Professional Documents
Culture Documents
2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
ABSTRACT
The world is at a critical juncture, in the midst of a great information and communication
technology (ICT) revolution. With the COVID-19 pandemic, society is witnessing the real value
of emerging digital technologies even more in human history. As telecommuting, work-from-
home arrangements, and all other disruptions shape the “new normal,” economies face the
most significant digital transformation challenges.
However, digital transformation's full benefits will not be realized unless governments promote
effective e-governance, create a digital environment, and invest in digital infrastructure.
This paper's discussion builds upon a wide-ranging collection of recent research and in-depth
studies on ICT development and digital transformation.
The insights collected from several global indices covering more than 170 economies – based
on World Bank, OECD, and the United Nations – are valuable to substantial, significant players
in the digital society. The indices all show that the importance and impact of effective e-
governance in the digital era are profound and multi-dimensional.
This paper reignites the Philippine government’s action to reexamine its national ICT
development agenda, given the pressing issues and challenges amid the COVID-19
pandemic. These conditions will necessitate an evaluation of the current e-governance
structures and policies of the Philippines as laid down in the Philippine Digital Transformation
Strategy (PDTS) and E-Government Master Plan of 2022 (also known as the e-Government
Master Plan 2.0).
Page 1 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
As COVID-19 continuously sends unparalleled shockwaves across the world, it transforms how
governments, businesses, and people work. For the Philippines, its ability to overcome
movement restrictions and maximize remote interactions is determined by its digital economy's
current state. The various levels of community quarantine have pushed everyone to adjust to
new working arrangements and practices.
ICT is now at the center of all economic activity (Portulans Institute, 2020; Cornell University,
INSEAD, and WIPO, 2017; ITU, 2018). It has become integrated into all facets of human
activity. With this, the Filipinos' collective and individual readiness to leverage on the benefits
of ICT will determine the future of the country. But is the Philippines prepared to transform
liberally into a digitally-enabled society?
In the pursuit of finding a reliable measure to determine the state of ICT development in the
country, the author explored several global benchmarks that assess the application and
utilization of ICT. With extensive worldwide coverage, the carefully selected Index rankings
used internationally comparable indicators to track the progress and competitiveness of
economies around the world.
Frequently quoted by global leaders and influencers, the following nine (9) indices present the
emerging trends in ICT and the impact of e-government with emphasis on the Philippines’s
global competitiveness ranking:
Since 2009, the ICT Development Index (IDI) has been published yearly by the
International Telecommunications Union (ITU). As a specialized agency of the United
Nations, the ITU developed an influential tool for monitoring the global information
society's advancements. It ranks the performance and progress of 176 countries at
different levels of ICT development over time.
This composite Index combines 11 indicators into a global benchmark measure. The IDI
monitors the progress, differences, levels, and evolutions over ICT development time in
both developed and developing countries. It also measures the development potential
and impact of ICT in economic and social development in these countries.
Page 2 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
Despite having a duopoly environment for ICT services having reached a high level of
GSM mobile coverage, the Philippines has slipped one notch in the latest IDI ranking.
The latest ITU report mainly illustrated sustained differences in ICT experiences and
persistent digital divide among and between developed and developing economies such
as the Philippines.
First introduced in 2002 by the World Economic Forum, the Network Readiness Index
(NRI) 2019 was redesigned to assess how governance structures are used to integrate
technology and people in reaping the benefits of the digital future.
Regarded as an authoritative assessment of the global ICT development, the NRI model
looks into the multi-faceted impact of the digital economy on society using the lenses of
technology, people, and governance (Portulans Institute, 2019).
Each pillar of the NRI model has three sub-pillars. These 12 sub-pillars are then translated
to 62 indicators to effectively assess people and technology's integration and readily
capture the governance structure in a network economy. After mapping the readiness
landscape of more than 120 economies based on their pillars' performances, the NRI
2019 report found many exciting themes.
Compared to the earlier editions, the renewed NRI considers the collective power of
people and technology. Unlike in other indices, this NRI captures the human dimension
of network readiness of a given economy. As collaborators and partners, the increasing
integration of people and technology in business and society require fitting governance
mechanisms.
Page 3 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
As the gap between best and worst-performing economies widened, the Philippines
climbed five notches to place 71st out of 121 economies in 2019. The country ranked 77th
in 2016 and 76th in 2015 out of 143 economies.
The DAI examines the relationship between technologies and economic development.
