The wide diffusion of technology brings major changes to the global economy. Competition becomes more intense. Global trade widens. More jobs are found in the services sector than in manufacturing. Labor unions weaken. Security of tenure at work is threatened. Labor markets become flexible. Immigration spreads rapidly.

Is the Philippines prepared to compete in the rapidly changing landscape brought by information and communication technology (ICT)? Not so. According to The Global Information Technology Report 2003-2004 prepared by the World Economic Forum, the Information for Development Program (infoDev) of the World Bank, and French international business school INSEAD, the Philippines only ranks 69th among 102 economies in terms of the “networked readiness index.” Compared to its Asian neighbors, the Philippines has lagged behind, managing to edge out only Indonesia.

The Report used the Networked Readiness Index (NRI) to measure the environment for ICT of the surveyed economies, their readiness, and usage of ICT from the viewpoint of individuals, businesses, and governments. NRI is defined as “the degree of preparation of a nation or community to participate in and benefit from ICT developments.” The study can aid economies in leveraging ICT effectively to accelerate their economic development.

Last year’s Report covered only 82 economies. Almost all Asian economies declined except for Singapore, Malaysia, Thailand, and Vietnam. At present, the latter ranks a notch higher than the Philippines in terms of the networked readiness index. The current NRI rankings reflect new variables and criteria transferred into other indices, while excluding indicators found in two previous reports. Because recent data is lacking for some economies, data from way back 2000 has been used in some instances. Some data came from the 2002 and 2003 Executive Opinion Survey conducted by the World Economic Forum.

The environment index, the readiness index, and the usage index comprise NRI.

The Environment Component Index measures the degree of conduciveness of the environment that a nation provides for the use and development of ICT. Market, political/regulatory, and infrastructure conditions determine this index.

The country’s weakest link among the three components of NRI lies in the Environment Component Index, having an overall rank of No. 82 — the poorest showing in the region. The country fared poorly in terms of overall administrative burden, number of public payphones, quality of scientific research institutions, and overall infrastructure quality. In addition, the country ranked low in terms of waiting time for telephone lines, brain drain, ICT service exports, and restrictions on foreign ownership.

On the other hand, the Report notes the country’s strengths in terms of press freedom, manufactured ICT exports, competition in the ISP sector, average ratings on the state of cluster development, available laws relating to ICT, and the number of granted utility patents in relation to its population.

The Readiness Component Index of an economy surveys the capability of individuals, businesses, and government to leverage the potential of ICT. The factors that influence an economy’s readiness can be gleaned from a number of factors such as the presence of relevant skills for using ICT within individuals, the utilization of ICT by the government for its procedures and services, and access and affordability of ICT for corporations.

The Philippines ranked No. 72 in this index, once more the lowest among Asian neighbors. Also, the country has the second most expensive telephone monthly subscription for businesses. The Report likewise notes the country’s deficiencies in terms of number of households with computers, quality of math and science education (the same as last year), and available radios.

Not all is lost, however. The Philippines got high ratings in the quality of its business schools, extensive staff training, adult illiteracy rate, affordability of internet telephone access, and tertiary enrollment.

The Usage Component Index evaluates the level of utilization of ICT by an economy’s population, the private sector, and the bureaucracy. It also reflects shifts in behaviors, lifestyles, and other economic and non-economic benefits of adopting ICT.

With an overall rank of No. 50, the Philippines managed to do its best in this index, buoyed by government online services and the widespread licensing of foreign technology. On the downside, the country fared poorly in terms of low ratings in the number of ISDN (Integrated Services Digital Network - high bandwidth digital communications service) and Cable TV subscribers and firm-level technology absorption. The Philippines also performed below par in terms of the number of available personal computers and public sector promotion of ICT.

Surprisingly, the country’s public sector has been cited by the study for its better performance compared to the private sector. Government usage ranked No. 29 and readiness, No. 56, while business readiness and usage ranked No. 80 and 59, respectively. The public sector has been playing catch-up to implement much needed ICT reforms. On the other hand, the private sector failed to rapidly adapt to technological changes.

The Philippines has yet to outperform other economies in terms of networked readiness, requiring a combination of policies and appropriate strategies to achieve its potential. The government is on the right track in this regard, as it has been making long strides in its effort to overhaul its antiquated delivery and governance systems with the aid of ICT. Short of coming up with a full blown national agency, the government recently ordered the creation of a Commission on ICT (CICT) that will oversee the needed legal and regulatory reforms, infrastructure, and human resources development of the country’s ICT sector. The CICT is also drawing up plans for an e-government strategy to identify critical government services that will address the need of citizens and businesses and an information infrastructure roadmap that aims to provide broadband internet access to rural communities by way of community e-centers to be set up in barangays nationwide.

Overperforming economies in the Global IT Report, such as the US, Singapore, and Finland, have identified ICT in their national agenda, working hard to make it an area of excellence to serve as models for underperforming economies like the Philippines. The country must transcend measures of national wealth or ICT spending to prepare an optimal environment for ICT development, as well as to promote increased levels of readiness and usage by all three main stakeholders.