October 09, 2014
MasterCard and Fletcher School ‘Digital Evolution Index’ Provides Roadmap of Countries Most Prepared to Support the Next Billion Internet Users
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Singapore, October 9, 2014 – Singapore (#1) and Hong Kong (#3) make up two of the top three countries prime to welcome the next billion Internet users thanks to their advanced, but still growing, digital economies. This is according to the Digital Evolution Index developed by MasterCard and The Fletcher School at Tufts University.
Sweden (#2), the United Kingdom (#4) and Switzerland (#5) round out the top five, among the 50 countries measured. China, Malaysia and Thailand ranked as the top three fastest moving digital economies, a result of their rapidly increasing Internet and smartphone population. Six of the top 10 in this category are Asian countries.
Today, there are 2.9 billion Internet users in the world. While a staggering number, businesses and governments have an opportunity to expand their reach by bringing the remaining 60 percent of the global population online.
“Asia is a hotbed of digital adoption – we’re seeing developed markets in the region claiming the top spots in the Index, and emerging markets showing immense potential with their rapid pace of digital adoption,” said Raj Dhamodharan, group head, Emerging Payments, Asia/Pacific, MasterCard. “This new Index helps businesses and governments in Asia make sense of the evolving digital landscape in each of their markets, reveal trends and also provide valuable insights into current and future Internet users.”
The study identified four interdependent drivers – supply, demand, institutions and innovation – that define each country’s digital evolution and can serve as strategic evaluation points for future growth.
“There is very little about the digital past and present of the West that instructs us about the digital present and future of the rest,” said lead researcher Bhaskar Chakravorti, Senior Associate Dean of International Business and Finance at The Fletcher School. “The momentum and direction of countries over time result from the interplay of these systemic elements. In the experience of the West the four drivers are more tightly connected.”
"In the case of emerging markets – where the next billion e-consumers are – some of these drivers move much faster than others; the trajectory is non-linear and you could end up with surprises such as Alibaba in China or Flipkart in India or M-Pesa in Kenya. Specifically, understanding the institutions and innovations in these parts of the world is essential to knowing where the world's digital evolution will pop next,” Chakravorti added.
While developed markets dominate the top spots, a different picture emerges when measuring the pace of digital adoption. The study analyzed each market’s evolution from 2008 to 2013 to understand country benchmarks, track progress and identify areas for improvement. Countries were grouped into four trajectory zones:
- Break Out – These countries currently have low readiness scores, but are rapidly evolving. India, China, Brazil, Vietnam, and the Philippines are examples. If their evolution rates sustain, these countries will emerge as strong digital economies, but the Index shows that the next phase of growth may be harder to achieve.
- Stall Out – While possessing a history of strong growth, these countries (most of Western and Northern Europe, Australia and Japan) have matured. Innovation and seeking markets beyond domestic borders will be critical to continuing growth.
- Stand Out – These countries, such as Singapore, Hong Kong, the United States, and New Zealand, have and continue to maintain high levels of digital transactions, supported by cutting edge infrastructure and sophisticated domestic consumers. To remain Stand Out markets, these countries must continue to fast-track innovation.
- Watch Out – These countries face challenges, but with a combined population of 2.5 billion people, they represent significant opportunities for investment. Indonesia, Russia, Nigeria, Egypt, and Kenya are examples.
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MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardAP and @MasterCardNews, join the discussion on the Cashless Pioneers Blog and subscribe for the latest news on the Engagement Bureau.
The Fletcher School at Tufts University (The Fletcher School)—the first exclusively graduate school of international affairs in the United States—has prepared the world’s leaders to tackle complex global challenges since 1933. The school’s alumni represent the highest levels of leadership in the world, including executive leadership of some of the world’s largest corporations; hundreds of sitting ambassadors; respected voices from distinguished media outlets; heads of global nonprofit organizations; and leaders of international peacekeeping and security initiatives. The Fletcher School offers a collaborative, flexible and interdisciplinary approach to the study of international affairs, featuring a distinguished faculty and diverse student body representing more than half the world’s countries. The Institute for Business in the Global Context is the hub at Fletcher that focuses on the intersection of business and international affairs. Follow Fletcher’s insights on global digital trends on Twitter@Fletcher_eBiz
The Digital Evolution Index is an output of the study conducted by researchers at The Fletcher School with the support of MasterCard. Analyzing datasets from public sources, such as The World Bank, and private sources such as EMPEA and Dow Jones VentureSource, the research team created an analytical framework for recognizing patterns and making sense of the global digital landscape, discerning country trends and evaluating their relative strengths and weaknesses.
The methodology for the Digital Evolution Index measures the current ability of countries to deliver on consumer demand and business supply capabilities, in combination with governmental policy and climate for innovation – four drivers defining digital readiness that were identified in the research hypothesis. In addition to the current state, the study measured each country’s trajectory across the four drivers from 2008 through 2013. The index then layers a quadrant matrix to visualize the trajectory of a particular country.