EIU Examines Thailand as Part of Global IT Competitiveness Study
IT sector still an important engine of Thai economic growth and means of accelerating Thailand’s economic recovery; government leaders urged to pursue pro-IT policies and support innovation
BANGKOK, 8 October 2009 — A new study offers insights into the key elements for IT Industry competitiveness and provides a ranking of 66 countries based on an analysis of key criteria.
The new study is issued by the Economist Intelligence Unit (EIU) and sponsored by the Business Software Alliance (BSA). According to the study, Thailand’s IT industry is ranked as the 49th most competitive in the world.
The study, now in its third consecutive years, assesses and compares the information technology (IT) industry environments to determine the extent to which they enable IT sector competitiveness. Specifically, the study examines six key criteria for IT industry competitiveness, including business environment, IT infrastructure, human capital, legal environment, R&D environment and support for the IT industry.
Five countries in Asia-Pacific rank among the top 20 countries globally for having the most competitive IT industries, including Australia, Singapore, Japan, Taiwan and South Korea.
“In today’s economic climate, it is critical that governments in the Asia Pacific continue to support the growth of a strong technology sector. The IT sector remains an important engine of economic growth, and economies in the region that are supporting innovation and taking steps to stimulate technology sector output are placing themselves in a strong position to accelerate economic recovery,” said Carlo Parlade, BSA Director of Software Policy, Asia Pacific.
“However, challenges for Asia Pacific governments remain. Economies like China and India must address issues such as balancing large pools of skilled IT personnel with progress in IT infrastructure. With broadband access becoming a prerequisite for many parts of the IT sector, economies with pervasive broadband penetration have a big competitive advantage over those where the infrastructure is lacking,” he said.
“Additionally, the study shows that economies that have strong legal frameworks for the protection of intellectual property (IP) are generally the IT leaders and score higher in the index. In contrast, economies where IP protection has not been well enforced are not traditionally seen as innovators. Some rely instead on their low-cost labour markets to remain competitive but this is hard to sustain over time. By improving on the factors that contribute to IT competitiveness, Asian economies will not only improve their ranking but also generate long term economic growth,” said Parlade.
Thailand achieved a position of 49th in the world in the 2009 IT Industry Competitiveness Index, a drop from 42nd last year. This was a result of declines in both its foreign-investment policy ranking and PC-ownership ranking, which is a heavily weighted indicator in the IT-infrastructure category of the index. Thailand’s foreign-investment policy ranking slipped to 35th, from 29th last year. Despite improvement in PC (personal computer) ownership, its relative ranking declined five places, from 47th in 2008 to 52nd this year.
Within Asia, Thailand was 11th, behind India (44th in the world) and ahead of the Philippines (51st) and Vietnam (56th).
Among the key findings for Thailand:
The quality of Thailand’s overall business environment was ranked 30th in the world, a slight drop from 28th last year.
Thailand ranked 50th in the world on IT infrastructure, a slight drop from 49th last year.
Thailand ranked 43rd in the world on IT human capital, a moderate improvement from 46th last year.
For its R&D environment, Thailand ranked 58th in the world, a slight rise from 59th last year.
For its legal environment Thailand ranked 57th in the world in 2009, a small drop from 56th last year.
Thailand ranked 29th in the world on support for IT industry development.
Among the key study findings for Asia Pacific:
Coordinated efforts among governments, universities and IT firms in the Asia Pacific are needed to improve the quality of technology training and expand the pool of potential hires. Asian economies continue to produce large numbers of IT employees but lag behind North America and Europe in providing well-rounded technology education. In Asia, IT training would benefit from greater investment in business studies and language skills.
Robust IP protection remains essential to IT sector competitiveness. IP regimes are strong in most developed markets, and emerging economies such as Thailand are also registering slow but steady progress, particularly in the area of enforcement. As innovation gradually becomes more important than low-cost labour to IT firms in China and India, IP enforcement is expected to improve in these economies as well.
Economies where broadbandare pervasive score highly in both the IT infrastructure category as well as the overall rankings. Australia, which falls within the overall top ten ranking, is among the world’s most prominent countries in developing broadband stimulus plans, showing how much importance their governments attach to improving broadband access.
