Structure and Methodology
The networked readiness framework translates into the Networked Readiness Index (NRI), a composite indicator made up of four main categories (subindexes), 10 subcategories (pillars), and 53 individual indicators distributed across the different pillars:
A. Environment subindex
1. Political and regulatory environment (9 indicators)
2. Business and innovation environment (9 indicators)
B. Readiness subindex
3. Infrastructure (4 indicators)
4. Affordability (3 indicators)
5. Skills (4 indicators)
C. Usage subindex
6. Individual usage (7 indicators)
7. Business usage (6 indicators)
8. Government usage (3 indicators)
D. Impact subindex
9. Economic impacts (4 indicators)
10.Social impacts (4 indicators)
A description of each subindex and pillar is provided below, along with the rationale for their inclusion. The appendix presents detailed information on the composition and computation of the NRI.5
The success of a country in leveraging ICTs depends in part on the quality of the overall operating environment. The Environment subindex therefore assesses the extent to which a country’s market conditions and regulatory framework support entrepreneurship, innovation, and ICT development.
The Political and regulatory environment pillar assesses the extent to which a country’s political and regulatory environments facilitate ICT penetration and the development of business activities. It does so by measuring the extent of intellectual property rights protection, prevalence of software piracy, the efficiency and independence of the judiciary, the efficiency of the law-making process, and the overall quality of regulations pertaining to ICTs.
The Business and innovation environment pillar gauges the extent to which the business environment supports entrepreneurship by taking into account measures of red tape, the ease of starting a business, and taxation. It also measures the conditions that allow innovation to flourish by including indicators on the overall availability of technology, the intensity of competition, the demand conditions for innovative products (as proxied by the development of government procurement of advanced technology products), and the availability of venture capital for funding innovation-related projects.
The Readiness subindex measures the extent to which a country has in place the infrastructure and other factors supporting the uptake of ICTs.
The Infrastructure pillar captures the state of a country’s ICT infrastructure as well as infrastructure that matters for ICT development: mobile network coverage, international Internet bandwidth, secure Internet servers, and electricity production.
The Affordability pillar assesses the affordability of ICTs in a country through measures of mobile telephony usage costs and broadband Internet subscription costs, as well as an indicator that assesses the state of liberalization in 17 categories of ICT services, because more intense competition tends to reduce retail prices in the long run.
The Skills pillar measures the capacity of the population to make effective use of ICTs by taking into account the enrollment rate in secondary education, the overall quality of the education system, and of mathematics and science education in particular, and adult literacy.
The Usage subindex assesses the extent of ICT adoption by a society’s main stakeholders: government, businesses, and individuals.
The Individual usage pillar measures the level of diffusion among a country’s population, using mobile telephony penetration, Internet usage, personal computer ownership, and the use of social networks.
The Business usage pillar captures the extent to which businesses in a country use the Internet for business-to-business and business-to-consumer operations, as well as their efforts to integrate ICTs in their operations. It also measures the capacity of firms to come up with new technologies by taking into account the number of patent applications under the Patent Cooperation Treaty (PCT). Finally, it measures the extent of staff training as a proxy for the capacity of management and staff to innovate.
The Government usage pillar assesses the leadership and success of the government in developing and implementing strategies for ICT development, as well as in using ICTs, as measured by the availability and quality of government online services.
The Impact subindex gauges the broad economic and social impacts accruing from ICTs.
The Economic impacts pillar aims to measure the effect of ICTs on the economy through technological and non-technological innovations in a country—as measured by the number of patent applications as well as by the role of ICTs in the development of new products, processes, and organizational models. It also measures the overall shift of an economy toward more knowledge-intensive activities.
The Social impacts pillar aims to assess a country’s societal progress brought about or enhanced by the use of ICTs. Such progress includes—but is not limited to—access to education and healthcare, energy savings, and more-active civil participation. Currently, because of data limitations, this pillar focuses on assessing the extent to which ICTs allow access to basic services (education, financial services, and healthcare); the use of the Internet at school, as a proxy for the potential benefits that are associated with the use of ICTs in education; the impact of ICTs on government efficiency; and the quality and usefulness of information and services provided by a country for the purpose of engaging its citizens in public policymaking through the use of e-government programs.
Measuring the impacts of ICTs remains a complex task, and the development of rigorous, international comparable statistics is still in its infancy. As a result, many of the areas where ICTs have a significant impact—especially those where the impact does not translate directly into commercial activities, as is the case in environment, healthcare, and education—are not captured in the NRI. Therefore the Impact subindex should be regarded as work in progress.
Methodology and data
The overall structure of the NRI remains unchanged from the previous edition. The only minor adjustment is the exclusion of the indicator Accessibility of digital content, which used to be included in the Infrastructure pillar. The NRI is now composed of 53 individual indicators. This adjustment, however, does not affect the ability to compare the 2015 results with earlier results, back to 2012.
