Philippines slips in global digital competitiveness ranking

The Philippines slumped to its worst showing in the World Digital Competitiveness Ranking by the International Institute for Management Development (IMD), mainly due to a decline in talent and scientific concentration. 

The country slid two spots to 61^st place out of 67 economies, scoring 45.18 in the 2024 World Digital Competitiveness Ranking, conducted by the World Competitiveness Center.

This was the Philippines’ lowest ranking since the report started in 2017.

Among 14 Asia-Pacific economies, the Philippines ranked 13^th, ahead only of Mongolia (64^th).

Singapore ranked first in the global digital competitiveness index with 100 points, followed by Switzerland and Denmark.

The ranking measures a country’s capacity to adopt and explore digital technologies to transform government practices, business models and society in general.

It measures a country’s capacity in three key factors: knowledge or the quality of human capital, excellence of technological infrastructure and future readiness.

The Philippines ranked 64^th in the knowledge factor, 58^th in future readiness and 56^th in technology.

“The decline is mainly driven by a drop in talent and scientific concentration. There is also a downturn in the technology and regulatory frameworks,” said José Caballero, senior economist at the IMD World Competitiveness Center, in an e-mail.

The country saw the steepest drop in the technology pillar, falling five places from 51^st last year.

According to IMD, the country showed weakness in the ease of starting a business (65^th), enforcing contracts (64^th), communications technology (66^th), and secure internet servers (64^th).

However, the Philippines showed promising performance in investments in high-tech exports (2^nd) and telecommunications (9^th).

The country also slid one spot in knowledge and future readiness, amid low ranking in talent (60^th), training & education (62^nd) and scientific concentration (61^st).

According to IMD, the Philippines’ strength in the knowledge factor lies in its graduates in sciences (22^nd) and its female researchers (2^nd).

For future readiness, IMD said the country showed strength in flexibility and adaptability (19^th spot).

“In terms of future readiness, while there has been an improvement in adaptive attitudes, that is societal attitudes toward new technologies, business agility and information technology integration remain stagnant,” he added.

According to Mr. Caballero, prioritizing the development of relevant talent and the country’s R&D (research and development) capabilities are keys to improvement.

“In addition, there is room for improvement in the regulatory framework’s support for the development of new technologies, [while] strengthening the adoption and integration of new technologies across the societal, private, and public sectors is also fundamental,” he added.

Asian Institute of Management’s (AIM) Rizalino S. Navarro Policy Center for Competitiveness, IMD’s local partner institute in the report, said that the Philippines was the weakest in the knowledge component.

“[This] reflects the level of our human capital and our investments in it. We are trailing behind regional peers in terms of improvements in basic education and training,” said Jamil Paolo S. Francisco, executive director of the AIM Rizalino S. Navarro Policy Center for Competitiveness, in an e-mail.

However, he said that the decline in the ranking does not mean that no progress has been made, but simply that other economies are improving at a faster pace.

“Basic education remains the foundation for any upskilling needed to adapt to rapidly changing technologies and economic demands. We need to get that right before we can expect to reap the benefits of technological advancement,” he added.

For the country to improve its ranking, Mr. Francisco said that the country should start with getting the basics right.

“We need more sustainable investments in education and infrastructure — begin with solid foundations in basic education and skills development to leverage technological advancements,” he said.

“Additionally, creating an enabling environment in terms of regulation, access to resources, and access to markets is crucial. Modernizing rules and frameworks to match the new needs and realities of companies, consumers, and workers is essential for progress,” he added.

Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the country’s declining performance in digital competitiveness can be attributed to the emergence of new technologies.

“The fast pace of digitalization globally with the emergence of new technologies such as artificial intelligence is widening the digital divide among countries, consistent with the wealth gap,” said Mr. Ricafort in a Viber message.

“As [well-off] countries digitize further, [the more they] would be far ahead than those that are worse off and far behind,” he added.

Because of this, he said that there is an urgent need for the Philippine economy to boost digitalization.

“There is an urgent need for the Philippines to digitize further… to have more competitive infrastructure and to create a favorable environment that is more conducive to more technological advances that will boost the country’s productivity,” he added.

Global tensions

The IMD report also explored the key challenges that hinder the advancement of digital competitiveness in the countries, such as geopolitical tensions.

Mr. Caballero said the geopolitical rivalry between the US and China are among the conflicts that could compromise how other countries compete at the global level.

“Geopolitical rivalries… are fragmenting the digital landscape, influencing not only how other countries develop and use digital technologies but also their ability to compete globally,” Mr. Caballero said in a statement on Thursday.

“It is therefore likely that any new tariffs will encompass national security-related elements. That is, tensions over technology and security concerns could also intensify, leading the US to further curtail China’s access to advanced technology,” he added.

US President-elect Donald J. Trump is seeking to impose 60% or higher tariffs on all Chinese goods and a 10% universal tariff once he assumes office in January 2025.

Mr. Caballero said that the geopolitical tensions have led to increased competition for digital dominance, which resulted in the fragmentation of global digital governance.

“In turn, such fragmentation can hinder collaboration on issues like cybersecurity and data privacy, which are essential for a balanced and secure digital ecosystem,” he said.

“In addition, fragmentation, by hampering collaboration, can increase the level of digital disparities among countries,” he added. – Justine Irish D. Tabile, Reporter