GDI index helps countries track their digital progress

Gavin: Tell us about the Global Digitalization Index (GDI). What is it, and what is its purpose?

Victor Lim: There was a need for an index that helped economies measure how they are progressing on their paths toward digitalization. New trends like greatly advancing connectivity, AI, edge quantum computing – a lot of the previous indices do not track these things. We wanted to create an index that does.

Gavin Allen: Why is this important?

Victor Lim: Because the whole world is digitalizing. Policymakers are asking, "How do I know the impact? How do I know I'm progressing?" So, it’s time to introduce a global digitalization index for that.

The GDI also tracks green energy. We believe digitalization takes two paths: economic growth and sustainability. With more digitalization, your electricity use will increase your carbon footprint. So you need sustainable digitalization.

Gavin Allen: What were the key findings?

Victor Lim: As economies progress on path of digitalization, they are able to seek economic benefit from it. The paper shows that for every dollar of ICT investment, there is an $8 benefit to the economy — an eight-fold multiplier — in terms of footprint, in terms of increased employment, increase value, productivity, innovation, new products, and so on.

We also see that some economies can leapfrog because they don’t have legacy systems especially in emerging markets. Kenya has a high proportion of green energy because it does not have all the legacy power stations that run on fossil fuels. Mexico doesn’t have legacy data centers, but it can build facilities with advanced storage capabilities. Some economies in the Middle East go straight to fiber – forget about copper, right? So in many of these cases, economies were able to quickly get on board.

Gavin Allen: Apart from leapfrogging, what are some other critical factors that influence the digital progress of a country?

Victor Lim: First, ubiquitous connectivity is the artery of the digital economy. It connects everything. It connects devices to data centers. It connects the data centers back to devices and gives people access to applications. And as you progress to more advanced applications, that can really have an impact on the economy.

You need the network to have higher bandwidth and lower latency. So, fiber, gigabit connectivity, 5G, and 5.5G plus will be key economic considerations.

In addition to the arteries, you need the brain: data centers and the cloud. That's where your data is stored and processed, and where you host the applications that create value. High-speed connectivity without data centers does not create value.

Data centers have to be sustained by green energy, to manage your carbon footprint. To make all of this happen, you need the right policies and incentives to build the necessary ecosystem.

Gavin Allen: How can a country accelerate this process?

Victor Lim: First, you need a view from the top. The president or the prime minister has to say, “We are going to be a digital economy. We are not going to be left behind. We are going to leapfrog and out-compete other economies.”

That will unlock programs and initiatives and the budget to make all these things possible. You need to spend money to make money. However, it is not necessarily just investment by the public sector. The government has to give private industry incentives to digitalize.

To some governments, it may be too big a task. You can digitalize specific industries, or specific agencies, but government has to lead. It has to transform first.

The key is that the government has to make access to technology affordable and manage the ubiquitous connectivity prices. Once you do that, the population and companies will come together and create value, which will pay dividends in the long term.

Gavin Allen: This is the first time you've done this Digitalization Index with Huawei. How will you adapt the Index in the future to take account of technological changes?

Victor Lim: Artificial intelligence will continue to be the mega trend shaping competition and capabilities in economies. Now, along with this, you have quantum computing, you have a virtual and augmented reality, and all these other things happening.

The GDI evolved from the Global Connectivity Index, which we've been running for 10 years, because we want to incorporate all these new trends. We will evolve to a Global Digitalization and Intelligence Index, or GDII, that will factor in that intelligence, data, and AI as key factors in driving the digital economy.

Gavin Allen: Sounds like it'll keep you busy for years to come.

Victor Lim: We are keen to help economists and policymakers develop a vision and a roadmap so they can transform their people, their communities, and their businesses towards a better, more intelligent world.