The use and impact of the internet, mobile phones, and other related technologies are
explored. The DAI 2016 report showed that connectivity expansion (connected
government, connected business, and connected people) and complementary reforms
acceleration (digital regulation and e-governance) are elements in an effective
development strategy in realizing the potential gains (digital dividends) of digital
technologies and responding to technological gaps (digital divide).
As a global index, DAI measures the digital adoption of over 180 counties and across the
economy's significant dimensions – business, people, and government. The sub-indices
of digital technologies necessary to economic development comprise of: a) “increasing
productivity and accelerating broad-based growth for the business,” b) “expanding
Page 4 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
opportunities and improving welfare for people,” and c) “increasing the efficiency and
accountability of service delivery for government” (The World Bank, 2016).
Table 4 The Philippines in the Digital Adoption Index (2014 and 2016)
The rapid growth in digital finance through efficient digital payment and remittance
systems has raised the Philippines' average index score. The country’s IT and BPO
industry, on the other hand, was characterized to have “high entry barriers” and “few
regulatory barriers to competition.” The progress in the business sector, especially retail,
allowed the digital economy to flourish.
In its tenth edition, the United Nations E-Government Survey is considered the only global
report that analyzes the development status of e-government performance concerning
national priorities and achievement of the Sustainable Development Goals.
To track e-government development progress at the country level, the United Nations
developed the E-Government Development Index (EGDI). The EGDI monitors the
progress of e-government development in 193 UN member states. This composite Index
covers three sub-indices: a) Online Services Index; b) Human Capital Index (HCI); and
the c) Telecommunication Infrastructure Index (United Nations, 2014).
Table 5 The Philippines in the E-Government Development Index (2014, 2016, 2018)
Page 5 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
The Philippines notably leaped from medium-EGDI to high-EGDI country. However, the
government's efforts to improve the provisioning of e-services were not enough to
upgrade its EGDI ranking in 2018. Meanwhile, the Philippines advanced its rank in the e-
Participation Index (EPI). From 67th in 2016, the country ranked 19th in the 2018 Survey.
The improvement in rank was attributed to citizens’ access to e-information, e-public
consultations, and e-decision making (United Nations, 2014; United Nations, 2016;
United Nations, 2018).
Table 6 The Philippines in the Internet Inclusion Index (2017 and 2020)
In terms of advancing Internet inclusion, the Philippines ranked 19th out of 26 nations in
the region. In the top ten countries by income bracket in the 2020 list, the country landed
Top 7 among lower-middle-income. In the global context, the country’s registered low
affordability levels of smartphones and internet subscriptions. Besides, citizens are also
“burdened by relatively slow download and upload speeds” (Inclusive Internet Index,
2020).
Formerly known as the Alliance for Affordable Internet (4AI) Affordability Index, the
Affordability Drivers Index (ADI) now examines infrastructure and access as drivers of
affordable Internet. The ADI is a comprehensive tool used to assess the policy, incentive,
Page 6 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
The increasing ADI scores of the Philippines reflect the reduced transaction costs on both
the supply-side and demand-side. This trend also indicates that the country’s
infrastructure investment initiatives generally have paid-off. Despite good progress in the
reduction in the cost to connect to the internet, the slow improvements in the overall
internet affordability in the country are caused by limited development across policy areas
such as market competition, national broadband policy, among others (Alliance for
Affordable Internet, 2019; Alliance for Affordable Internet, 2018; Alliance for Affordable
Internet, 2017; Alliance for Affordable Internet, 2016).
The Freedom on the Net (FOTN) Index is an extensive study available on internet
freedom covering 65 countries in six regions around the globe. This comprehensive
research, which consists of 21 questions covering internet access, freedom of expression,
and privacy issues, examines carefully global trends related to the impact of ICT on
democracy.
Grounded in the basic standards of free expression and freedom of opinion (i.e., Universal
Declaration of Human Rights), the FOTN Index also examines how political systems and
governance structures cause the decline or improvements in internet freedom.
Page 7 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
Score by Subindex
Ave. (among 65 countries)
Overall
Score
Philippines FOTN
(0= Most Free; Obstacles Limits on Violations of
Ranking
100=Least Free to Access Content User Rights
The internet freedom standing of the Philippines has declined for the fourth consecutive
year. This situation is attributed to increasing extralegal intimidation cases by state
authorities in retribution for their online activities. Some online media outlets and
journalists also claimed to have experienced some sort of harassment from the
government. Surveillance of internet activities has been a growing concern among
ordinary users and rights activists. On the other hand, the government's issues on content
manipulation to advance specific political interests also surfaced. Despite these
conditions, over 70 percent of its population has continued accessing the internet to
express an opinion and exercise freedom to some degree (Kelly, Truong, Shahbaz, &
Earp, 2016; Kelly, Truong, Shahbaz, Earp, & White, 2017; Shahbaz, 2018; Shahbaz &
Funk, 2019).
