Populous Developing Economies Continue To Attract Investors Even Though Gaps Prevail: Study

The Fletcher School at Tufts University in partnership with Mastercard, unveils the 'Digital Intelligence Index,' which charts the progress, economies have made in advancing digitalization, fostering trust and integrating connectivity into the lives of billions.

Building upon earlier editions in 2014 and 2017, this year’s index paints a picture of global digital development, sheds insight on key factors driving change and momentum, and unpacks what this means for economies facing the challenges of a global pandemic and post-pandemic future. 

The index highlights that populous developing economies including India, Indonesia, Brazil and Nigeria continue to attract investor interest even though institutional and infrastructural gaps prevail. The digital journeys of these economies are quite different - while Indonesia and India experienced high momentum, Brazil and Nigeria experienced slow momentum. This suggests that the role of digitalization in the emergence of these highly significant economies is going to be quite different, and each has opportunities for a lot of catching up in the years ahead. Notably across Asia Pacific, Singapore, Hong Kong SAR, South Korea and Chinese Taipei are amongst the most digitally dynamic economies. 

“The pandemic may be the purest test of the world’s progress towards digitalization. We have a clearer view on how dynamic digital economies can contribute to economic resiliency during a time of unparalleled global turmoil and can be positioned for recovery and change,” expressed the Dean of Global Business at Fletcher, Bhaskar Chakravorti.

Other key findings include:

• With nearly two thirds of the world’s population online today, we are entering an ‘after access’ phase, where access alone is not enough. Aspects such as the quality of access, effective use of digital technologies, accountable institutions, robust data governance policies and fostering trust are greater factors in determining digital competitiveness and sustainability.
• Young people in emerging economies are demonstrating high levels of digital engagement, a bright spot for governments attempting to expand digitalization in their economies.

President Cyber & Intelligence of Mastercard, Ajay Bhalla, said, “Never before has there been such an acute need to understand the factors that drive digitalization and digital trust. With that knowledge, businesses and governments can work together to help all 7.6 billion people around the world benefit from the vast opportunities a digitally advanced economy can bring.  Whilst much remains uncertain today, it is clear that digital success will be a key building block in our collective recovery.”

A Global Outlook on Digital Evolution and Trust 

This year’s index looks at two components: Digital Evolution and Digital Trust. Digital Evolution captures an economy’s historical momentum from the physical past to the digital present. Digital Trust is the bridge that connects its journey from the digital present to an intelligent and inclusive digital future.

Mapping 95% of the world’s online population and drawing on 12 years of data, the Digital Evolution scorecard measures 160 indicators in 90 economies across four key pillars: institutional environment, demand conditions, supply conditions, and the capacity for innovation and change. These segment into four categories:

• Stand Out economies that are highly digitally advanced and exhibit high momentum
• Stall Out economies that enjoy a high-state of digital advancement while exhibiting relatively slower momentum
• Break Out economies that are lower scoring in their present states of digitalization but are evolving rapidly
• The fourth category is Watch Out economies – they face significant challenges with their relatively lower state of digitalization and lower momentum

India is one of the economies in the Break Out category, owing to strong momentum in its digital journey and optimistic attitudes towards digitalization and technology. Other economies in this category include China, Indonesia, Saudi Arabia, Kenya, and Russia. 

The Digital Trust scorecard measures 198 indicators in 42 of the index’s economies across four key pillars: behavior, attitudes, environment, and experience.

• One area in which trust can be measured is behavior, which evaluates how engaged users are with digital systems. In this category,  the fastest-moving economies—China, Indonesia, India, and Vietnam—all have high levels of digital engagement. Behavior was measured through examining consumer use of technology, social media, e-commerce, and mobile payments
• Economies such as Singapore, Hong Kong SAR, Chinese Taipei and South Korea provide citizens with a near seamless experience, delivering the holy grail of advanced infrastructure, broad access and unparalleled interaction. This experience is also matched by high levels of engagement, offering these economies a clear advantage in a ‘beyond access’ future.
• Economies such as mainland China, Indonesia and Vietnam have increasingly favorable attitudes about their digital future, buoyed by rapidly expanding digital adoption and opportunity. 
• Overall, digitally advanced economies with higher levels of socio-economic equity expressed more positive attitudes towards digital technologies, while fast-moving Break Outs are more optimistic than their Watch Out peers.

Executive Vice President, Services, Asia Pacific of Mastercard, Matthew Driver expressed, “COVID-19 has advanced digitalization across Asia Pacific by at least five years in as many months, only serving to further accelerate the development of the digital ecosystems across the region. With rising levels of consumer trust and engagement and growing digitization in the small business segment, all deeply supported by proactive enabling actions from governments, the opportunities ahead for the region are immense. With Asia Pacific poised to recover quickly from the pandemic, the strong performance in the two components of Digital Evolution and Trust will only serve to further support Asia’s leadership in digital.”