US tops ‘ease of doing digital business’ global ranking; Phl 34th

The US and the UK outrank the rest of the world in facilitating the growth of a digital business ecosystem, according to a study of the Harvard Business Review.

The United States and the United Kingdom are the top performers in World Bank’s annual Doing Business survey, described by some as the World Cup or Olympics for governments competing to make their countries attractive to businesses.

The Philippines ranked 34th, ahead of Southeast Asian neighbors Malaysia (36th) and Indonesia (41st).

The ranking measures how easy it is to do business in a country by examining regulatory environments and is enormously influential―it has inspired more than 3,500 reforms across 190 economies. In 2017-18 alone, 128 economies undertook a record 314 reforms.

In a story released by the Harvard Business Review, it addressed a key element missing from rankings such as Doing Business: They say little about the ease or difficulty of doing digital business. The study aimed to close the gap with the first analysis of the Ease of Doing Digital Business (EDDB) in 42 countries around the world.

The countries picked constitute the most significant markets for digital businesses worldwide and offer a consistent set of data across a wide range of indicators. Their digital business environments require distinctive policy focuses and investments. The evaluation is intended as a complement to that of the World Bank: Provide decision-makers a basis to compare countries not only in terms of “traditional” business-friendliness but also in terms of factors affecting setting up digital businesses.

The US and UK’s performance are driven by several strengths: market sophistication, supply and institutional boosters for the digital economy, accessibility of data, along with strong performance in terms of translating the “ease” across all four platforms. The UK is, of course, expected to go through some significant changes post-Brexit.

The Netherlands, Norway, Japan, Australia, Denmark, Switzerland, Canada and Finland rounded out the top 10.

China stands out as an anomaly and a contradiction: while it was the fastest-moving digital economy as measured by the momentum score of our Digital Evolution Index, its EDDB performance is weak. The reason is that even though it has established a highly favorable environment for the dominant domestic digital players, China is a challenging market for new and international business builders because of multiple government restrictions.

The “ease” evaluated here takes the perspective of a potential digital business builder located anywhere. In addition to government barriers to entry, China’s overall environment is a difficult one for a business that plans to establish itself in the market because of a host of restrictive digital economy laws and policies, including data localization laws and lack of data openness. As a result, despite the rapidly advancing and highly innovative digital ecosystem within China, its EDDB performance is markedly weaker.

The US and the UK topped 42 countries included in the Ease of Doing Digital Business list. Russia and Indonesia ranked last. (Harvard Business Review)

• In Singapore, the highest-ranked SEA nation at 13th, 6% of the population are freelancers, yielding a high Online Freelance score. Correspondingly, its growth in ecommerce and as a sharing economy can be attributed to its digital foundations, and word of mouth popularity of sharing economy offerings. However, Singapore’s restrictions on open data sharing and regulatory constraints on digital media businesses contribute to its weaker performance on that platform.

• South Korea (24th) does best in market sophistication measures, such as mobile broadband coverage, speeds, and consumer sophistication; however, its digital media scores are adversely affected by instances of internet censorship. It scores relatively low on Data Accessibility because of its data localization laws which restrict spatial and location information owing to national security concerns. Also, strong labor unions and rigid regulations have ensured that ridesharing and home sharing services remain either partially or fully banned in Korea.

• India’s (38th) strongest digital platform is that of online freelance, especially in software. Four in 10 freelance workers in software development and technology are based in India. However, India is constrained by its digital and physical infrastructure even as the number of Internet users with access to mobile broadband has been growing rapidly.

• Estonia (16th) does particularly well in the sharing economy for several reasons. Its innovative institutions provide strong foundations. While some European countries have responded to the sharing economy with bans, Estonia has worked with companies, such as Airbnb and Uber, to come up with a new tax arrangement, allowing hosts and drivers to pay tax authorities seamlessly. Bolt, one of Uber’s most formidable competitors in Africa and Europe, was born in Estonia. Estonia’s greatest opportunity for improvement is in easing the environment for ecommerce businesses that must operate at the intersection of the digital and the physical world. It has a low per capita usage of ecommerce and is negatively affected by cross-border shipping costs in the European Union. (HBR)