The US remains the most competitive IT industry in the world for incubating high-tech start-ups and breeding technology innovation, but the UK and a host of other nations are snapping at its heels, according to the Economist Intelligence Unit.
The US maintained its number-one ranking in the Economist Intelligence Unit's (EIU's) How technology sectors grow: Benchmarking IT industry competitiveness 2008 report, but the UK jumped one place, to number three. Three countries — Taiwan, Sweden and Denmark — also made the top five for the first time, at the expense of previous IT heavyweights Japan and South Korea.
Propping up the bottom of the competitiveness table was Iran, while India, Russia and China were surprisingly low down in the rankings, at numbers 48, 49 and 50 respectively.
The report, sponsored by the Business Software Alliance and now in its second year, ranks the performance of 66 countries in six categories: IT talent pool, tech infrastructure, legal regime, R&D environment, government support, and overall business environment.
While the report's authors acknowledged that harder times lie ahead for IT producers, with the current economic downturn affecting the US and Western Europe in particular, they contended that IT industry competitiveness should nonetheless remain constant.
One of the biggest challenges facing the developed IT industries, such as the US and UK, is sourcing talent, the authors said. The report states that, while the US, Singapore and UK provide the best environments for developing talent, the brain drain of IT skills from emerging markets is slowing and possibly reversing. Developed nations will, therefore, find it increasingly difficult to attract the best global technology skills, the authors said.
The strongest R&D environments are in east Asia, led by Taiwan, South Korea and Japan, who are all heavy investors in R&D and prolific generators of patents, the report states.
A competitive broadband market is also key to IT competitiveness, and the IT industries in the top-ranking countries in the report all have, to varying degrees, high-quality fat-pipe networks developed through competition.
The EIU report also found that the legal regimes covering intellectual-property protection and cybercrime law are slowly improving in countries such as China.
Denis McCauley, director of global technology research at the EIU, said in the report: "Few countries can hope to build strong IT production sectors without strong business and legal environments, deep pools of talent, support for innovation, and the widespread use of technology throughout society."