internet prowess correlates with economic strength

Why Mexico will continue to be a laggard in innovation

A few years ago my friend Marcel Julien (who worked for the Government of Mexico at the time) asked me what would I do to boost the economy and make Mexico more innovative.

My answer: Invest in internet infrastructure. Skip the wiring, give people internet connection through satellite.

Now, I’m not the only one who believes that boosting internet speed will boost the economy. A few weeks ago, FastcoExist published an article that argues the same point:

Each time a country doubles its broadband speed, economic output increases by 0.3%. That may not sound like much, but for the club of rich countries known as the OECD that’s equivalent to $126 billion every year, or more than 14% of the average annual growth rate of those countries during the last decade.

The findings come from a new study conducted in 33 OECD countries that attempts to quantify the impact of broadband speed  and it’s further reading on cable broadband. One interpretation of the report is that broadband will become the interstate highways of the 21st century: infrastructure that radically improves the exchange of valuable goods (or services and ideas) leading to explosive economic growth over time.

In Mexico, how far away are we?

Here is some evidence that we are not quite there yet.

At the beginning of the year The Boston Consulting Group published an article titled “The Connected World: The Digital Manifesto: How Companies and Countries Can Win in the Digital Economy” (download pdf) which features an interesting chart:

internet prowess correlates with economic strengthAha! Mexico, is an aspirant.  Judging from the 20 Mbps top speed the local telco company (Telnor see below) is promoting, I honestly thought we were laggards. Crazy isn’t it?

infinitum apestaInterestingly, three weeks ago I was talking to one of my business partners about this same topic. About how pathetic it is that we are limited by what we can do because people in Mexico believe that Facebook is the internet. I see people who are using the internet to download movies instead of learning new things. Heck, I know people who don’t know what Wikipedia is.

But they know what Facebook is.

How can these people have any perspective about how business, their work, their life and society is changing if they believe that Google and Facebook are the Internet?

Internet connectivity is correlated with IT prowess

The 11th edition of The Global Information Technology Report 2012: Living in a Hyperconnected World was released by the World Economic Forum with a special focus on the transformational impacts of ICT on the economy and society. The Nordic countries rang in high on the list, with Sweden ranking first, followed by Singapore and Finland. Denmark came in as fourth on the list, while Norway placed seventh– one place higher than the United States. The report assessed 142 world economies to assess the impact of ICT on the competitiveness and well-being of the nation.

The main factors of compiling the report came down to indicators such as broadband and mobile phone use, number of applications for ICT patents, internet access in schools, e-government initiatives, and so on. Overall it looked at how businesses, individuals, and governments leveraged ICT.

What both the BCG and WEF reports show is how IT is a competitive advantage, and Nordic countries have it in spades.

Take-home point

Companies are starting to realize that one of the most critical business capabilities in a digital world is agility. And it all starts with IT. And in a world where all business are in the IT business, countries that are lagging behind in IT infrastructure are their own economic threat.

Mexico isn’t looking too good…

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