About half of the individual indicators used in the NRI are sourced from international organizations. The main providers are the International Telecommunication Union (ITU); the United Nations Educational, Scientific and Cultural Organization (UNESCO); other UN agencies; and the World Bank. Carefully chosen alternative data sources, including national sources, are used to fill data gaps in certain cases. The other half of the NRI indicators are derived from the World Economic Forum’s Executive Opinion Survey (the Survey). The Survey is used to measure concepts that are qualitative in nature or for which internationally comparable statistics are not available for enough countries.6
The Survey is completed annually by over 13,000 business executives in all the economies included in the NRI (see Browne et al. 2014 for more details). The Survey represents a unique source of insight into many critical aspects related to a country’s operating environment. These include the extent of red tape and the degree of intellectual property protection; aspects related to the population’s capacity to leverage ICTs; its use of technology and its capacity to innovate; the importance of its government’s vision for ICTs; and the contribution of ICTs to the development of new products and services and to improving access to basic services.
The computation of the overall NRI score is based on successive aggregations of scores: individual indicators are aggregated to obtain pillar scores, which are then combined to obtain subindex scores. Subindex scores are in turn combined to produce a country’s overall NRI score. In order to aggregate the individual indicators, scores of each indicator are normalized onto a common scale ranging from 1 to 7. Scores for indicators derived from the Survey are always measured on a 1-to-7 scale and therefore do not require transformation prior to aggregation. At each aggregation level, a simple average (i.e., an arithmetic mean) is used to combine components, with a few exceptions, which are flagged in the appendix.
The revision of the computation methodology for certain individual indicators has caused significant shifts in the results for several countries. The methodologies underpinning indicators 8.02 Government Online Service Index and 10.04 E-Participation Index, both computed by the United Nations, have been revised (see Box 1). Similarly, the International Comparison Programme has revised the methodology used to compute the purchasing power parity (PPP) conversion factor.7 This factor is used to compute the PPP estimates of telephony and Internet tariffs (indicators 4.01 and 4.02, respectively). As a result, PPP estimates are not comparable with those published in previous editions and, in some countries, differ significantly, even if tariffs in local currency have not changed.
For two indicators, the number of missing data points remains very high. Indicators 1.07 Software piracy rate and 9.04 Knowledge-intensive jobs are missing data for 38 and 25 economies, respectively. For each of the other 51 indicators of the NRI, the number of missing data points does not exceed four. In addition, in the absence of data on adult literacy (indicator 5.04) for as many as 22 OECD member countries and for Hong Kong SAR, a rate of 99 percent was assumed for the purpose of calculating the Skills pillar score.
Box 1: Measuring e-government and e-participation: The UN E-Government Survey
The United Nations E-Government Survey has been conducted since 2003 by the United Nations Division of Public Administration and Development Management in order to assess the development of e-government across three main dimensions: telecommunication infrastructure; human capacity; and availability of online services. The results of the E-Government Survey feed into the calculation of a number of indicators, including the Government Online Service Index and the E-Participation Index, both of which are included in the Networked Readiness Index (NRI). Although the conceptual framework of the E-Government Survey has remained the same since 2003, it has been adapted to the evolving nature of e-government through some methodological changes.
The Government Online Service Index captures a government’s performance in delivering online services to its citizens. The 2014 edition measures the provision of basic e-services, governments’ attention to e-participation, multichannel service delivery, usage expansion, adoption of open data initiatives, whole-of-government approach, and digital divides. It focuses more than previous editions on e-participation in particular, and on the presence of open data initiatives on government websites. The basket of basic services provided by public administration has also been expanded to include environmental e-information.
The E-Participation Index assesses the extent to which governments leverage digital technologies to improve civic participation through the provision of e-information, the launch of e-consultation initiatives, and use of e-decision making. The 2014 version of the E-Government Survey expanded the assessment of e-participation so as to include also the use of e-government programs to engage citizens in public policymaking and implementation. The survey was updated to improve the accuracy of the information collected on e-consultation and e-decision-making initiatives. New questions and updates were also made to better assess data publishing and sharing by government agencies; the availability of information on the citizens’ rights to access government information; the provision of outcome on feedback received from citizens concerning the improvement of its online services; and the provision of tools in order to obtain public opinion for public policy deliberation through social media, online polls, petition tools, voting tools, online-bulletin boards, and online discussion forums.
The Government Online Service Index and the E-Participation Index provide useful information for the NRI’s government usage and social impacts pillars. Further information about these indicators is available in the Technical Notes and Sources.
When it comes to country coverage, the objective is to include as many economies as possible. The inclusion of an economy depends on the availability and quality of indicators. To be included in the NRI, the number of missing (or outdated) data points for an economy cannot exceed five, or 10 percent of all indicators. Because almost half of the indicators entering the NRI are derived from the Executive Opinion Survey, the capacity to conduct the Survey in a country is therefore a necessary—but not sufficient—condition for its inclusion.
The NRI 2015 covers 143 economies, which together account for 98.4 percent of world GDP. Benin, Bosnia and Herzegovina, Brunei Darussalam, Ecuador, and Liberia—all covered in the 2014 edition—have not been included this year because the Survey data for these countries are not available. Sierra Leone was also excluded, although Survey data do exist for that country, because too many data points were missing for other indicators. Tajikistan has been reinstated.