Notable AI revolutions are seen in both public and private sectors around the world. True
enough, AI has already revolutionized public service delivery. The Oxford Insights
developed in 2017 the first Government Artificial Intelligence Readiness Index (GAIRI) to
assess how OECD national governments take advantage of AI opportunities in operations
and public service delivery.
From the original nine input metrics covering digital skills and government innovation
levels to data capabilities, the 2019 Index is now comprised of 11 input metrics and
covered all UN countries. These metrics are further clustered into Governance,
Infrastructure and Data, Skills and Education, and Government and Public Services. The
Page 8 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
Index also highlights how countries journey towards the AI revolution and how they
absorb and exploit AI's enormous innovative potentials.
Table 9 The Philippines in the Government Artificial Intelligence Readiness Index (2019)
Ranked 50th globally and 12th in the Asia and the Pacific, the Philippines is expected to
perform better in the coming years given its plan to optimize AI potentials in the
manufacturing sector and the offshoring and outsourcing business. The current
pacesetters are the banking, retail, and healthcare industries. However, the country must
focus on governance and developing a pool of in-country talent alongside AI systems
(Miller & Stirling, 2019).
Cornell University, INSEAD, and WIPO (2017) recognizes innovation as a “central driver
of economic growth and development.” The Global Innovation Index (GII) ranks the
innovation performance of nearly 130 economies around the world.
The GII puts innovation into the policy discussion, assesses national innovation systems,
and collects innovation metrics. To do this, the GII ranks world economies based on 80
indicators grouped into two pillars. The Input Pillar comprises of Institutions, Human
Capital and Research, Infrastructure, Market Sophistication, and Business Sophistication.
The Output Pillar, on the other hand, consists of Knowledge and Technology Outputs and
Creative Outputs.
Page 9 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
Amid the changing geography of innovation, the middle-income economies are keeping
up. Although global growth declined in 2019, the Philippines landed for the first time in
the group of innovation achievers – 6th among lower-middle-income economies, 12th
among economies in South East Asia, and 54th among 130 economies in the world. Since
2011, the country performs way better in Innovation Output than Input. Except for the
market sophistication dimension, the Philippines’ scores in all innovation dimensions are
above average (Cornell University, INSEAD, and WIPO, 2018; Cornell University,
INSEAD, and WIPO, 2017; Cornell University, INSEAD, and WIPO, 2019).
The ability to integrate people and technology with the right governance structures is key to a
prosperous collective future (Portulans Institute, 2020; ASEAN, 2020; OECD, 2020).
The global comparisons based on the income group classification and regional geographic
clusters of the World Bank, United Nations, and the OECD help track a government’s progress
in various dimensions and indices over time.
2. On the Network Readiness Index. The most future-ready economies of 2019 were
already listed in the 2016 ranking. This only showed that prioritizing investments in digital
technologies while maintaining a supportive environment for digital leadership allowed
the champion economies like Sweden, Singapore, and the Netherlands to exploit the
opportunities and benefits consistently offered by ICT. With the right governance
mechanisms, an economy’s ability to integrate its people and technology translated into
an e-inclusive future. Also, individuals, businesses, and governments cannot be
embedded in a highly networked economy if governance structures are not adequately
Page 10 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
established. Governments can accelerate the process through sound regulation and
more intense competition.
Latest Sub-indices/Pillars
The Ranking Rank
Ranking Sub-index Sub-index Sub-index
Index (countries) Sub-index 1
Year 2 3 4
E-Government
75th Online Online Human
Development 2018 -
(over 194) Service Infrastructure Capital
Index d/
Affordability 26th
2019 Access Infrastructure - -
Drivers Index f/ (over 61)
Government Government
50th Infrastructure Skills and
AI Readiness 2019 & Public Governance
(over 194) and Data Education
Index h/ Services
Input Output
Global Innovation 54th
2019 (Infrastructure, Sophistication, (Knowledge, Technology and
Index i/ (over 127)
Institutions) Creativity)
Data from a/ International Telecommunications Union; b/ Portulans Institute; c/ The World Bank; d/ United Nations Department
of Economic and Social Affairs; e/ The Economist Intelligence Unit; f/ Alliance for Affordable Internet; g/ Freedom House; h/
Oxford Insight; i/ Cornell University, INSEAD, and WIPO
3. On Digital Adoption Index. While digital technologies are made available throughout the
developing economies, around 60 percent of the global population is still excluded from
the benefits of a rapidly expanding digital economy. For World Bank (2016), regulations
that “facilitate competition and market entry” and institutions that are “accountable to
Page 11 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
people” are among the key features of the right environment for digital development
strategies to flourish and digital adoption to manifest.
