This appendix presents the structure of the Networked Readiness Index (NRI) 2015. As explained in the chapter, the NRI framework separates environmental factors from ICT readiness, usage, and impact. That distinction is reflected in the NRI structure, which comprises four subindexes. Each subindex is in turn divided into a number of pillars, for a total of 10. The 53 individual indicators used in the computation of the NRI are distributed among the 10 pillars.

In the list below, the number preceding the period indicates the pillar to which the variable belongs (e.g., indicator 2.05 belongs to the 2nd pillar; indicator 8.03 belongs to the 8th pillar). The numbering of the indicators matches the numbering of the data tables at the end of the Report.

The computation of the NRI is based on successive aggregations of scores, from the indicator level (i.e., the most disaggregated level) to the overall NRI score (i.e., the highest level). Unless noted otherwise, we use an arithmetic mean to aggregate individual indicators within each pillar and also for higher aggregation levels (i.e., pillars and subindexes).a

Throughout the Report, scores in the various dimensions of the NRI pillars are reported with a precision of one decimal point. However, exact figures are always used at every step of the computation of the NRI.

Indicators that are derived from the World Economic Forum’s Executive Opinion Survey (the Survey) are identified here by an asterisk (*). All the other indicators come from external sources, as described in the Technical Notes and Sources section at the end of the Report. These are transformed into a 1-to-7 scale in order to align them with the Survey’s results. We apply a min-max transformation, which preserves the order of, and the relative distance between, the scores.b

Networked Readiness Index 2015

Networked Readiness Index =
1/4 Environment subindex
+ 1/4 Readiness subindex
+ 1/4 Usage subindex
+ 1/4 Impact subindex

Environment subindex

Environment subindex =
1/2 Political and regulatory environment
+ 1/2 Business and innovation environment

1st pillar: Political and regulatory environment
1.01 Effectiveness of law-making bodies*
1.02 Laws relating to ICTs*
1.03 Judicial independence*
1.04 Efficiency of legal system in settling disputes*c
1.05 Efficiency of legal system in challenging regulations*c
1.06 Intellectual property protection*
1.07 Software piracy rate, % software installed
1.08 Number of procedures to enforce a contract d
1.09 Number of days to enforce a contract d

2nd pillar: Business and innovation environment
2.01 Availability of latest technologies*
2.02 Venture capital availability*
2.03 Total tax rate, % profits
2.04 Number of days to start a business e
2.05 Number of procedures to start a business e
2.06 Intensity of local competition*
2.07 Tertiary education gross enrollment rate, %
2.08 Quality of management schools*
2.09 Government procurement of advanced technology products*

Readiness subindex

Readiness subindex =
1/3 Infrastructure
+ 1/3 Affordability
+ 1/3 Skills

3rd pillar: Infrastructure
3.01 Electricity production, kWh/capita
3.02 Mobile network coverage, % population
3.03 International Internet bandwidth, kb/s per user
3.04 Secure Internet servers per million population

4th pillar: Affordability f
4.01 Prepaid mobile cellular tariffs, PPP $/min.
4.02 Fixed broadband Internet tariffs, PPP $/month
4.03 Internet and telephony sectors competition index, 0–2 (best)

5th pillar: Skills
5.01 Quality of educational system*
5.02 Quality of math and science education*
5.03 Secondary education gross enrollment rate, %
5.04 Adult literacy rate, %

Usage subindex

Usage subindex =
1/3 Individual usage
+ 1/3 Business usage
+ 1/3 Government usage

6th pillar: Individual usage
6.01 Mobile phone subscriptions per 100 population
6.02 Percentage of individuals using the Internet
6.03 Percentage of households with computer
6.04 Households with Internet access, %
6.05 Fixed broadband Internet subscriptions per 100 population
6.06 Mobile broadband Internet subscriptions per 100 population
6.07 Use of virtual social networks*

7th pillar: Business usage
7.01 Firm-level technology absorption*
7.02 Capacity for innovation*
7.03 PCT patent applications per million population
7.04 Business-to-business Internet use*g
7.05 Business-to-consumer Internet use*g
7.06 Extent of staff training*

8th pillar: Government usage
8.01 Importance of ICTs to government vision of the future*
8.02 Government Online Service Index, 0–1 (best)
8.03 Government success in ICT promotion*

Impact subindex

Impact subindex =
1/2 Economic impacts
+ 1/2 Social impacts

9th pillar: Economic impacts
9.01 Impact of ICTs on new services and products*
9.02 PCT ICT patent applications per million population
9.03 Impact of ICTs on new organizational models*
9.04 Employment in knowledge-intensive activities, % workforce

10th pillar: Social impacts
10.01 Impact of ICTs on access to basic services*
10.02 Internet access in schools*
10.03 ICT use and government efficiency*
10.04 E-Participation Index, 0–1 (best)

Notes

1. Formally, for a category i composed of K indicators, we have:
   When two individual indicators are averaged (e.g., indicators 1.04) and 1.05 in the 1st pillar), each receives half the weight of a normal indicator.
2. Formally, we have:
   The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies covered by the GCI. In some instances, adjustments were made to account for extreme outliers. For those indicators for which a higher value indicates a worse outcome (i.e., indicators 1.07, 1.08, 1.09, 2.03, 2.04, 2.05, 4.01, and 4.02), the transformation formula takes the following form, thus ensuring that 1 and 7 still corresponds to the worst and best possible outcomes, respectively:
   
3. For indicators 1.04 and 1.05, the average of the two scores is used in the computation of the NRI.
4. For indicators 1.08 and 1.09, the average of the two normalized scores is used in the computation of the NRI.
5. For indicators 2.04 and 2.05, the average of the two normalized scores is used in the computation of the NRI.
6. The affordability pillar is computed as follows: the average of the normalized scores of indicators 4.01 Prepaid mobile cellular tariffs and 4.02 Fixed broadband Internet tariffs is multiplied by a competition factor, the value of which is derived from indicator 4.03 Internet and telephony sectors competition index. It corresponds to the score achieved by an economy on this indicator normalized on a scale from 0.75 (worst) to 1.00 (best), using the min-max transformation described above. A normalized score of 0.75 is assigned to an economy with a competition index score of 0, which means that a monopolistic situation prevails in the 17 categories of ICT services considered. A normalized score of 1.00 is assigned to an economy where all 17 categories are fully liberalized. Where data are missing for indicator 4.03 (i.e., Mongolia, Puerto Rico, Timor-Leste, and Venezuela), the score on the affordability pillar, which is simply the average of the normalized scores of indicators 4.01 and 4.02, is used. The competition index score for Taiwan, China, was derived from national sources.
7. For indicators 7.04 and 7.05, the average of the two scores is used in the computation of the NRI.