Conventional wisdom seems to suggest that the truly innovative actors in a society tend to be people, institutions, and governments endowed with wealth, earned and accumulated over generations. It also tells us that countries take a long time, often decades, to transform themselves and become innovative leaders. However, a look at the world around us is enough to turn such notions on their head.
Some countries are using information and communication technologies (ICT) to leapfrog into the 21st century, as highlighted by the findings of the Networked Readiness Index (NRI), recently published in the World Economic Forum's Global Information Technology Report 2006-07. Information technology is enabling economies to drive innovation and create wealth in the short span of a few years and not decades.
Consider the case of Estonia, ranked at a very impressive 20th position (out of 122 countries) in the latest NRI rankings. An astonishing amount of innovation has emerged from Estonia, a country of 1.4 million inhabitants that has regained statehood only in August 1991.
Inspired by the technology revolution in neighbouring Finland, the Estonian government's clear vision and leadership in ICT have led to results that often surpass those achieved by the older democracies of Western Europe. E-leadership has proven to be instrumental in helping Estonia through the painful transition from centralised state planning to the model of modern governance it is today.
Under the motto "the Internet connects people, not computers," the Tiger Leap Programme was launched in 1997 to reshape the Estonian educational system with technology; the Estonian Parliament approved in 2000 a proposal to guarantee Internet access to each of its citizens, just like any other constitutional right; people all over the country can access the Internet free of charge from hundreds of Public Access Points; Estonian citizens can vote online, as witnessed by the successful e-voting in the recent general elections; special projects such as Village Roads are creating a truly inclusive information society by making the Internet and mobile services available to all, especially those in rural and remote regions.
Finland, another top performer in the NRI Rankings, is often quoted as a prototype of the future networked society, a society based on the intensive generation, sharing and use of knowledge. This is a far cry from Finland's crisis in the early 1990s, when it was on the brink of bankruptcy.
By focusing relentlessly on innovation, education and ICT, Finland's economy has diversified from raw materials, capital, energy and scale-intensive to knowledge-intensive.
Similar to Estonia, the Finnish government has placed great emphasis on the development of human capital and the creation of an innovation-friendly society, also by investing heavily in R&D (3.4 per cent of GDP, among the very highest in the world). Finland was the first country in the world to introduce the concept of a national innovation system as the basic frame of reference in policy formulation.
Networking and co-operation became the norm for public-private partnerships and the governance of the country in general. Appropriate councils were set up to evolve the policy emphasis from a "science push" to an "industry pull" mode.
Finland is also home to one of the most open and competitive ICT sectors in the world, accounting for a very large share of business employment and value added. There are around 40 significant telecommunications operators in Finland, a country with a small population of 5 million.
Though Nokia represents the most visible and talked-about face of ICT in the country, the entire ICT sector has more than 5,000 firms. These firms continue to innovate in many basic technologies: a well-known example is the rise of the open source software movement, pioneered by Finnish programmer Linus Torvalds.
Similar transitions are also taking place in other places of the world. Consider Israel, ranked 18th in the NRI. Despite Israel's turbulent geo-political context, the development of its high-tech sector during the past decade has been impressive. With strong links to Silicon Valley and other US high-tech corridors as well as long-standing ties with American academic and research institutions, Israel has rapidly built a leading global position in high-tech entrepreneurship, with a large number of start-ups.
It has been the Israeli government's explicit goal to position the country at the centre of the knowledge economy, in close co-operation with the business sector, through a heavy focus on education and human capital.
Also a large-scale immigration of skilled labour (from Easter Europe in recent years) has given Israel the highest number of engineers per capita in the world -- 140 per 10,000 employees, more than twice the level of the United States and Japan. Israel's investment in R&D (4.6 per cent of GDP) is higher than that of any other industrialised country, and a variety of incubators and venture capital programs help to convert leading-edge technological research into value-adding businesses.
Many countries in even the world's poorest continent are embracing new technologies and making substantive commitments to innovative ways of thinking about and tackling old problems. Ethiopia, despite being one of the world's poorest countries, is spending nearly one-tenth of its GDP on information technology every year.
Hundreds of government offices and schools have been equipped with broadband Internet connections, and more are yet to come. Both government and private sector leaders in Ethiopia -- in an astonishing example of forging headlong into the "global village" -- have committed huge resources to seeing that by 2007 all of Ethiopia's 74 million people live no more than a few kilometres from a broadband connection.
The government of Mozambique has identified information technology as a key enabler of their respective national innovation strategies. Mozambique is using information technology to improve governance and public administration while guaranteeing its citizens greater access to the benefits of a global knowledge base.
Technology is driving innovation in economies around the world by allowing creative thinking and responsive problem-solving to provide the promise of never-before-seen opportunities for all. However, technology alone cannot make these transformations happen.
Leadership from the top is critical and partnership between business and government is important. Human capital development has to also progress hand in hand with investments in technology. Putting all the pieces of the puzzle together is not easy, but when done correctly, can change the face of our world.
Soumitra Dutta is Chaired Professor of Business and Technology, Dean of External Relations at INSEAD. Irene Mia is Senior Economist of the Global Competitiveness Network at the World Economic Forum.