5. On Inclusive Internet Index. The extent of availability of internet infrastructures and the
level of quality of internet services of a given economy once assessed can provide
valuable insights to public and private decision-makers in addressing issues of global
connectivity. Policy innovation from the government is a crucial element in investing in
Internet infrastructures and sustaining Internet inclusivity. Governments must be bold
enough to look beyond ICT regulations. As the government places its services and
information online, internet adoption and internet use are accelerated. In general,
countries that maintain e-government services and online presence enable their citizens
to transact business more efficiently and less costly.
6. On Affordability Drivers Index. The unfavorable competition and unfair regulation in the
Internet markets are seen as significant barriers to affordable access. When the
government and public institutions develop integrated open access solutions, the overall
supply-side costs are lowered, making it more accessible to every citizen. There has been
an established strong relationship between government policies and internet affordability.
Besides promoting competition in the market, providing public access options should also
be the government’s top priority. In the latest ADI report, investments in infrastructure
hold enormous societal benefits. As repeatedly observed in A4AI’s in-depth annual
research initiatives, more reliable and affordable connectivity closes the digital divide, and
boosts digital dividends.
7. On Freedom on the Net Index. The Freedom House, the organization behind FOTN
initiatives, recorded the increasing intrusion of government into the digital public sphere.
Against the backdrop of rising digital authoritarianism, securing Internet freedom is as
vital as protecting democracy. As more and more governments control their citizens
utilizing the internet and technology, Internet freedoms and human liberation are
imperiled.
Page 12 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
inequality of access to AI. Policy-makers, especially those in the middle and lower-income
countries, capitalize on the power of AI to not be affected by global disparities. Citizens,
on the other hand, must be protected from the associated risks of automation.
9. On the Global Innovation Index. All types of economies see the promotion of innovation
as the key to achieving economic and social development. Thus, economies centered
their attention on creating dynamic and supportive innovation networks and
environments. Despite economic uncertainties, the world witnessed unprecedented
growth in innovation investments and expenditures. Global use of an intellectual property
(IP) and research and development (R&D) has been growing since 2017.
The government's ability to deliver its services in an efficient, effective, and enhanced manner
determines the fate of its relationship with its citizens and the business sector. Such a link,
once nourished, interaction can be facilitated by e-Government mechanisms. The network of
interactions between “government and citizens” or G2C, “government and business
enterprises” or G2B, “government and employees” (G2E), and “inter-governmental
relationships” or G2G shape the very foundation of a digitally-enabled economy.
After all, collaboration and not competition matters in the digital world. It may appear that in the
preceding discussions, there has been a long-standing global race to ICT adoption among
economies, given the metrics and methodologies applied by research and ranking institutions.
The digital journey of the economies can be characterized by collaboration rather than
competition (International Monetary Fund, 2020). In some cases, the “e” in e-government could
also mean empowerment. For OECD (2020), empowering the business sector and citizens
through innovation is best done by putting them at the steering wheel of e-government.
Without a doubt, the Philippines and the rest of the world are at the crossroad of another digital
revolution that will impact the economy at different levels. Several transformations will unfold
over the coming years with opportunities and challenges that are not yet fully known, either
providing digital dividends or exacerbating the digital divide. It is high time for the Philippine
national government, through the Department of Information and Communication Technology,
to revisit its e-Government Master Plan 2.0. The plan should reduce bureaucratic red tape and
enhance access to digital technologies, investing in digital infrastructures, strengthening
institutions and governance, and embracing collaborative regulation. These efforts, among
others, will surely provide the much needed digital dividends while taking into consideration the
impacts of the digital divide.
######
Page 13 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
References
Alliance for Affordable Internet. (2016). The 2015-2016 Affordability Report. Washington, D.C.:
Web Foundation.
Alliance for Affordable Internet. (2017). The 2017 Affordability Report. Washington, D.C.: Web
Foundation.
Alliance for Affordable Internet. (2018). The 2018 Affordability Report. Washington, D.C.: Web
Foundation.
Alliance for Affordable Internet. (2019). The 2019 Affordability Report. Washington, D.C.: Web
Foundation.
ASEAN. (2020, April). Economic Impact of COVID-19 Outbreak on ASEAN. Jakarta: ASEAN
Secretariat Community Relations Division.
