Bangladesh among The World’s Top IT Deployers, According to The Tau Index Measures Commitment, Equitability
By Roger Strukhoff
Do you want to be where the action is? Witness a society transforming itself through the wonders of IT? Maybe China, or India? Brazil? Estonia, perhaps?
Try Bangladesh or Ukraine instead. Visit Morocco and Egypt. Honduras is lovely almost any time of year, as is Senegal. Many places in Eastern Europe aren’t so bad, either.
These are among the countries at the top of a new scale I’ve created called the Tau Index. Tau is the Greek letter for T, so the Tau Index stands for Technology, sort of. The letter is used in many areas of science to describe stress, perception, clarity, and velocity. In physics, the Tau factor goes down as your speed approaches that of light. In my simple measure, the Tau Index goes up as you develop IT expenditures more aggressively.
How Does it Work?
The Tau Index takes into account the percentage of a nation’s economy devoted to IT expenditures, along with its per capita income, its cost of living, and its income distribution.
The Tau Index is a way to tease out those countries that may be overlooked because of their small size, seemingly ingrained poverty, or both. I explained how I derive it in a previous post, and am happy to explain it further to anyone who wishes to know more.
By factoring in the cost of living (or “per capita GDP in PPP terms” in wonkspeak), and relative income distribution (a measure known as the Gini coefficient), the Tau Index gives a fighting chance to those countries who are working hard to raise their standard of living, but who may be lost in the shuffle of the major economies.
However, it does give a fair shot to those major economies, and is weighted equally among enough factors to show how well highly developed nations are doing. Maniacal South Korea, for example, scores very well. as do better-known hotbeds such as the Czech Republic and Malaysia.
Two Guiding Principles
The two guiding principles behind the Tau Index are:
* Information technology costs the same amount of money everywhere. So, in a country with a relatively low cost of living for things other than IT (such as Bangladesh, Mexico, Senegal, etc.), the impact of IT will be relatively greater than in a country with a high cost of living (such as the US and Canada Germany and France, Japan, etc.).
* Better income distribution means more widespread access to IT. Despite politician’s proclamations worldwide that they have nothing but the interests of poor people in their hearts, the reality is that a more even distribution of income results in a more even distribution of opportunity.
The Tau Index is not meant to be a moral statement, though. It doesn’t care how a country got rich or poor, or why income is distributed the way it is. It is blind to politics. It is deaf to arguments about the exceptional things that make a particular country wealthy or impoverished. It does not predict the future. It draws no direct connection between copious use of IT and an improved society.
What You See is What You Get
The Tau Index is merely a way to square up what one sees on the ground with what one reads about the world. It can also show how a small country such as Senegal can make a big impact with IT expenditures.
Senegal has a per capita income of about $1,000 (compare to about $46,000 in the US), but can nevertheless be relatively aggressive in its IT expenditures (it spends 10.4% of its annual GDP on IT versus 7.3% for the US). It can also create a relatively big impact through a low cost of living and an income distribution that looks less like what one might expect in a developing nation, and more like the US.
I used 2009 expenditures on IT, on a national basis, as a key component in this rating. I know that 2009 was a down year for most; it will be interesting to see if and how 2010 expenditures are rebounding, and what effect they’ll have.
The Tau Index is also ignorant of local customs and pleasures. It doesn’t know that:
* Senegal is one of the few places in the world dominated by Sufi Islam.
* the Rambutan fruit grows in the Philippines, Malaysia, and Indonesia, and is one of the universe’s great creations
* Swiss cows really have Swiss cowbells
* liquor stores in Finland are called, when hyphenated, Alkohol-I-Like
* Turkey has more Greek ruins than Greece
* Lima is the driest major city on earth, even though it has fog all the time as well
* Trains come rolling slowly into stations in the US with their bells a-clangin’ precisely as they did more than 100 years ago. It’s not Europe, nor will it ever be.
And a million other things that one should see or die before one dies.
Some Quick Snapshots
The Tau Index merely gives us a quick snapshot on what vector a nation is currently on in its expenditure of IT. A low Tau Rating means the country doesn’t spend much, is very expensive, has a very unequal income distribution, or any combination thereof.
Because these factors are weighted equally, some countries can overcome a weakness in one area with a strength in others. Others can’t. Here are some examples:
* Malaysia scores well even though it has a high Gini coefficient (ie, there’s a lot of income disparity).
* Supposedly hot Brazil does not score well, because it is expensive, there is a large income disparity, and frankly, it doesn’t spend that much on IT (only 4.7% of its GDP) despite all the glowing reports it’s received recently.
* Western Europe in general is penalized because of the strength of the Euro and the weakness of the US dollar. The Tau Index is based on data from the World Bank that expresses everything in US dollars, and sets the US as the benchmark in cost-of-living terms. But here is where the Tau Index is effective, I think. Everyone knows the Euro is overvalued compared to the dollar and that it’s causing big problems throughout the EU region; the Tau Index merely reflects this.
