In New ICT Maturity Index, LATAM’s Scores are Mixed

Swedish technology giant Ericsson has released its Networked City Index for 2013, and the results for Latin America are mixed. The Index, which was assessed for Ericsson by Swedish consultancy Sweco Eurofutures, ranks 31 cities and measures their ICT maturity with regard to how they leverage ICT investments to positively affect economic, social and environmental development – referred to as the “triple bottom line.” Of the 31 cities, three were from Latin America: São Paolo, Buenos Aires and Mexico City.

These three metropolises, though showing some strengths, failed to shine when compared to their global peers. São Paolo did best, in the 17th spot, followed by Buenos Aires in the 21st position and Mexico City in 23rd.

First place went to Stockholm, followed by London (England) and Singapore. The list of 31 candidates was based on size, with some exceptions made for strong performing outliers.

“The selection here is based on a list of the world’s largest cities, with additional cities with strong ICT development and/or interesting aspects,” says Rodrigo Varanda, a senior public relations analyst at Ericsson. “The Networked Society City Index 2013 is open to other cities, and we hope that the list will continue to grow.”

São Paulo’s Big Chance

São Paulo, the largest city in Brazil with a greater metropolitan population of about 20 million, is home to the head offices of 63 percent of all the international companies with business in Brazil, as well as the São Paulo Stock Exchange, the largest in Latin America.

In its report, Ericsson notes that while São Paulo’s performance is average compared to the other included cities, when compared to developing economies it is performing very well, with the FIFA World Cup in 2014 resulting in the mayor’s office launching initiatives to improve ICT. These include plans to install free Wi-Fi access in 120 public spaces. São Paulo may also see a boost in 2016, when Rio de Janeiro hosts the summer Olympics.

The city rates as average in IT usage and infrastructure, but below average in the social dimension. It also has economic challenges, with relatively modest GDP per capita and modest scores in economic competitiveness. This is complicated by the fact that information and communication technologies are not affordable to the wider population.

Buenos Aires and Mexico City

Greater Buenos Aires, Argentina’s capital and largest city, constitutes the third-largest metropolitan area in Latin America, with a population of around 13 million. By comparison Mexico City is the region’s largest city, with almost 22 million people in the greater metropolitan area. Unfortunately, these megalopolises did not perform well in the Index ranking, coming in 21st and 23rd, respectively, out of the 31 candidates.

“Mexico City and Buenos Aires aren’t top performing cities, either in ICT maturity or triple bottom line,” says Patrik Waaranperä, senior consultant at Sweco Eurofutures. “They are, however, performing better than many other cities.”

Perhaps, but with Johannesburg squeezed between them in 22nd place, can these Latin American powerhouses take much solace in outscoring laggards Manila, Jakarta, Delhi, Cairo, Mumbai, Lagos, Karachi and Dhaka? Clearly, they are not sharing company with the leaders, most of whom have the same basic levels of Internet access and usage, with their rankings then distinguished by differences in advanced infrastructure and usage.

“The cities that have the lowest ranking do have low penetration in basic infrastructure and usage,” says Waaranperä. “Mexico City has quite good ICT infrastructure, but is lacking in ICT usage. For Buenos Aires we can see the opposite. That said, Mexico City and Buenos Aires have many basics in place for further development.”

The report notes that ICT usage in Mexico City is fairly modest, and speculates that this could be a result of insufficient ICT infrastructure, as well as the lower standard of living for a significant part of the population. As well, Mexico City lacks a well-developed open data source environment, which then affects its overall score.

The good news is that although Mexico City scores below average in the ICT affordability dimension, the telecommunications market is now becoming more competitive, which should bring costs down in the future.

Lots of Assumptions

Sweco Eurofutures, which conducted the study for Ericsson, employed a complex methodology that was heavily reliant on statistical models but was also based on some big assumptions. The first was the city selection itself.

“The cities included in the index were chosen by Ericsson, mostly with regard to location (country and continent) and size,” says Waaranperä. “Some cities, especially the northern European cities, were chosen because of their high ICT performance.”

This might explain the inclusion of high-ranking Stockholm (1st), Copenhagen (5th) and Oslo (6th), though one could argue that it is odd to have three smaller northern European cities and to exclude Berlin. Sweco also acknowledges in the report that one of the challenges in comparing cities around the world is divergent data sources. This is further complicated by debates as to where cities begin and end – particularly with megalopolises like Mexico City.

Overall, the methodology used by Sweco involved the usual formulas and weightings employed by economists, with aggregates, variables and attempts to account for missing data. It is a methodology of impressive complexity that, nonetheless, draws on a somewhat arbitrary list of cities, as well as the subjective equal weighting for the “triple bottom line.”

And the index’s most salient conclusion, that Stockholm, Sweden, leads the world, might raise a few eyebrows. After all, one of Sweden’s largest companies, which is headquartered in Stockholm, embarked on the study with a leading Swedish consultancy, also based in Stockholm. It is perhaps not too big a surprise that they determined that Stockholm, population 2 million, best leveraged ICT for economic, social and environmental development.

This article was first appeared on our sister publication Global Delivery Report