4 Core Drivers of Digital Evolution

April 11, 2019 by in Models

Supply Conditions: How developed is the infrastructure to facilitate digital interactions and transactions? This driver measures the quality and readiness of digital and physical infrastructure such as bandwidth availability and quality of roads. Developing countries with fledgling infrastructure comprise the low end of the scores on the Supply driver.

Demand Conditions: Are consumers willing and able to engage in the digital ecosystem? The indicators underpinning Demand Conditions help address additional questions, such as:
• Do consumers have the means and instruments necessary to plug into the digital economy?
• Do consumers have the willingness and continued interest to remain actively engaged in the
digital economy?
While high demand is always a welcome sign, low demand scores can be interpreted as an
indication of untapped market potential that investors and businesses can take advantage of in an
enabling institutional environment; stagnant demand over time, particularly in advanced markets,
can be a sign of market saturation pointing to a need for innovation that can help restart the engines
of demand.
Institutional Environment: In addition to directly investing in infrastructure and establishing
laws and regulations, government actions and policies play an essential role in either supporting
or hindering the business engine that creates and distributes digital technologies. At the same
time, governments are key to determining the climate for investment and innovation in digital
technologies and their applications. By providing a stable environment that encourages investment
and protects consumers, governments create enabling conditions or even the technologies
themselves that foster digitalization. The indicators underpinning the Institutional Environment
driver also help address questions, such as: Are governments taking deliberate steps towards
advancing and adopting digitalization? Do they have policies and regulations in place to foster
digital ecosystems?
Innovation and Change: Innovation is the key to finding new solutions to global, national, and
local challenges. Innovation and the resulting change push the boundaries of the digital ecosystem
and what it can do; it is in equal parts the most impactful and challenging driver to jumpstart.
By breaking down the systems of innovation into inputs such as availability of talent and capital;
processes, such as university and industry collaboration in R&D; and outputs, such as new digital
products and services created, we measure the vitality of innovation in a country and identify
opportunities for improvement. The indicators associated with this driver focus on the core issue of:
What is the extent of innovation taking place in the country’s digital economy?

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