Both countries are tapping into the huge potential that exists and leading the way for growth, ICANN says
Published: 16:45 June 9, 2015
By Naushad K Cherrayil, Staff Reporter
Dubai: The UAE and Qatar lead the Middle East when it comes to advanced and productive internet economies, according a 2015 Boston Consulting Group (BCG) e-Friction Index.
Globally, Qatar is ranked 23rd, with the UAE in 24th place — ranking ahead of a number of strong emerging economies.
In a new study, the BCG e-Friction Index ranks 65 economies according to four types of e-friction — infrastructure-related friction that limits basic access; industry and individual friction, both which affect the ability of companies and consumers to engage in online transactions; and information friction, which involves the availability of, and access to, online content.
The study, titled ‘Which Wheels to Grease? Reducing Friction in the Internet Economy’, shows that high e-friction economies are in danger of missing out on a high-impact propellant of growth and job creation. Those that address their sources of e-friction have the potential to add significant value to their economies.
“The internet has created an unprecedented environment for businesses to grow and flourish, thanks to its ‘permission-less’ innovation, which makes it possible for everyone to explore the untapped opportunities of today’s digital economy,” said Baher Esmat, vice-president of Stakeholder Engagement in the Middle East at the Internet Corporation for Assigned Names and Numbers (ICANN), which commissioned the 2014 report and the update.
He said that Middle East countries have the potential to grow their digital economy, adding that the report demonstrates how the UAE and Qatar are tapping into this potential and leading the way for growth.
The research also found that, globally, the difference between countries with large digital economies and those with low economic activity amounts to about 2.5 per cent of GDP — a material figure for any nation.
Hermann Riedl, partner and managing director at BCG Middle East, said consumers and business in the UAE and Qatar faced less e-friction, that is, few frictions or constraints on digital activity.
“The nations that are still lagging behind, however, both in the GCC and in the rest of the world, need to imminently address their sources of e-friction,” Riedl said. “After all, doing so could have a strong impact on national competitiveness as well as on social and economic development.”
Based on the study, Riedl said that the broad causes of e-friction include wealth, population density, the urban-rural population mix, literacy and English-language skills. And, while some of these can be influenced by policy initiatives, others require more creative approaches.
Among high-income economies, “all-rounders” and “well-oiled nations” — such as the UAE — have generally low e-friction scores, although the well-oiled set performs less consistently across the 55 indicators than all-rounders do.
“Even economies in the well-oiled categories, such as the UAE, should not rest on their laurels,” Riedl said. “They also have sources of friction to address, such as those related to outdated regulation, excessive bureaucracy, and impediments to investment. These economies need to focus their interventions with care,” he said.