Comparison of E-readiness Composite Indicators

Lamriq Rabii Doukkali Abdelaziz

TIES Team TIES Team
ENSIAS, Med V University ENSIAS, Med V University
Rabat, Morocco Rabat, Morocco
lamriq.rabii@gmail.com doukkali@ensias.ma

Abstract- The e-readiness is an assessment tool designed to

measure and analyse the level of ICT integration in II. REQUIREMENTS FOR E-READINESS COMPOSITE
development of country. Several tools of e-readiness using INDICATORS
composite indicators approach to calculate the final index
The composite indicators are the most commonly
that characterizes the purpose of the e-readiness study. Based
techniques used by several organisations to gauge the level
on selected individual indicators, composites can provide a
way to benchmark and gauge the level of the countries'
of e-readiness for a country, region or society. The build
economic progress. The main goal of this paper is to present a of the overall index of e-readiness is based on the
comparative study of the best-known e-readiness composite following steps:
indicators based on some criteria such as: the estimation of
missing data, normalization, weighting, and index calculation.
A. Data selection
The objectives of e-readiness assessment are multiple,
such as e-infrastructure, e-economy, e-society and e­
Keywords- E-readiness; Composite indicators; JCT;
government [5]. Identifying the e-readiness goal helps to
Normalization; Weighting; Aggregation.
defme the key areas on which we can extract the relevant
I. INTRODUCTION indicators that are covering all the main aspects related to
the objective of e-readiness. In addition, indicators should
The Information and Communication Technology (lCT)
be measurable, analytical and pertinent [6].
became one of the driving forces of the economy, it has
contributed in the development of the overall economic B. Data reliability
growth of developed countries [I]. In the I990s, several
Given the complexity of measurement and collection in
studies by the World Bank reported that developing
terms of time and cost, indicators are generally related to
countries need urgent concern for the ICT areas. Actually,
data sources rather than desired quality [6] . The data
many organizations are beginning to develop survey
sources selected should provide reliable indicators with
systems to help countries exploit the capabilities of the
meaningful and accurate values.
information technology for their development [2].
Thereafter, the e-readiness tool has been created to e. Data collection
measure the quality of ICT infrastructure and the ability of The data collection process is the most difficult step in
their use by different actors in the country [3]. the construction of composite indicators. In terms of time
The e-readiness assessment tools such as composite consumed and costs expended, repeating this process every
indicators provide a one final index that summarise all year is not easy.
important data related to e-readiness goal measurement. The questionnaires, statistical methods, best practices
The score value obtained is calculated using normalization, and historical analyses are the main methods used for
weighting and aggregation methodologies to compile data collecting data and assessing values [7].
collected.
Several methods have been developed to compute the e­
D. Data availability
readiness index in order to rank a country or provide a The absence of some indicators reduces the reliability of
comparison between them. However, the choice of those composite indicators for countries that have a lack of
methods is finally related to the objective of the e­ information [6]. The composite provides analysis and
readiness study and the nature of the data collected [4]. In helps identifying areas that need improvement. However,
this paper we will present an overview of the best-known the lack of certain data hinders the realization of this
e-readiness composite indicators existing and a objective.
comparison of the methods used in the construct of their By exammmg several e-readiness assessment
indexes. methodologies, the approaches used in the composite
This paper is structured as follows: section II describes indicators fall into five categories:
the composite indicators construction for e-readiness • Country exclusion: when a country has a large lack
assessment, section III presents an overview of the e­ of data, the e-readiness index is no longer
readiness composite indexes, and section IV compares significant. Consequently, this country will be
those composites tools. Finally, section V concludes the excluded.
paper and gives directions for future work.

