Consternation About Global Competitiveness

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Commentary on the “Global Information Technology” report and rankings

by RampRate Staff

It seems that every couple of years, fear over the rise of global competition makes its way into the headlines, presenting welcome opportunities for evangelists to ascend their respective daises.   In April, the “Global Information Technology” report, which examines and ranks nations in terms of network readiness, was released. Following the report, headlines at the innovation and technology blog IP Democracy and the news service Reuters, once again, sounded the alarm to the public around US international competitiveness with the headline, “U.S. Slips from Top Technology Spot.”

The US’s ranking at number “7” – behind Denmark and Singapore – is deflating. But at each sign of a slip in competitiveness, especially when the World Economic Forum releases a report placing the US beneath less power economic players, is there cause to raise the alarm bells once again? Or are we too quick, as a society, to conclude that the fall of Rome is nigh with the words “U.S. Slips from Top Technology Spot?”

Diversions In Logic

It can be argued that the answer is a resounding “yes.”  The truth is that as a measure of innovation, network readiness is only a slice of the total innovation equation. The word “innovation” in its purest definition is, “The introduction of new ideas, goods, services, and practices which are intended to be useful.”  The IP Democracy report measures “the degree of preparation a nation or community requires to participate in and benefit from information, communications and technology (ICT) developments” focusing on the “environment for ICT offered by a country or community,” “readiness of the community’s key stakeholders (individuals, business and governments)”, and “usage of ICT among these stakeholders.”

While ICT is an important cog in the innovation engine, it is one cog of many. Along with a well-developed ICT infrastructure, innovation must be measured by private and public R&D spending, number of patents registered, public research money spent, etc. Furthermore, if the market accepts highly developed and less regulated ICT as a standard for innovative nations, this further begs the question: What is the benchmark for “readiness,” and which standard of “usage among ICT stakeholders” is this a measurement against?

“What’s The Measurement?”

This report appears very heavy on anecdotal analysis, rather than a true quantitative measurement of telecommunications infrastructure and the regulatory climate of national infrastructure.  The focus of the study is squarely on fixed connectivity. This ignores the fact that many more newly developing countries, such as eastern European nations, are rapidly adopting wireless broadband infrastructure like WiMax to leapfrog into the broadband age. In contrast, more “developed” infrastructures must grapple with the burden of legacy networking systems. Even then, the fact that there is a marked absence of some of the most wired societies in the world in the report, like South Korea and Japan, gives pause during even a passing analysis.

A Better Way

Instead of relying on ICT as the measure of technological innovation, a better measure of innovation would lie in taking a more holistic view of the overall business of technological innovation.  An example would be measuring what countries are registering the most new patents. The World Intellectual Property Organization has been recording this data. If one trusts WIPO’s numbers, the rankings look drastically different when including countries like Japan and South Korea in the mix:

Figure 1:  Number of PCT International Applications files in 2005 by Country of Residence

As Figure 1 illustrates, of the number of international patent applications in 2005, the US was far and away ranked the top individual country of residence for patents filed. In terms of countries where non-residents file patents, the US ranks the top in that category as well, leading all other countries with 81% — providing evidence that the US is the preferred location to develop and build on innovations. The US also boasted over 160,000 patents in 2005, followed distantly by Japan at 120,000. Total R&D spend is also another measure of innovative investments. There are a variety of standards to measure innovation, but connectivity and ICT as examined by the Global Information Technology report is simply too focused a measurement to be the end all.

IP Democracy. March 29th, “US Slips from Top Technology Spot.” <;

Merriam-Webster’s online

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4 thoughts on “Consternation About Global Competitiveness

  1. Ben Bloom says:

    One wonders whether the US patent total is inflated by the filing of patents in the US to get US patent protection, even if the innovation did not actually happen in the US.

  2. Ben, you make a good point but if you look at the same data set from WIPO, the US has a compratively low ratio of Non-Resident to Resident Patent Filings of .87.

    Consider that other high volume of patent filing countries such as Norway (7.10), Israel (3.10), Singapore (12.39), and Canada (9.10) have much higher non-resident filing ratios. Therefore among its peers, the effect of non-resident filings vs. resident filings in the US is comparatively minimal.

  3. Erich Oberle says:

    Nice article Kenneth. Given the population size of the US compared to the other countries in the survey perhaps it would be worth comparing the number of patents filed as a percentage of population. However, the point is still well received that the US leads overall in this frontier; good news.

  4. Zenia Brown says:

    I agree that ICT alone is not a fair “stick” to measure technology in the Global Competitive markets. E ven as developing countries are expanding their infrastructure (Brazil, Taiwan, and more), and adding new Wireless technologies to reach distant locations, the core resources to develop and support information, users, services, applications, need to be present for an all encompassing delivery. Certainly, once these steps are achieved, the ability to measure progress will increase, along with increased collaboration tools to spur further inventions. We already know that the US is lagging in adopting new technologies compared to Europe and Asia, largely due to regulations and poor adoption rates of corporate developers. In the global marketspace, we need to “be on our toes” as to not slide further down the scale once developments solidify in developing countries.

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