Methodology

The Networked Readiness Index is comprised of four subindexes that measure:

• The environment for ICT. 

• The readiness of a society to use ICT. 

• The actual usage of all main stakeholders. 

• The impacts that ICT generates in the economy and society. 

The first three subindexes can be regarded as the drivers that condition the results of the fourth subindex, ICT impacts. These four subindexes are divided into 10 pillars and 53 variables according to the following structure (Figure 2):




Environment subindex 
The environment subindex gauges the friendliness of
 a country’s market and regulatory framework in supporting high levels of ICT uptake, the development
 of entrepreneurship and innovation-prone conditions. A supportive environment is necessary to maximize the potential impacts of ICT in boosting competitiveness and well-being. It includes a total of 18 variables distributed into two pillars.

• The political and regulatory environment pillar (nine variables) assesses the extent to which the national legal framework facilitates ICT penetration and the safe development of business activities, taking into account general features of the regulatory environment as well as more ICT-specific dimensions. 
• The business and innovation environment pillar (nine variables) gauges the quality of the business framework conditions to boost entrepreneurship, taking into account dimensions related to the ease of doing business. This pillar also measures the presence of conditions that allow innovation to flourish by including variables on the overall availability of technology, the demand conditions for innovative products, the availability of venture capital for financing innovation-related projects, and the presence of a skillful labour force. 

Readiness subindex 
The readiness subindex, with a total of 12 variables, measures the degree to which a society is prepared to make good use of an affordable ICT infrastructure and digital content.

• The infrastructure and digital content pillar (five variables) captures the development of ICT infrastructure (including the mobile network coverage, international Internet bandwidth, secure Internet servers, and electricity production) as well as the accessibility of digital content. 
• The affordability pillar (three variables) assesses the cost of accessing ICT, either via mobile telephony or fixed broadband Internet, as well as the level of competition in the Internet and telephony sectors that determine this cost. 
• The skills pillar (four variables) gauges the ability of a society to make effective use of ICT thanks to the existence of basic educational skills captured by the quality of the educational system, the level of adult literacy, and the rate of secondary education 

Usage subindex 
The usage subindex assesses the individual efforts of the main social agents— individuals, business and government—to increase their capacity to use ICT, as well as their actual use in their day-to-day activities with other agents. It includes 15 variables. 

• The individual usage pillar (seven variables) measures ICT penetration and diffusion at the individual level, using indicators such as the number of mobile phone subscriptions, individuals using the Internet, households with a personal computer (PC), households with Internet access, both fixed and mobile broadband subscriptions, and the use of social networks. 
• The business usage pillar (five variables) captures the extent of business Internet use as well as the efforts of the firms in an economy to integrate ICT into an internal, technology-savvy, innovation-conducive environment that generates productivity gains. Consequently, this pillar measures the firm’s technology absorption capacity as well as its overall capacity to innovate and the production of technology novelties measured by the number of PCT patent applications. It also measures the extent of staff training available, which indicates the extent to which management and employees are better capable of identifying and developing business innovations.
• The government usage pillar (three variables) provides insights into the importance that governments place on carrying out ICT policies for competitiveness and the well-being of their citizens, the efforts they make to implement their visions for ICT development, and the number of government services they provide online. 

Impact subindex 
The impact subindex gauges the broad economic and social impacts accruing from ICT to boost competitiveness and well-being and that reflect the transformations toward an ICT and technology-savvy economy and society. It includes a total of eight variables. 

• The economic impacts pillar (four variables) measures the effect of ICT on competitiveness thanks to the generation of technological and non-technological innovations in the shape of patents, new products or processes, and organizational practices. In addition, it also measures the overall shift of an economy toward more knowledge-intensive activities.
• The social impacts pillar (four variables) aims at assessing the ICT driven improvements in well being thanks to its impacts on the environment, education, energy consumption, health progress, or more active civil participation. At the moment, because of data limitations, this pillar focuses on measuring the extent to which governments are becoming more efficient in the use of ICT and providing increasing online services to their citizens, and thus improving their e-participation. It also assesses the extent to which ICT is present in education, as a proxy for the potential benefits that are associated with the use of ICT in education. 

The final NRI score is a simple average of the four composing subindex scores, while each subindex’s score is a simple average of those of the composing pillars. We assume that all Index subindexes give a similar contribution to national networked readiness.