In our latest report, Tides of Disruption: How to navigate business transformation, we highlight key markets and their current readiness for digital disruption, as well as in the future. The likes of the UK, the US, France, Germany and Singapore were listed as being 'ahead of the wave', while UAE and China were 'just keeping up'. In this article, we expand on the report's commentary in greater detail to explore the impact of digital disruption worldwide on the ability of different jurisdictions to remain attractive to fast-moving industries.
To arrive at our conclusions, we have analysed the World Economic Forum's Networked Readiness Index 2016, alongside the markets' capacity for future innovation outlined by the Economic Intelligence Unit's Technological Readiness Ranking.
Our analysis reveals the current standing of major global economies - those that have always lagged behind, those with the benefit of years at the forefront of technological advancement and those in the middle - while also indicating the extent to which these nations will continue along their current trajectory.
Countries ahead of the wave of digitalisation
UK - sustaining momentum in future innovation
Our report highlighted the UK is 'ahead of the wave', yet it finds itself in a complicated position; it is currently among the most advanced nations on earth with regard to technological readiness, however, against the backdrop of a changing political and economic situation and projected stagnation in future innovation, it faces a challenge to sustain its advantage.
One potential barrier to growth in the UK is that while boards have become more tech-aware in order to get the most from technology, IT departments need to become more business-aware in order to create bespoke technological solutions for companies, rather than retro-fitting technological advances to fit a business purpose.
United States - blockchain a weak link
Unlike the UK, the United States is strong and will only get stronger on the global stage when it comes to readiness for digitalisation. The United States is already among the most advanced nations when it comes to tech, and while it will not grow this ability to the same extent as Sweden, Australia or France, as identified in our report, there will be enough progress to remain among the top five tech-ready nations on earth.
One area in which the United States does lag significantly behind its advanced rivals is in blockchain. 16% of senior executives surveyed1 in the United States in 2018 said that their organisation would make no investment in blockchain in the next year; compared to 6% in Canada, 3% in the UK and 1% in Germany. In the same survey, all respondents from China, France, and Mexico said they would be making investment.
France - employment challenges through automation
France is one of the big movers when it comes to future innovation and is largely investing in order to compete with its European rivals Germany and the UK. Indeed, while France is ranked joint-22nd for current readiness, the nation is set to be the joint-3rd most tech-ready country in 2022, alongside Finland, the Netherlands, the US, Germany, and Japan.
Barbara Jouffa, Paris-based Gowling WLG Corporate Partner adds: "By 2022, two of the three largest employment sectors in France will be wholesale and retail trade and manufacturing, accounting for a combined 25.1% of employment2. This represents little change from 2017, when the figure was at 25.7%. However, as automation brings down the cost of manufacture and logistics, reshoring could see outsourced manufacturing 'jobs' - performed by robots - return to France which could destabilise employment composition."
Germany - being reshaped by automation
While Germany is currently positioned ahead of the wave, there is significant risk of disruption to German industry from automation, with manufacturing and wholesale and retail trade the two largest projected employment sectors in the country in 2022. Here, manufacturing will account for 18.2% of jobs, while wholesale and retail trade will account for 13.7% for a combined 31.9% of German jobs.
Despite ranking highly on a number of metrics, there are concerns about Germany's ability to keep pace with its rivals3. Berlin and Frankfurt, have been seen as hotspots for start-ups, but as Germany turns its attention to AI, its strengths may lie in its existing industries, namely manufacturing4 . However, to counter balance this, Germany does have a very strong score for e-Governance, ranking 12th globally and scoring higher than other advanced technological countries like Norway and Switzerland.
As Manuela Finger, a Munich-based IP partner at Gowling WLG, explains: "The framework in Germany for digitalisation is very good - Germany ranked sixth in the digital readiness index 20185 - but it needs more courage and willingness to really innovate. Many German companies focus above all on efficiency rather than real 'added value' - mainly using innovation to improve existing products - and therefore do not fully exploit their innovation potential. Also, there clearly needs to be more investment in digitalisation in general."
Canada - cyber security underpins future tech readiness
Canada is one of the world's most prepared countries when it comes to developing and deploying technological innovation - a position that is only expected to strengthen in the years ahead.
While Toronto - which continues to rival the San Francisco Bay Area and New York City in tech job creation - has helped put Canada's tech sector in the global spotlight, it's only part of the picture. Montreal, Ottawa and Vancouver also rank among the top markets in North America for tech talent according to a 2019 CBRE report 6, while Waterloo Region continues to punch far above its weight in terms of its ability to cultivate ground-breaking startups and be a powerhouse of tech talent. Hamilton has also experienced dramatic growth in tech and advanced manufacturing, and has fast become a leader in those sectors among Canadian mid-sized cities.
"In recent years, Canada has woken up to its position as a major global tech hub, and has responded with an array of new initiatives designed to attract talent and investment from around the world," said Viona Duncan, co-chair of Gowling WLG's Global Tech Group. "From revamping its intellectual property regulatory framework and courting skilled foreign workers through its 'Global Talent Stream' program, to launching a CDN$950-million 'Innovation Supercluster Initiative,' Canada has signalled to the world that it intends to remain a competitive force in this space."
