the world competitiveness league.
These factors include highly developed educational institutions which have fostered a strong culture of innovation; transparency in government which has contributed to the emergence of a friendly climate for new business ventures; and a strong predisposition to adopt the latest technologies, both in government, the business community and civil society.
The fact that these countries have extremely responsible fiscal management means that the state has access to resources to continue to make improvements to the quality of the educational system, to invest in research centres and so on and these, more and more, are turning out to be key drivers not just of innovation and the adoption of new technologies, but also of growth and efficiency. Also, because these are relatively small countries, their experiences have considerable relevance for the rest of the world.
There is a huge gap between the first and second Latin American economies with Chile in 29th place and Brazil in 52nd place. In what way is Chile exceptional among Latin American economies?
Chile is, without question, the leader in the region in efforts to harness the latest technologies for boosting the efficiency of its economy and improving the living standards of the population. Chile is characterized by extremely competent macroeconomic management; a regulatory environment that is friendly to business; a public sector that, in terms of the quality of the underlying institutional environment, is already operating above the EU average.
Indeed, as we look at the overall institutional environment in Chile—which we are able to assess by examining a broad range of indicators—we see that there are only 8 countries in the EU which have higher scores than Chile. Furthermore, the government has taken the lead in turning information and communication technologies into effective means for improving the delivery of public services and enhancing the transparency of financial transactions involving public funds.
As with the Nordics, Chile also has had very good management of public resources, which means that there is money for education, improving the country’s infrastructure and boosting the capacity of the private sector to operate at high levels of efficiency in an increasingly complex global economy.
The African countries of Botswana (56) and Ghana (61) rank higher than larger economies such as Argentina (71) and Russia (72). This underlines the perception that ICT can help to close the development gap. What are the main points to remember here?
The main point here is not so much the relatively respectable ranks of Botswana and Ghana, but rather the rather dismal scores for Argentina and Russia which, in both cases, reflect important underlying weaknesses in the environment component of the Networked Readiness Index.
In Argentina there are concerns about excessive levels of bureaucracy and red tape, obstacles to starting a new business, the effectiveness of law-making bodies and the property rights climate. In Russia the concerns are focused on security of property rights—which are perceived as being among the weakest in the world—and inefficiencies in the operations of the judicial system. In Russia these are undermining its potential to create new businesses in the high technology area.
Russia is an interesting case to examine, given its distinguished tradition of scientific discovery and technological innovation. Russian contributions to science in the 20th century have been seminal—the challenge for the authorities is how to pave the way for a return to that impressively accomplished scientific past.
A similar case can be made about Argentina, by the way, which remains the only country in Latin America to have Nobel prizes in science—three in all.
This year’s GITR has a case study on Israel, an emerging ICT powerhouse. What makes the Israeli experience relevant?
Our case study sought to understand better the role that government policies have played to unleash the astonishing development of the high-tech sector in Israel. During the decade of the 1990s, despite ongoing concerns for basic security, Israel took full advantage of its high educational levels, skilled immigrants, and capacity for innovation to cultivate the ICT sector, which grew 16 per cent per year and increased its GDP participation from 5 to 14 percent.
In 2004, Israel ranked 6th in the world in the number of US patents per capita, preceded only by the United States, Japan, Taiwan, Switzerland, and Finland. Since Israel is not a low wage country, it must compete in high value-added products and technologies. Its success comes from niche players who have learned to stay focused. A number of companies have become world leaders in domains such as the Internet, communications, semiconductors, consumer electronics and digital printing.
We were particularly impressed with their incubators programme. In 1991, to promote business start-ups, and particularly to assist the new wave of immigrants from the former Soviet Union, the Office of the Chief Scientist initiated the incubator program to enable first time entrepreneurs with innovative ideas to develop them into a business.
The basic rationale of this programme was to take selected entrepreneurs with promising ideas with export potential through to first round investments in product development, to the point where they could stand on their own, find strategic partners, and raise venture capital on the market. It has been a remarkably successful programme and well worth studying by other countries. |