978-1-4673-8709-5/15/$31.00 ©2015 IEEE 93

 • Data removed: suppression of indicators where data normalized indicators are aggregated by a simple average
is missing for several countries. using the following equation (1) called Figure-of-Merit
• Data ignored: data will be not considered in the (FOM) [8], [9].
computing of e-readiness index or may takes the
minimum or maximum value that can be reached (1)
by the other countries.
• Data from the nearest year: the missing value takes Where:
the available data in the nearest year or the mean of E: the index of e-readiness
latest years.
i: each of the indicators
• Data from the similar countries: The country with N: total number of indicators
missing value takes the available data in similar
Wi: the weight assigned to the indicator i CLf=l Wi = 1 )
countries.
Ni: the normalized value of the indicator i
E. Normalization: The global index value can be used to rank countries

The data collected does not have the same and provide comparison between them.

characteristics in terms of unity and homogeneity. It can be

III. OVERVIEW OF E-READINESS COMPOSITE INDEXES
extremely dominant values or extremely dominated values.
In order to aggregate them into a single composite index, a There is a limited number of e-readiness assessment

normalization of data is needed to: avoid mixing the tools that present their methods used to calculate the index

measurement unit, adjust their dimension size, and avoid of a country, region or community. In this section, we will

the extreme value domination [6]. In addition, the present a comparison of the following e-readiness

normalization allows comparison of data on a common composite indexes: the ICT Development Index (101), the

base. Networked Readiness Index (NRI), the Technology

There are several techniques of normalization. Each Achievement Index, the e-Trade Readiness Index, the

technique has its advantages and disadvantages. The UNCTAD B2C E-commerce Index, the Knowledge

following techniques are used by the e-readiness Economy Index, the Digital Opportunity Index, the

composites examined in this study:
• Distance from the reference measure: the reference
measure is the ideal value that can be reached by
each indicator.
• Distance from the maximum and minimum value:
the normalized value takes the values between the
minimum and maximum value of the scale used.
• Standard deviation from the mean.
• Scaling of data: a numerical value from 1 to n
(n>1) is attributed to each indicator to adjust them
on one common basis.
• Country rankings: country is ranked
indicator. Then, the normalized value takes the
country rank for the indicator divide it by the
number of countries with a higher rank.
Monitoring Digital Divide, and the Digital Access Index.
A. leT Development Index (IDI)
The ICT Development Index (101) is a composite
indicator created by ITU in 2008 in order to measure the
level of ICT development and the digital divide. The last
report was published in 2014 edition of measuring the
information society and covers 166 countries [10].
The index is based on 11 important indicators included
into 3 sub-indices (ICT access, ICT use and ICT skills).
The data used was selected on the basis of three criteria:
for each
• Data relevance and its coherence with the goal of
IOI.
• Data availability and quality.
• The results of various statistical analyses [10].

F. Weighting scheme B. Networked Readiness Index (NRI)

The index is strongly influenced by the weight assigned The Networked Readiness Index (NRI) is a framework
to each indicator [6]. Several approaches are developed to developed by the World Economic Forum and INSEAD in
determine the ideal weight that can be used to evaluate the 2002. It is an annual report that measures the development
composite indicator. Below we describe the two of technology and innovation through the world. The last
approaches for weighting data used by the composite version of NRI was published in 2015 on the Global
studied in this paper. Information Technology report and comprises 143
• Equal weight: the indicators are supposed to have economies [11].
the same influence and can take an equal weight. The composite indicator uses 53 individual indicators
• Objective weight: the weight assigned to each divided in 10 pillars distributed in four main categories
indicator is based on the observed values using the (Environment, Readiness, Usage and Impact). The data
statistical technique of analysis such as PCA used are taken from two sources: the first half of data is
(Principal Component Analysis). from the international organizations (ITU, UNESCO,
World Bank, etc.) and the second half of data is a survey
G. Aggregation method
from World Economic Forum's Executive Opinion Survey
In order to provide a global picture of the e-readiness [11].
level for a country, it is necessary to aggregate all selected
indicators using some mathematical methods. The C. Technology Achievement Index (TAI)
majority of e-readiness composite indicators use the same The Technology Achievement Index (TAl) was
formula for computing the overall index. The weighted introduced by Desai et al. in 2002. The main objective of

