Global trends of digitalization: potential of Ukraine

Глобальні тренди цифровізації: потенціал України

Новікова Н., Дьяченко О., Головня Ю.

Notes: - the study was not performed; n/a - data are not available

Source: compiled by the authors [14-22].

The Network Readiness Index reflects the level of countries' ability to use ICT for socio-economic development and is one of the most important indicators of innovation and technological potential of the countries, their development in the field of high technology and digital economy. Previously, this figure was calculated by the World Economic Forum and the International School of Business INSEAD. In 2019, the index was thoroughly revised and transferred to the non-profit organization Portulans Institute which conducts this study together with the World Alliance of Information Technologies and Services.

In 2020, Ukraine reached the level of 2016 on this index and took 64th place out of 134 countries which is 3 points higher than in 2019. The growth was due to strengthening sub-indexes of management and technology development which is partly explained by significant potential in software development for the creation of digital technologies. The weakest sub-index is the impact of digitalization on the socio-economic life of the country (figure 2).

Experts emphasize that there is a need to address the health issues, well-being, and stability of society to improve its quality of life and sustain- nable development. Such results indicate the necessity to continue emphasis on efforts of increasing the level of digitalization of the national economy which will have a positive impact on all areas of activity, as well as on the growth of the professional level of management personnel.

Figure 2. Positions of Ukraine in the Network Readiness Index, 2015-2019

Source: compiled by the authors [15].

The Global Opportunity Index reflects a set of factors that contribute to attracting foreign direct investment to the country: ease of doing business; quality of state regulation; rule of law. According to this index Ukraine took 99th place in the 2019 ranking (88th place in 2015).

The Global Innovation Index reflects the innovation potential of the world countries. The index consists of 82 different variables and is calculated according to the methodology of the International Business School INSEAD (France) and is the most complete comprehensive indicator of innovative development of the world countries which are at different levels of economic development. In the last five years Ukraine has signifycantly strengthened its position in this ranking: in 2020 it rose by 19 points and took 45th place among 131 countries. Ukraine achieves better performance in the field of innovation (71st place) than in innovation (37th place) (figure 3). The increase is mainly due to growth in the sub-indices of education (+ 20 positions) and R&D (+10 positions).

Regarding Huawei Global Connectivity Index which tracks the impact of ICT on the national economy, digital competitiveness and future growth, Ukraine has improved this indicator by 12 points in 5 years and in 2019 took 50th place in this ranking against 56th place in 2015.

Source: compiled by the authors [17].

The study, which covers 79 countries, which generate 95% of world GDP and represent 84% of the world's population [21], is based on four elements of ICT development and digitalization: the level of existing supply of ICT products and services; the level of demand for network interaction; experience in digital technologies implementation; the potential for digital transformation. Ukraine has the highest indicator in terms of sub-indices of experience in digital technologies implementation and demand for networking figure 4).

The compilers of the ranking claim that the increase of the global connectivity index by 1 point is equivalent to: the strengthening of the level of competitiveness by 2.1%; accelerating the introduction of innovations at the state level by 2.2%; increase in productivity by 2.3% [17].

According to the E-Government Readiness Index which is updated every two years and is calculated on three indicators: e-services development, human capital and telecommunications infrastructure, in 2019 Ukraine ranked 69th in terms of government readiness to use ICT and the level of quality of public services. The price of 13 positions is higher compared to 2017 which helped Ukraine to join the group of countries with a high level of e-government development.

Source: compiled by the authors for [21].

To assess the provision of interactive information services to citizens the Electronic Participation Index is used which assesses the quality and usefulness of e-government programs for engaging citizens in the process of public decision-making and their implementation. The index is based on three components: e-information, e-consulting, e-decision making. According to this indicator Ukraine has made a leap strengthening its position in 2020 by 29 points compared to 2018 (from 75 to 46 places), and, as a result, in 2020 entered the group of countries with the highest index of electronic participation (figure 5).

The Global Competitiveness Index shows the ability of national economies to achieve sustainable development in the medium term based on new knowledge and technologies. During 2016-2019 Ukraine weakened its position according to this ranking: in 2015 it took 79th place, and in 2019 - 85 [19].

The World Digital Competitiveness Index which complements the Global Competitiveness Index and is developed by the Swiss Business School of the International Institute for Management Development, examines the ability and willingness of 63 countries to implement digital technologies as a key driver of economic transformation. According to the method of calculating this index countries are ranked taking according to three groups of factors which contain three subfactors consisting of 52 criteria (32 statistical and 20 expert).

Figure 5. Positions of Ukraine in the ratings "Readiness for E-government" and "Electronic Participation Index", 2016-2020

Source: compiled by the authors on [18].

Among them: assessment of the development of educational and scientific potential, availability of regulatory framework, availability of financial capital and technological conditions, ability of business to adapt to a changing environment [4]. In 2020, Ukraine moved up two places in this ranking (from 60th to 58th) compared to 2019, due to the availability of digital / technological skills (40-27), electronic participation (53-39) and manoeuvrability of companies (47-33) (figure 6).

According to experts of the International Institute of Management [20] strengthening Ukraine's position in the ranking of the global index of digital competitiveness will contribute to: strengthening the rule of law, reforming the legal system and restoring confidence in the judiciary, improving capital efficiency, timely servicing of external and domestic debt; economic development, reducing the flow of labour migration of Ukrainians abroad.

Figure 6. Positions of Ukraine in the World Digital Competitiveness Index, 2015-2020

Source: compiled by the authors [20].

The Global Cybersecurity Index calculated by the International Telecommunication Union assesses the level of cybersecurity of countries according to five main indicators: the legal framework for cyberspace regulation, technical infrastructure, organizational issues, quality improvement and cooperation. In the ranking of 2018, Ukraine increased its position by 4 points and took 54th place against 58th place in 2017. Experts emphasized the development of the Law of Ukraine "On Basic Principles of Cybersecurity of Ukraine", which defines the legal and organizational framework for protecting Ukrainian society in cyberspace, directions of state policy in the field of cybersecurity which approximates Ukraine to international standards for the protection of information space.

international rating digitalization economy

Conclusion

Negative trends in some indices of digital development of Ukraine are a signal to the leading government agencies and organizations to take appropriate measures to overcome them, positive trends indicate the right choice of digitalization of the economy. Analysis of Ukraine's digital potential revealed that the country has significant resources for digitization. The first stage of accelerating the development of the digital economy is the formation of a modern basic ICT infrastructure and its modernization. The key directions for the realization of digital potential are determined by the existing model of the economy.

In Ukraine as in a country with a high share of employment in the agricultural sector there is a need to take measures for the development of digital agriculture to increase productivity. Equally important for the development of the digital direction is a favourable innovation environment which is created primarily with the support of the state. The institutional aspiration to develop the digital economy in combination with the propensity of the private sector to innovate creates synergies for the development of the digital economy. The increase of positions in the world rankings of digitalization is possible not due to local improvement of certain areas and indicators but due to the implementation of a comprehensive public policy covering various areas of activity which will result in impetus to the digital ecosystem.

Ukraine's transition to a digital economy is an inevitable process. The COVID-19 pandemic opens up new opportunities for the development of the state, society and individual economic entities, as well as it identifies problem areas. The study of the national system of indicators of the development of the information society of Ukraine is seen as a promising further exploration in this direction. The development of digital potential will stimulate the interaction of all categories of the population, business, entrepreneurs, and government and within each of the individual categories.

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