Broadband penetration and PC ownership continue to languish in emerging markets, putting their IT sectors at a disadvantage vis-à-vis more developed markets. While most developed economies boast PC (desktop and laptop) ownership rates ranging between 60% and 85% of the population, rates in many emerging markets with rapidly growing IT sectors such as China, India and Vietnam languish stay at under 20%.
Singapore ranked third in the category of innovation environment, owing to its strong support for R&D and its IT firms’ record of patenting innovations. Taiwanese, South Korean and Japanese firms also remain the most prolific generators of IT patents in Asia.
Taiwan and South Korea have seen steep falls in their rankings — the former from 2nd to 15th and the latter from 8th to 16th — due predominantly to deterioration in their R&D environment scores. These are a result of a change in the data source used in the index model to score IT-related patents.
"While the outlines of good IT policy are the same in good times and bad, the deep global recession has made it all the more urgent to prioritize support for the technology sector," states Manoj Vohra, Director of Research with the Economist Intelligence Unit. "Governments and industry leaders must pay closer attention than ever to ensure they have the right policies in place to maximise the benefits of a globally competitive IT industry."
Six Key Competitiveness Enablers
According to the Economist Intelligence Unit, six factors work together to create a sound environment for the IT sector: an ample supply of skilled workers; an innovation-friendly culture; world-class technology infrastructure; a robust legal regime that protects intellectual property; a stable, open, and competitive economy; and government leadership that strikes the right balance between promoting technology and allowing market forces to work.
Those economies that perform well in these six “competitiveness enablers” generally are home to high-performance IT industries. The study is intended to provide a roadmap for governments in addressing their strengths and weaknesses when it comes to supporting a strong domestic IT sector.
Other findings from the Economist Intelligence Unit research and BSA recommendations include:
Broadband networks are a vital factor for IT competitiveness, and the competitiveness gap could widen for economies with slower adoption. Technology firms demand fast, reliable, and secure Internet access, and the importance of broadband will grow as more IT services and applications are delivered over the Internet.
Investment in skill development remains a long-term imperative. Those economies that deliver a combination of IT, business and language skills training will generate a stronger IT workforce.
Protectionism and support for ‘“national champions” will hinder recovery efforts — and longer term sector competitiveness. Governments must strike a balance between support that encourages industry growth and investment, and that which introduces unfair market practices and protectionism that can harm competitiveness.
IP regimes are improving in many emerging markets, but further progress is needed. Intellectual property protection remains critically important to IT competitiveness and is a relatively low-cost way of stimulating long-term economic development.
For more information on the index results and the methodology, see “Resilience amid Turmoil: Benchmarking IT Industry Competitiveness 2009,” available free of charge at
www.eiu.com or
www.bsa.org/globalindex.
For further information, contact:
Artima Tantikul
(t) +66 (0) 2684 1551
(f) +66 (0) 2684 1553
(e)
artima@veropr.comAbout the Economist Intelligence Unit
The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of over 650 analysts, we continuously assess and forecast political, economic and business conditions in 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.
About the Business Software Alliance
The Business Software Alliance (
www.bsa.org) is the foremost organization dedicated to promoting a safe and legal digital world. BSA is the voice of the world's commercial software industry and its hardware partners before governments and in the international marketplace. Its members represent one of the fastest growing industries in the world. BSA programs foster technology innovation through education and policy initiatives that promote copyright protection, cyber security, trade and e-commerce. BSA members include Adobe, Agilent Technologies, Altium, Apple, Autodesk, AVG Technologies, Bentley Systems, CA, Cadence Design Systems, Cisco Systems, Corel, CyberLink, Dassault Systèmes SolidWorks Corporation, Dell, Embarcadero, Frontline PCB Solutions - An Orbotech Valor Company, HP, IBM, Intel, Intuit, McAfee, Microsoft, Mindjet, Minitab, NedGraphics, PTC, Quark, Quest Software, Rosetta Stone, SAP, Scalable Software, Siemens, Sybase, Symantec, Synopsys, Tekla, ThaiSoftware Enterprise and The MathWorks.