94 2015 15th International Conference on Intelligent Systems DeSign and Applications (ISDA)
TAl is to measure the capacity of the technology creation The composite indicator uses eleven indicators
and usage for a country. The TAl ranks 35 countries in the presented by three categories (Opportunity, Infrastructure
last Special Report 2015 - Technology: Reshaping the and Utilisation) [16].
global economy [12].
H. Monitoring the Digital Divide and beyond
The Composite indexes utilize 8 indicators distributed
on four dimensions (creation of technology, diffusion of Monitoring the digital Divide and beyond is an initiative
old technology, diffusion of new technology and human designed by the Obricom Research Committee. The first
skills) [12]. concept was created in 2000 under the Digital Divide
Index and then was titled 'Monitoring the Digital Divide'.
D. E-Trade Readiness Index (eTRI) The index measures the correlation between ICT and
The e-Trade Readiness Index (eTRI) is developed by competitiveness and the role of knowledge in development
the Economist Intelligent Unit (EIU). The eTRI measures [17].
the degree of internet usage by cross-border trade through The composite index uses 21 indicators presented by
policy, regulation and infrastructure [13]. two sub-indices: Info-Intensity (Networks and Skills) and
The index ranks 19 countries based on 44 indicators Info-use (ICT uptake and intensity). It was built with 6
through 5 categories (investment climate, Internet years of observation for 192 countries [17].
environment, international trading environment, regulatory
/. Digital Access Index
and legal framework, and the environment for e-payments)
[13]. In order to compare countries and measure their ICT
progress, the ITU has created the DAI to measure the
E. UNCTAD B2C E-commerce Index accessibility of information and communications
The UNCTAD B2C E-commerce Index was developed technology by an individual to a country. The index ranks
by UNCTAD to assess the readiness of countries for e­ countries from 0 (low accessibility) to I (complete
commerce. The index is based on 4 main indicators accessibility) [18].
(Internet use, secure servers, credit card penetration and The index focused on 8 indicators presented in five
postal delivery services) and covers 130 economies [14]. categories (infrastructure, affordability, knowledge, quality
and usage) and covers 178 countries [18].
F. Knowledge Economy Index (KEf)
The Knowledge Economy Index is a tool developed by IV. COMPARISON
the World Bank that gauges the country's global readiness
to compete in the knowledge economy (KE). The index is Many studies of e-readiness comparison like [7], [19],
based on 12 indicators that represent four sub-indexes [20] focus on some general aspects such as e-readiness
(Economic Incentive and Institutional Regime (EIR), definition, focus areas, classification of their models as e­
Innovation and Technological Adoption, Education and society or e-economy. Others researches [4],[21] provides
Training, and Information and Communications a comparison of a various composite indicators with
Technologies (ICT) Infrastructure) [15]. different scope of application and do not include all e­

G. Digital Opportunity Index (DOl) readiness composite indexes.

Each e-readiness composite indicators of the 9 indexes
The Digital Opportunity Index (DOl) was created in
studied in this paper has its methods that contribute in the
2000 by lTD and it measures the opportunity to benefit
final index formulation. The details of various steps such
from ICTs that is "universal, ubiquitous, equitable and
as: estimating missing data, normalization, weighting and
affordable" by the citizens of a country. The last version
aggregation are summarized in Table I.
of 001 was published in 2007 and includes 181 economies
for a period of three years (2004-2006) [16].

