When it comes to the digital world, does size matter?
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

When it comes to the digital world, does size matter?

Recent research carried out by Tufts University and MasterCard Inc. suggests that larger economies are falling behind smaller and more nimble nations – at least, in regards to digitization. According to a digital economy ranking produced by the researchers, several Nordic countries, Switzerland, and South Korea have all pulled ahead of the U.S. and Japan. If you then add in digital momentum – that is, not just where the countries are now, but how quickly they’re moving forward – three nations emerge as clear front runners: New Zealand, Singapore, and the United Arab Emirates.

digital demo

SOURCE: The Fletcher School at Tufts University in partnership with MasterCard

New Zealand has been pitching itself to tech entrepreneurs as a stable nation in which to conduct business, and avoid the geopolitical instability currently plaguing some of the other options. It’s the leader of the “D5” – or Digital 5, a group of forward-thinking countries that came together in 2014 – so it’s perhaps not a great surprise that it fares so well in this research. Other standouts include fellow D5er Estonia, the UK and Singapore.

The advantages these countries have, according to Bhaskar Chakravorti, senior associate dean of international business and finance at The Fletcher School at Tufts University, are largely down to political will and greater coordination in the digital environment. He cites electronic payment systems as an example: users, merchants, and technology providers need to come together for a seamless transition. According to Chakravorti “that’s much more effective in a smaller economy like the U.A.E. and much harder in an economy like the United States that has so many players.”

nordic digital

One solution for the U.S. might be to copy the Nordic countries model when it comes to investment in digital infrastructure. In America, large swathes of rural citizens lack reliable broadband coverage. In Finland, by way of contrast, that access is a legal right. The rest of the Nordic countries share this conviction that strong digital infrastructure is a necessity. Even if they haven’t, yet, made it a legal requirement.

chn digital

Not all big economies are digital laggards. The developing world has its share of over-performers. This is partly a reflection of where they’ve started – if 90% of your population was living rurally ten years ago, you can cover a lot more distance, more quickly, than your more developed peers. But it’s also a reflection of the speedy sophistication of these populations, and their quick embrace of smartphones, Ecommerce, and social media.

Disclosure

Dominion holds MasterCard in its Global Trends Ecommerce Fund. It also has strong exposure through a number of companies to the markets discussed herein.


If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.