South Africa ranks 43 in the world in the 2009 IT industry competitiveness index, with a score of just 35,3 out of 100 in the index. Last year, it ranked at number 37.
The shift can be contributed to changes in the country’s performance as well as to improvements in the sources of data used to measure some indicators.
Some figures differ significantly from 2008 to 2009: for example, IT infrastructure rose from 8,4 to 17,8 while human capital decreased from 39,9 to 31,8.
These are among the findings of a new study issued by the Economist Intelligence Unit and sponsored by the Business Software Alliance (BSA).
The study, now in its third year, assesses and compares the IT industry environments of 66 countries, including South Africa, to determine the extent to which they enable IT sector competitiveness.
“In today’s economic climate, supporting a strong technology sector is more important than ever,” says Alastair de Wet, chairperson of the BSA's South Africa Committee. “Technology can drive the economic recovery and generate long term economic growth. Broadband availability is becoming increasingly essential to IT sector competitiveness, as more IT offerings are delivered over the Internet. BSA expects that the recent construction of the Seacom cable and the premise of increased and cheaper broadband could influence the South African rank positively in the next few years.”
The study finds that South Africa performed strongest in the business environment, scoring 74,9, and the legal environment, scoring 63,5.
Areas for improvement include the R&D environment at 13,2 and human capital at 31,8.
The top five countries in Middle East and Africa are Israel with 64,3; South Africa with 35,3; Saudi Arabia 33,9; Turkey 33,8 and Egypt 26,8.
"Globally, the IT sector has ridden out the crisis reasonably well, despite reduced technology spending," says Denis McCauley, director of global technology research with the Economist Intelligence Unit. "Rather than pushing short-term measures designed to boost sector output or support ailing IT producers, policymakers need to remain focused on strengthening the fundamental enablers of long-term sector competitiveness."
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 countries 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 countries 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. South Africa has seen a major growth in IT infrastructure due to various factors, including the construction of the Seacom cable.
* Investment in skills development remains a long-term imperative. Those countries that deliver a combination of IT, business and language skills training will generate a stronger IT workforce. The recession has eased the talent shortages that had plagued many IT firms until about a year ago. But, as economies recover and hiring eventually resumes, competition for the best talent will again grow fierce. Co-ordinated efforts among governments, universities and IT firms are needed to improve the quality of technology training and expand the pool of potential hires.
* 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.
* Intellectual property (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.