TABLE!. SUMMARY TABLE OF E-READINESS COMPOSITE INDICATORS

Composite Number Number of Data missing N ormalization/Scaling Weighting Calculation of

Indicator of indicators estimation the index
countries
ICT Readiness 166 II Hot-deck imputation Distance to a reference sub-indices Arithmetic
Index method using the data measure and then are weighted mean
from similar scaled from 1 to 10 by the
countries. Principal
Component
analysis (PCA)
Networked 143 53 The missing indicator Maximum-minimum Equal Arithmetic
Readiness takes the maximum transformation mean
Index value that can be Data from the survey
reached. scaled from 1 to 7
Technology 35 8 Data available in the Maximum-minimum Equal Arithmetic
Achievement nearest year or in the transformation mean

2015 15th International Conference on Intelligent Systems Design and Applications (ISDA) 95
Index comparable country.
e-Trade 19 44 No missing data Standard deviation Equal Arithmetic
Readiness from the mean for mean
Index qualitative data and
scale of! to 100 for
quantitative and state
data.
UNCTADB2C 130 4 Data available in the Scale of 1 to 100 Equal Arithmetic
E-commerce nearest year mean
Index
Knowledge 146 12 Data available in the Countries are ranked Equal Average of the
Economy Index nearest year using their actual weighted sub-
scores on each variable. indexes
Then scaled from 1 to
10 by dividing it by the
number of countries
with a higher rank.
Digital 181 11 Earlier data was used Data scaled on 0 to 1 Equal Simple average
Opportunity or some unavailable by indexing relative to of the three
Index data was estimated a reference value (l00 normalized
based on the per percent is the goalpost sub-indexes.
Capita income of used for the most
regional peers. indicators)
Monitoring 19 2 21 Average of two years Distance to a reference Equal Geometric
Digital Divide or the applicable measure (reference mean of the
rates of growth country and reference two
year) unweighted
sub-indices
(info-state and
info use)
Digital Access 178 8 Data from nearest Data scaled from 0 to 1 Equal Average of
Index years when by dividing it by the normalized
internationally Goalpost categories
comparable data is not
available.

After studying nine composite indicators of e-readiness,
we found the following major gaps. Firstly, the problem of
missing data persists and influences the selection of
indicators. In addition, for most composites, the approach
used to estimate the missing data is the nearest available
data, except ICT Readiness Index that uses Hot-deck
imputation as an advanced method.
Secondly, there is a various technic of standardisation
used by the e-readiness composite indicators. As each
method has its advantages and disadvantages, composites
have not justified their choices knowing that each method
corresponds to the nature and distribution of data to
normalize [6].
Thirdly, as to weighting, all e-readiness composites
consider that data have the same weight and there is no
weighting system used, except ICT Readiness Index which
uses PCA as a weighting scheme.
Fourthly, as to aggregating, the arithmetic mean is the
most method used to calculate the final index, except
Monitoring Digital Divide which uses geometric mean as
aggregation method.
v. CONCLUSION
This paper covers an overview of different composite
indicators used by several e-readiness assessment models.
The index compiles data selected, normalized, weighted to
compute the overall index for measuring the quality of ICT
and the degree to which a country, region or society can
take advantage from ICT for their economic development.
Our principal contribution is the critical study of the
most important steps that contribute in the construction of
the composite indicators used by e-readiness tools such as:
missing data estimation, normalization, weighting and
methodology of aggregation.
As conclusion, we find that there are three major
problems that impact the e-readiness composites. The first
problem concerns the treatment of missing data. In fact,
the estimation methods used are conventional and missing
data are replaced with data of the nearest year or in similar
countries. The second problem concerning the choice of
normalization methods that is not based on a previous
study since it related to the nature of the data treated.
Likewise, the reference measure or goalpost used to
minimise outlier values for some indicators was chosen
subjectively without any scientific basis. The third
problem affects the weighting schemes. Indeed, the
majority of e-readiness composites ignore the weighting of
indicators, while giving a weight to an indicator will
strongly impacts the e-readiness assessment result [6].
Only ICT Readiness Index uses the Principal Component
analysis (PCA) for weighting sub-indexes.
Composite indicators should choose the suitable
methods to have a good formulation of selected indicators

96 2015 15th International Conference on Intelligent Systems DeSign and Applications (ISDA)
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