UK has most globalised ICT market in the world, says new report

By Chris Middleton
12 Jun 2014 View Comments
Theresa May - Photo UK Home Office

A new report identifies strong links between digital openness, ICT globalisation, and economic growth.

The ICT Globalisation Index, published today by the Economist Intelligence Unit (EIU), finds that the links are so strong that the internet has accounted for 21 per cent of GDP growth in developed countries over the past five years.

Three-quarters of that growth lies outside the ICT sector itself, says the report.

The report also makes the surprising claim that the UK leads the world in the globalisation of its ICT sector, ahead of northern European counterparts the Netherlands and Germany, and the US in fourth place.

Taiwan and Japan are in eighth and ninth places out of the 20 countries surveyed, with China ranked 12th and India 13th.

However, the headline findings are heavily influenced by one key fact, namely that the UK is far more open to foreign direct investment (FDI) into its domestic ICT sector than any other country in the world.

In other words, the report does not claim that British IT companies are taking over the world. Indeed, it implies that overseas IT companies may be taking over the UK.

Of note is another finding: fears over cyber security are the main reason for most countries being more reluctant than the UK to throw open their doors to overseas innovators.

This strongly suggests that the UK sees welcoming FDI as more important than the security implications of its own economic policies.

If true, this calls into question Home Secretary Theresa May's call earlier today for the UK government to "find innovative ways" of persuading the public of the need for increased state surveillance of their own communications.

Computing's story about Chinese telecoms giant Huawei serves as another counterpart to the report's findings, given GCHQ's close monitoring of the company as it aggressively expands in the UK and Europe.

The EIU's assertion of a strong connection between greater digital openness and higher levels of economic growth should also make for challenging reading in Brussels.

Some in Europe, such as Justice Commissioner Viviane Reding, have called for increased regulation of the overseas ICT sector, especially where US companies' data protection, hosting and transfer policies may have an impact on European citizens' privacy.

The EIU report acknowledges some downsides for any country with a highly globalised ICT sector.

These include the risk of exposing domestic industries to more efficient or aggressive overseas competitors, along with the cyber security challenges that follow a high reliance on digital channels.

The report also warns of barriers to the further expansion of the developed world's ICT sectors, which include a lack of transparency and poor knowledge of overseas markets.

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