With Canadian offices in Calgary, Hamilton, Montreal, Ottawa, Toronto, Vancouver and Waterloo region, Gowling WLG has not only witnessed Canada's tech revolution first-hand, but has also had the opportunity to participate meaningfully in a number of major commercial and legislative milestones that have transformed the sector as a whole.
Singapore - little disruption amid sea of change
Singapore is technologically the most advanced nation on earth, ranking the highest for current readiness, while also being ranked as the joint-most sophisticated nation for future innovation for the years from 2018 to 2022.
Driven by consistent performance across metrics, including having launched its first cyber security masterplan in 2005, and updating it in 2016 with its cyber security strategy; this has overseen measures that include air-gapping government IT, having accepted the impossibility of securing such a complex IT infrastructure online.
These measures - particularly the measures to protect the digital information of government and civil service officials - have possibly contributed to one of the few areas of decline in Singapore's technological profile. Singapore remains the 7th highest ranked country globally for e-Government development - behind only Denmark, Australia, South Korea, the UK, Sweden and Finland. However, this represents a fall of three places from 4th in 2016 with Denmark, Sweden and Finland leapfrogging the world's first 'Smart Nation'.
By 2022, 27.9% of Singapore's employment will be within the wholesale and retail trade and manufacturing industries - two industries relatively vulnerable to automation. However, Singapore is forecast to undergo fairly little disruption in its employment composition. From 2017 to 2022, the proportion of those employed in retail and manufacturing is set to fall by just 0.5%, from 28.4%.
Partner Sheena Jacob of Singapore-based JurisAsia, which Gowling WLG formed an exclusive association with last year, said: "Although the move by the Singapore government to disconnect its internal IT government network from the internet appears to have affected its global technology rankings, it remains ranked number two in the world for online services.
"In fact, ongoing global cyberattacks and the apparent increase in state cyber warfare may in the long run demonstrate that the benefits to national cybersecurity outweigh the disadvantages. Singapore remains heavily committed to investment in technology, and its various initiatives, including Smart Nation, will continue to remain at the forefront of its national policies."
Countries just keeping up with digitalisation
China - AI leader but poor cyber-security is potential threat
While at the frontier of technological development, Chinese businesses are driving some of the most interesting innovations in artificial intelligence and telecommunications.
China is one of the strongest emerging nations for measures like e-commerce, however, when it comes to international patents granted or R&D spending as a percentage of GDP, China's level is not that of an international powerhouse - although it is clear from the dramatic increase of patent applications in China that this position is shifting. It is also held back by relatively poor cyber security and e-Governance infrastructure. According to the ITU's Global Cyber Security Index, China scores a 0.62 (1.00 is the highest), while the nation's score for e-Governance is 0.68 in the United Nations' e-Government Development Index, placing them 65th globally.
Jamie Rowlands, Chief Representative Officer of our Guangzhou office says: "China continues to try to shift from a manufacturing hub to more of a knowledge-based economy and technology is at the core of this. While there is still work to do, new regulations relating to cyber security demonstrate China's intentions of being a world leader in digitalisation in the future".
UAE - public sector driving innovation
The United Arab Emirates holds its own with regard to technological readiness for digitalisation, ranking joint-22nd for current readiness alongside France and the Republic of Ireland.
By 2021, Dubai hopes to run all of its governmental processes through blockchain technology, a move that will have implications for both e-Governance and cybersecurity in the emirate. The UAE is currently ranked 21st in the world for e-Governance, up eight spots from its 2016 ranking, very much in line with the other aspect of the nation's tech infrastructure.
If, as expected, Dubai achieves its aim by 2021 through embracing and implementing blockchain in public service provision, it should also boost its cyber security performance. Currently, in the ITU's Global Cyber Security Index, Dubai scores a 0.57 (1.00 is the maximum score) and the 47th highest score globally. With the efforts made by the Government for Dubai to excel in all it does, we expect the emirate to move up in these rankings in the coming years.
Tony Fielding, Partner of the Gowling WLG Dubai Technology, Media and Telecoms practice is of the view that "the UAE is, and wants to continue to be, an early adopter of innovation. The Emirate is embracing all forms of technological innovations to pursue its digital ambitions. New laws are being drafted to address issues of cyber security, data protection and cloud deployment in the Dubai government sector, as well as initiatives for implementing digital health platforms, artificial intelligence and local telecoms companies rolling out 5G technologies; not to mention its investment in incubators such as the Fintech Hive, Dubai Future Accelerators and other tech-focussed initiatives that underpin the Emirate's ambitions."
Understanding the impact of digital disruption and digitalisation
For more on our timeline of disruption, as well as our look at different countries' readiness for digital disruption and emerging new business models please download Tides of Disruption: How to navigate business transformation.
Footnotes1 Deloitte; 2018 Global Blockchain Survey
2 International Labour Organisation; Jobs by Industry Dataset, 2017
3 Handelsblatt Global; What's wrong with Germany's tech scene?, 2017
4 Politico; Germany's €3B plan to become an AI powerhouse, 2018
5 The Digital Readiness Index of Gartner and Cisco, 2018
6 2019 Scoring Tech Talent, CBRE Research. 16 July 2019
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