How are the BRICS reaping the technology dividend?

Since the beginning of the worst financial crisis in 80 years, the global economy has seen a change in traditional growth patterns. Advanced economies have experienced negative or sluggish growth, while emerging markets – notably the BRICS economies of Brazil, Russia, India, China and South Africa – have continued to show robust growth.

There are several reasons for this emerging market growth, including stronger domestic markets, increases in the price of commodities and better access to finance thanks to higher flows of capital.

However, these emerging economies are now struggling to maintain this level of rapid economic growth. This could potentially have important consequences, not only for the economic and social development of these countries, but for the global economy in general.

Many of the favourable conditions that fuelled this growth have started to fade away, and due to the size and increasing importance of the BRICS, the rest of the world could be affected.

In order to support sustained and stable growth, emerging markets must increase levels of productivity by introducing reforms that will improve the functioning of their markets and boost innovation. One way of doing this is by improving their digital infrastructure.

The Networked Readiness Index (NRI), the results of which appear in the latest edition of Global Information Technology Report 2014, measures the capacity of different countries to use information and communications technology (ICT) to boost competitiveness and well-being. The NRI shows that, in general, little progress has been achieved in recent years.

An in-depth analysis of the NRI scores shows that overall, the results in all dimensions of digitization have remained stable, notably in terms of the economic and social impact from technologies that provide access to information through telecommunications including the internet, wireless networks and mobile phones.

Perhaps the main exception to this rule has been a slight improvement in terms of ICT usage, reflecting the significant efforts that have been made to facilitate broader access to ICT.

In comparative terms, however, this stability in the scores represents a drop in global rankings for the BRICS, as other economies are faster to develop and exploit their ICT potential. Since 2012, with the exception of Russia, which moves six places up the rankings, all the other BRICS economies have dropped – in some cases significantly – and are now in the middle of the rankings. A closer analysis confirms that this drop in rankings is particularly important in terms of economic and social impact.

Reversing this situation will require the adoption of holistic strategies that support better development and uptake of ICT throughout these countries, including in rural areas. While expansion in these vast nations represents a huge challenge, they should continue investing in their ICT infrastructure and increase access.

In addition, and very importantly, to draw all the benefits from ICT, innovation and entrepreneurship must be encouraged. Doing so will lead to higher economic and social returns. Strengthening the institutional framework to support the development of ICT and improving education systems, the science and technology base and the interaction between research institutions and local companies will thus be key to future success.

The World Economic Forum’s Global Information Technology Report 2014 is now live. 

To learn more about technology trends sign up for the Global Information Technology Outlook module of the Forum Academy, the online professional leadership development platform of the World Economic

Author: Beñat Bilbao is a Senior Economist at the World Economic Forum.

Image: A woman looks at a data chip during a trade fair, March 8, 2014. REUTERS/Wolfgang Rattay