The World Digital Competitiveness Ranking 2024 from the International Institute for Management Development (IMD) has just been published, with Luxembourg in 29th position overall (dropping from 21st position in 2023).
This competitiveness ranking places the 67 countries covered by the edition in relation to each other in their capacity to transform their governance and economic models via digital technologies.
The methodology
The World Digital Competitiveness Ranking includes 59 indicators, 38 of which are based on statistical data and 21 are from a survey conducted among business leaders.
The performance of countries is evaluated on the basis of three pillars: "Knowledge", which includes indicators focused on the capacity of human capital to understand and implement new technologies; "Technology", focused on the regulatory, financial and technological context enabling the development of digital technologies; and "Future Readiness", or the degree of adoption of technologies by governments, businesses and society in general. Each of these pillars includes three sub-factors. The overall ranking is based on the aggregation of the results of these nine sub-factors.
In order to best reflect the developments in digital technologies and the contexts in which they are implemented, the 2024 edition includes five new indicators: the "Computer science education index" indicator, a count of the number of articles published on artificial intelligence per capita, the number of laws relating to artificial intelligence, the number of secure internet servers, the view of business leaders on the ability of society to adapt to change in the face of new challenges. In addition, the indicator relating to data protection is integrated into the survey conducted among business leaders.
Earthquake in the general ranking: the United States at the foot of the podium, the Netherlands plummets
Undisputed leaders of the IMD ranking since 2018, apart from their 2nd position in 2022, the United States has fallen back to 4th position, behind Singapore, Switzerland and Denmark in this 2024 ranking. Switzerland, in 2nd, makes a remarkable entry into the leading pack, followed by Denmark. In 8th place, the Netherlands records the biggest decline in the top 10, dropping six places compared to the 2023 ranking. Luxembourg, in 29th, moves further away from its 2019 performance (21st) and is clearly struggling to keep up with the pace of other countries in terms of digital transformations. In neighbouring countries, changes compared to last year are very heterogeneous. While France, in 20th position, has gained seven places, Belgium has fallen six places (21st). Germany, for its part, remains in 23rd position. An increasingly assertive indicator of competitiveness, it is not surprising that the top three of this World Digital Competitiveness Ranking is identical to that of the World Competitiveness Yearbook.
The ability to seize digital transformation, Luxembourg's weak link
Luxembourg is progressing on the "Knowledge" pillar, a first since the 2020 ranking. At 24th, it has gained nine places compared to 2023. It is now ahead of Estonia (25th), Portugal (29th) and is just behind Lithuania (23rd). Despite this progress, the country remains behind its three neighbouring countries, France, Germany and Belgium, respectively 22nd, 20th and 18th on this pillar.
On the "talent" sub-factor, participants in IMD's Executive Opinion Survey have the country progressing on the pro-business environment of cities (from 20th to 15th place). The international experience of the workforce remains an important asset of the country (9th). On the other hand, its ranking on the level of digital and technological skills of the workforce should raise alarm. In 34th position in 2023, Luxembourg is 37th in 2024. It cannot be repeated enough: in a context of digital revolution and difficulties in finding the right profiles to carry it out, training - both initial and continuing - is a key strategic issue. In the "Training & Education" sub-factor, Luxembourg's marked fall - from 16th to 30th place - on the "employee training" indicator calls for rapid and large-scale actions. On the other hand, the Grand Duchy's ranking has improved slightly on the proportion of female graduates (16th, gain of one place) and the low student/teacher ratio in higher education remains a strong point for the country (1st). The country has improved significantly on the proportion of graduates in scientific and technical subjects in the space of a year, moving from 50th to 36th place. While the prospects for improvement remain significant to meet the skills needs of the economy, this leap forward is encouraging. Luxembourg is ranked 19th on the new "Computer science education index" indicator, which evaluates universities and graduates on the world stage. Finally, Luxembourg's results for the "Scientific concentration" sub-factor are mixed. There has been progress in the "R&D productivity by publication" aspect, i.e. the ratio between the number of scientific articles and R&D expenditure, expressed as a percentage of GDP (+1 place) and the share of women researchers (+4 places). Luxembourg is ranked 2nd, behind Cyprus, on the new "AI articles" indicator. On the other hand, the ranking has deteriorated on research and development expenditure (41st, compared to 39th in 2023) and the granting of high-tech patents (27th, -2 places).
Among the three pillars of the IMD ranking, technology, the 2nd pillar, remains a weak link in Luxembourg. In the sub-factor “Regulatory framework” (60th place), all results are down, except for a gain of six places on the indicator “Starting a business”. The results from the survey of business leaders are particularly deteriorating. On the ability of immigration laws to support the recruitment of foreign workers, the survey participants downgraded the country to 64th position (down 50 places). The same dynamic applies to the ability of the legal framework to support the development of technological applications (57th, -39 places) and to encourage innovation in scientific research (52nd, -40 places). The correct application of intellectual property rights is also, in the eyes of entrepreneurs, a major problem (53rd, -39 places). In addition, Luxembourg is 39th on the new indicator “AI policies passed into law”. Regarding the sub-factor “Capital”, Luxembourg’s ranking is slightly better than that on the regulatory framework (58th). However, in both cases, Luxembourg's competitiveness is noticeably declining from year to year. This is reflected in particular by significant drops in ranking that should be a warning sign. The country has lost 34 places in both the "IT & media stock market capitalisation" section (42nd) and the availability of financing for technological development (56th). The business leaders surveyed are sounding the alarm on the "Banking and financial services" and "Venture capital" indicators, for which they place Luxembourg in 65th position (out of the 67 economies participating in the IMD ranking). A positive development in this rather bleak context, the country has risen to 21st place (+40 places) in the share of telecommunications investments in GDP. The country's performance on the "technological framework" sub-factor is more mixed. On the one hand, the country is progressing in the use of 4G and 5G networks (moving from 55th to 36th position) and broadband penetration (moving from 31st to 20th place). In addition, the weight of high-tech exports in its GDP has increased (53rd in 2023, 26th in 2024). On the other hand, the country has dropped out of the top 20 countries with a high average bandwidth speed, moving from 17th to 52nd place in the space of a year. Entrepreneurs, for their part, consider that communication technologies do not meet their needs (37th, loss of 15 places). The country is 27th on the new indicator "Secure internet servers".
At 54th position, Luxembourg records its worst result on the pillar "Future readiness", while it was a strength of the country in 2020 (29th). In 2024, this fall is observed in particular on business agility and IT integration. On the first sub-factor, agility, here again, entrepreneurs significantly downgrade Luxembourg both on the ability of companies to react quickly to risks and opportunities (down 23 places) and on the agility of companies (-40 places) or the use by companies of "big data & analytics" to make decisions (-27 positions). In addition, the country falls to 47th place (-27 places) regarding the fear of entrepreneurial failure. The observation is not more brilliant regarding the sub-factor "IT integration". Once again, the results of the survey of entrepreneurs indicate difficulties in terms of support for public-private partnerships for technological development (61st) and a lack of consideration of cybersecurity by companies (56th). In addition, the statistics highlight the very rapid acceleration of installations of unlicensed software (decline from 4th to 35th place between 2023 and 2024) and the Government's difficulties in mitigating the damage caused by cyber threats (41st, -4 places compared to 2023).
