The Global Digitalization Index 2024 Report, compiled by Huawei Technologies and the International Data Corporation, underscores the imperative need for nations to invest in their digital futures to spur long-term economic growth. Examining the extent and impact of digital technologies such as artificial intelligence (AI), fifth-generation mobile communications technology (5G), and cloud computing, the report highlights how these technologies are rapidly transforming traditional manufacturing practices, communication methods, and living standards. This transformation, often referred to as the fourth industrial revolution, is characterized by the integration of data, interconnectivity, analytics, and automation to optimize efficiency and profitability.
The report points to a significant rise in global investment in information and communication technology (ICT), reaching a staggering US$4.9 trillion in the previous year. Additionally, it remarks on the projections made by the World Economic Forum, suggesting that digital technology and AI are poised to drive 70 percent of global economic growth over the next five years. This investment is not only about economic expansion but also about ensuring that emerging economies do not fall further behind, exacerbating existing global economic disparities.
The Rise of Global ICT Investment
The Global Digitalization Index report assesses the progress of digital development in 77 countries, accounting for 93 percent of the world’s gross domestic product (GDP) and 80 percent of the global population. Countries are categorized into three clusters: front runners, adopters, and starters, based on economic development, ICT industry maturity, connectivity, digital foundation, green energy technology, support policies, and ecosystems. A fundamental finding is the strong correlation between the maturity of a nation’s ICT industry and its economic growth.
Front runner countries like the United States, Singapore, and China see a significant economic benefit from digitalization, with a one-point increase in the global digitalization index (GDI) boosting GDP per capita by US$945. This boost is considerably higher than what adopters and starters experience, emphasizing the importance of robust ICT investment. The report highlights the massive potential returns on digital investments, where every US$1 invested in digital transformation can yield an US$8.3 return in a country’s digital economy. However, it also points out that between 2019 and the previous year, highly digitalized countries increased their tech investments 18 times faster than less developed ones, potentially widening the economic gap further.
Economic Benefits of Digitalization
The report highlights that regardless of their current stage in digital transformation, all countries need strategies to keep pace with technological advancements and sustain their digital growth. The report provides tailored recommendations for each cluster of countries to navigate these challenges and build capabilities. For front runners, like Singapore, the emphasis is on maintaining their competitive edge through continuous economic transformation with AI and developing green data centers to meet net-zero goals.
Adopted countries are advised to focus on expanding connectivity and supporting foundational technology development. Thailand, for instance, is advancing its digital transformation by accelerating the roll-out of 5G networks and facilitating investments in cloud computing, big data, and AI. Starter nations are encouraged to prioritize establishing fixed and mobile broadband connectivity to stimulate digital economic activities. Kenya serves as an example in this regard, having made strategic investments in expanding mobile network coverage, building a national fiber-optic network, and digitalizing government services, thus boosting its e-commerce sector significantly.
Strategies for Sustaining Digital Growth
Moreover, the report underscores the critical role of green energy technologies in driving sustainability and reducing carbon emissions within the ICT industry. Countries are urged to develop medium- and long-term ICT plans to lay a sturdy foundation for the growth of digital economies. Emerging economies must also focus on nurturing ICT talent and creating lucrative job opportunities in science, technology, engineering, and mathematics (STEM) fields. Despite similar proportions of STEM graduates across clusters, their capacity to retain talent varies dramatically, with a stark contrast between more developed front runners (95 percent retention of STEM graduates) and less developed starters (15 percent retention).
Bridging this gap requires increased investments in ICT industries and the introduction of incentives and policies to prevent brain drain. Building robust ICT ecosystems also involves fostering innovation, entrepreneurship, and collaborative initiatives with global tech leaders. These steps help create a vibrant technology sector capable of sustaining long-term digital growth and contributing to economic resilience. By focusing on these key areas, emerging economies can begin to catch up with more developed countries and play a significant role in the global digital economy.
Prioritizing Connectivity in Starter Nations
The Global Digitalization Index 2024 Report, created by Huawei Technologies and the International Data Corporation, underscores the crucial necessity for nations to invest in their digital futures to foster long-term economic growth. It examines the impact of digital technologies like artificial intelligence (AI), 5G mobile communications, and cloud computing, noting how these innovations are rapidly transforming traditional manufacturing, communication methods, and living standards. This shift, known as the fourth industrial revolution, involves the integration of data, interconnectivity, analytics, and automation to boost efficiency and profitability.
The report highlights a significant rise in global investment in information and communication technology (ICT), reaching an impressive US$4.9 trillion last year. Moreover, it references projections from the World Economic Forum, which indicate that digital technology and AI will drive 70 percent of global economic growth over the next five years. This investment is crucial not only for economic growth but also for ensuring that emerging economies do not fall further behind, deepening existing global economic inequalities.