* Eastern Europe, by contrast, is being very aggressive with its IT expenditures. The region benefits from a relatively low cost of living, equitable income distribution, weaker currencies than the Euro, and relatively high percentages of IT expenditures.
* Estonia doesn’t score as highly as one might expect. But remember, it’s a tiny country (population 1.3 million), and is getting expensive. It scores OK, and is known for its clever use of Web-driven IT, but it’s not the house-on-fire you’ve read about.
* Several Middle Eastern countries have quietly made big recent strides by aggressively buying and deploying IT, and the Tau Index reflects this. Morocco and Egypt are two of the current superstars. Saudi Arabia, Tunisia, Iran, and Jordan are all standouts. As stated before, the Tau Rating is not political; it just measures things.
* Honduras has a Tau Index higher than anyone else in the Americas. It could afford to devote only $1.3 billion to IT last year (compared to almost $50 billion in Mexico). But its spending represents 8.7% of GDP, and 17.1% on a cost-adjusted basis; its income distribution, while low, is better than that of many countries in Latin America.
* Oil-driven economies do not fare well. Maybe they think they don’t have to, because life is good in most of them. Saudi Arabia and Iran are exceptions to this, as is Mexico. But Venezuela lags badly, as does Norway, and the ratings for Nigeria and the UAE are good, but not great.
* Ireland’s not doing well. Its relatively low IT expenditures no doubt reflect its current economic crisis, and ironically, its tremendous success in the early part of this decade (and its inclusion in the Euro zone), result in a very low Tau Index.
* Bangladesh is the world’s true phenom. Its Tau Index is off the chart, literally. I had designed a place called “Perfect Land,” that had a high income, moderate cost of living, abundant IT expenditures, and great income distribution. I figured nobody could beat Perfect Land, but Bangladesh soared more than 40% above it. I had seen in some recent presentations at conferences that there was something stirring in Bangladesh. The Tau Index reflects that. I am working to follow up with some folks in that country to see what’s going on. Bangladesh spends 9.2% of its GDP on IT, or 23.8% on an adjusted basis. It has a low cost of living and a strongly equitable distribution of income.
* Ukraine, Morocco and Egypt also beat out Perfect Land (although not to the pownage extent of Bangladesh). Ukraine had a respectable IT expenditure (7.1% of its GDP) and derived benefit from a very low cost of living and a very high Gini coefficient (no doubt a legacy of its Soviet days). Morocco and Egypt had good Gini coefficients; Morocco has an extraordinary IT expenditure (13.8% of GDP, 22.2% in adjusted terms), while Egypt has an extraordinarily low cost of living.
Not a Blueprint
The Tau Index is not meant to serve as a blueprint; it’s not an engineering project. I’ve been careful to limit it to two digits, so as not to imply an undue level of precision. Again, it is blind to social conditions, political conflicts, governmental heavy-handedness, and to what purposes IT is being put in the countries of the world.
But I believe it does bring a new, credible measure to the discussion of how IT impacts the world, how it is being used to lift all boats in its rising tide. As Cloud Computing (and its presumed efficiency) is more widely deployed, I may need to add another dimension to it.
For now, I’ve thrown 73 countries into the mix (including Singapore and the Hong Kong special administrative region), a significant expansion from my first crack at this.There were others such as Libya, Serbia, and Croatia that I’d like to include, but for which I currently lack statistics.
I think it provides a quick, nice snapshot of what’s going on in the countries of the world. Any and all comment is welcome. I hope I am able to add a little fresh insight to the problem of examining IT expenditures and their impact on the world.
The Tau Index – Results for 73 Countries
(based on IT expenditures in 2009)
(listed in the order of how they scored)
The World Champion (Tau Index = 7.1)
Bangladesh
Also Off the Charts (5.0 and Above)
Ukraine
Morocco
Egypt
Stars (4.0 to 4.9)
Hungary
Malaysia
Bulgaria
Senegal
Czech Republic
Vietnam
South Korea
Standouts (3.0 to 3.9)
Pakistan
Romania
Saudi Arabia
Poland
Thailand
India
Honduras
Slovakia
South Africa
Kenya
Philippines
Strivers (2.0 to 2.9)
Tunisia
Iran
Russia
Hong Kong
Sri Lanka
Jordan
Estonia
Sweden
Costa Rica
United Kingdom
Japan
Mexico
Singapore
Bolivia
Cameroon
China
Canada
Strugglers (1.5 to 1.9)
Turkey
Ecuador
Finland
Panama
Slovenia
Argentina
United States
Portugal
Indonesia
Netherlands
Germany
Nigeria
UAE
Austria
Spain
Algeria
Switzerland
Stragglers (below 1.5)
Greece
Denmark
Colombia
Peru
Chile
New Zealand
Israel
Belgium
France
Italy
Ireland
Australia
Norway
Brazil
Uruguay
Jamaica
Venezuela
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