Cornell University, INSEAD, and WIPO., , (2017). The Global Innovation Index 2017:
Innovation Feeding the World. Ithaca, Fontainebleau, and Geneva: World Intellectual
Property Organization.
Cornell University, INSEAD, and WIPO. (2018). The Global Innovation Index 2018: Energizing
the World. IIthaca, Fontainebleau, and Geneva: Word Intellectual Property
Organization.
Cornell University, INSEAD, and WIPO. (2019). The Global Innovation Index 2019: Creating
Healthy Lives—The Future. Ithaca, Fontainebleau, and Geneva: World Intellectual
Property.
International Data Corporation. (2019). Worldwide Artificial Intelligence Spending Guide: An
IDC Spending Guide. Massachusettes: IDC Group.
International Monetary Fund. (2020). World Economic Outlook: The Great Lockdown.
Washington, DC: IMF.
International Telecommunication Union. (2017). Measuring digital development: Facts and
Figures 2017. Washington, DC: ITU Publications and United Nations.
ITU. (2016). Measuring the Information Society Report 2016. Geneva: International
Telecommunication Union.
ITU. (2017). Measuring the Information Society Report 2017 Volume 1. Geneva: International
Telecommunication Union.
ITU. (2018). Measuring the Information Society Report 2018 Volume 1. Geneva: International
Telecommunication Union.
Kelly, S., Truong, M., Shahbaz, A., & Earp, M. (2016). Freedom on the Net: Silencing the
Messenger, Communication Apps under Pressure. New York: Freedom House.
Kelly, S., Truong, M., Shahbaz, A., Earp, M., & White, J. (2017). Freedom on the Net 2017:
Manipulating Social Media to Undermine Democracy. New York: Freedom House.
Miller , H., & Stirling, R. (2019). Government Artificial Intelligence Readiness Index 2019.
London: Oxford Insights.
NEDA. (2016). Ambisyon Natin 2040: A Long Term Vision for the Philipines. Manila: National
Economic and Development Authority.
Page 14 of 15
Working Paper Series No. 2, Series of 2020
Policy Innovation and Digital Transformation
Graduate School of Public Development and Management
NEDA. (2017). Philippine Development Plan 2017-2022: Abridged Version. Manila: National
Economic and Development Authority.
OECD. (2020). Future of e-government: Agenda 2020. OECD e-Government Studies: (p. 16).
France: OECD Publications.
Portulans Institute. (2019). Network Readiness Index 2019. Washington D.C., USA.
Portulans Institute. (2020). Readiness is essential to address the impacts of the Great
Lockdown. Washington, DC.
PwC. (2017). Sizing the prize: What’s the real value of AI for your business and how can you
capitalise? PwC.
Shahbaz, A. (2018). Freedom on the Net: The Rise of Digital Authoritarianism. New York:
Freedom House.
Shahbaz, A., & Funk, A. (2019). Freedom on the Net: The Crisis of Social Media. New York:
Freedom House.
The Economist Group. (2017). The Inclusive Internet Index: Bridging digital divides. London:
The Economist Intelligence Unit Limited.
The Economist Group. (2020). Inclusive Internet Index. London: The Economist Intelligence
Unit Limited.
The World Bank. (2016). World Development Report 2015: Digital Dividends. Washington,
D.C.: World Bank Group.
United Nations. (2014). United Nations E-Government Survey 2014: E-Government for the
Future We Want. New York: United Nations Department of Economic and Social Affairs
(UNDESA).
United Nations. (2014). United Nations E-Government Survey 2014: E-Government For The
Future We Want. New York: United Nations Department of Economic and Social Affairs
(UNDESA).
United Nations. (2016). United Nations E-Government Survey 2016: E-Government in Support
of Sustainable Development. New York: United Nations Department of Economic and
Social Affairs (UNDESA).
United Nations. (2018). UN E-Government Survey 2018: Gearing E-Government to Support
Transformation Towards Sustainable and Resilient Societies. New York: United Nations
Department of Economic and Social Affairs (UNDESA).
World Economic Forum and INSEAD. (2014). The Global Information Technology Report 2014.
Geneva.
World Economic Forum and Insead. (2015). The Global Information Technology Report 2015.
Geneva.
World Economic Forum and INSEAD. (2015). The Global Information Technology Report 2015.
Geneva.
World Economic Forum and INSEAD. (2015). The Global Information Technology Report 2015:
ICTS for Inclusive Growth. Geneva.
World Economic Forum and INSEAD. (2016). The Global Information Technology Report 2016:
Innovating in the Digital Economy. Geneva.
Page 15 of 15