Which economies made the most digital progress in 2020?

2020 was a wild year. A year in which our day-to-day lives were dominated by one topic: the pandemic. With the crisis came new challenges we need to face—most of which can be addressed through sped-up digital progress. 

While it’s true that COVID-19 pushed many economies into recession, the silver lining is that it showed us the urgent need to move forward in digitalization. Countries like Singapore or South Korea knew what Europe didn’t: that there’s still considerable room for improvement.

Digital progress in context

Digitalization in the economy is a very broad concept, but can be put better into context with a framework developed by Harvard Business Review. 

In this context, we identify four core areas:

1. Supply: How developed is the country’s digital infrastructure? Are there enough broadband services?
2. Demand: Is the population willing to be part of the process of digital progress? Is there enough knowledge?
3. Institutional Environment: How advanced is the government in terms of digitalization? Does the government provide adequate framework conditions?
4. Innovation & Change: How much innovation has been observed in recent years? Does the country have the necessary educated people? Is there collaboration between research and the private sector?

The underdogs emerge

Taking these four core areas into account, we see South Korea, Hong Kong, and Singapore emerge on top. These are closely followed by countries such as Taiwan, Estonia, and the United Arab Emirates. These economies are characterized by a focus on the export of innovative and digital products, fast and accessible internet, enough tech talent, and a good coordination between the public and private sector. 

But this is nothing new. These countries have been pioneering and leading digitalization for a few years now. The question is, which countries have experienced some kind of breakthrough in recent months? 

China, despite a strong lockdown, proved itself above all. With the help of the introduction of even more digital technologies, they were able to better cope with the crisis. Driven by this crisis, the Chinese government launched an extensive and aggressive digitalization program. 

And it wasn’t just China; smaller players on the world’s stage also progressed a lot. India and Indonesia, as well as smaller emerging countries like Vietnam, Bangladesh, and Kenya, showed considerable development despite fewer or non-existent resources. These countries focused on making broadband more accessible throughout the nation; increasing access to digital tools; promoting Research & Development; and establishing legal frameworks.

Countries pouring effort into advancing in digitalization are and will continue to be more robust than those economies that still depend on traditional industries with a high share of exporting physical goods and services. 

The consequences of digital progress

This digital progress doesn’t just end up benefiting companies, though. Providing digital services, building a better broadband infrastructure, and collecting more and better data—while respecting data protection guidelines, of course—can help governments decrease the gender gap and improve education. 

While digitalization obviously isn’t the only indicator of how robust and stable an economy is, it became more important in 2020 and will be even more so this year. Countries are now starting mass vaccination, and a digitalized public infrastructure clearly speeds up the whole process. So let’s see if our usual suspects will win the race, or if new, interesting players will emerge. 

Born and raised in western Germany but with Romanian roots, Michelle Michalowski studied Economics with a major in Statistics at the University of Mannheim before coming to Madrid to study the Master in Big Data & Business Analytics. Apart from being interested in tech and data, she is also a fitness junkie and a travel lover. Connect with her on Linkedin.