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Competitiveness
How do national strategies interact with industry dynamics? Four different paths to digital competitiveness
The different ways that economies tackle digital competitiveness can make them at once resilient and vulnerable in today’s increasingly fragmented digital economy, says Fabian Grimm.
People assume top-ranked economies do everything right, and those at the bottom do everything wrong. The truth is simply that some make better use of what they have, while others struggle – for many different reasons.
When it comes to digital competitiveness, the different paths taken are becoming easier to see – as analysis in the 2025 IMD World Digital Competitiveness Ranking (WDCR) shows. There is increasing polarization not only among countries at similar development levels but also between industries operating in the same economy.
This divergence is growing because of geopolitical fragmentation. These external pressures are interacting with sectoral patterns, potentially accelerating divergence between digitally advanced and lagging industries.
There are many different paths to competitiveness, which is precisely why we compute 61 pieces of criteria in the WDCR and 341 in our flagship World Competitiveness Ranking. What Singapore, Germany, the Nordic countries, the US, and China have in common is that they all made the Top 20 in the former. But the real question is: how did they get there in such different ways?
Singapore: The rewards and risks of digital specialization
Singapore exemplifies excellence in digital governance (achieved through specialization), and with that comes strategic benefits – but also potential risks.
The island nation’s financial sector stands out as a global benchmark for digital integration, supported by strong institutional coordination, advanced regulatory frameworks, and impactful public–private partnerships. Singaporean executives in the financial sector report far higher satisfaction than the global average across multiple enablers, including communications technology, digital infrastructure, venture capital availability, and cyber security.
These outcomes reflect decades of proactive policy, notably through initiatives such as Singapore’s FinTech Regulatory Sandbox, the Smart Financial Centre program, and other targeted digital infrastructure investments.
However, this concentration of excellence is not evenly spread across Singapore’s economy. Executives in manufacturing, construction, and agriculture report below-average perceptions of their digital environment, indicating that the benefits of digital policy have been unevenly distributed.
The country’s model demonstrates both the strengths and limits of specialization: by channeling resources into high-value sectors, Singapore has achieved world-leading competitiveness in finance and fintech, but at the cost of weaker diffusion of digital capability across traditional industries. This creates a form of structural dependency, one in which national competitiveness relies heavily on a narrow set of digitally advanced sectors, leaving the broader economy more exposed to technological or market disruptions.
Singapore’s approach enables exceptional performance in targeted sectors, which can lead to talent and capital attraction; however, the narrow depth of its focus creates vulnerability. If the financial sector faces disruption, if global fintech standards converge to eliminate competitive advantages, or if geopolitical tensions restrict cross-border financial services, the economy’s overall competitiveness could be exposed.
A narrow digital base, even when world-leading, creates dependencies that limit flexibility in responding to technological change or economic shocks.
“Contrastingly, economies such as Sweden, Denmark, and Norway illustrate the resilience benefits of pursuing a more balanced digital development strategy.”
Nordic model of a balanced digital strategy is ‘good enough’
Contrastingly, economies such as Sweden, Denmark, and Norway illustrate the resilience benefits of pursuing a more balanced digital development strategy.
While rarely claiming the global top score in any single sector or indicator, Nordic industries consistently achieve strong ratings across all 21 survey metrics. Executives across all industries consider their sectors’ digital readiness, aptitude, and skill levels to be above the global sample average.
For instance, public-private partnerships average at least 66% in these economies (versus 62% globally), company agility reaches at least 70% (versus 64% globally), management of cities scores 68+ (versus 64% globally), and satisfaction with national cyber security frameworks is at least 66% across all sectors (versus the global range of 56–65%). Flexibility and adaptability among Nordic companies consistently exceed 70%, compared to the global average of around 65%.
This even distribution indicates a deliberate strategy: robust digital infrastructure investment available to all sectors, inclusive skills development that doesn’t concentrate resources only in priority industries, strong social trust that enables data sharing and collaboration, and coordinated government-industry partnerships that function across the economy.
Critically, Nordic countries show minimal variance between industries. Even traditional sectors like agriculture and construction benefit from the same high-quality digital governance, infrastructure access, and skills development that support IT and communications and professional services.
This broad-based approach creates resilience; no single sector carries the burden of national digital competitiveness, and economic shocks to one industry don’t undermine overall digital capability. These economies are also less vulnerable to sector-specific disruptions and better positioned to maintain both economic strength and social cohesion as technological change accelerates.
The trade-off is that Nordic countries may not achieve the absolute peaks of excellence seen in specialized economies like Singapore’s finance sector.
The Fraunhofer Institutes, combining research with practical application, exemplify how institutional infrastructure enables technology transfer.
Shaping digital outcomes through industrial policy
In our data, Germany provides one of the clearest examples of how national industrial policy can shape company capabilities within a specific sector and reveals the importance of balancing operational excellence with innovation dynamism.
Manufacturing executives in Germany consistently report higher satisfaction rates than the global average for that industry in indicators that measure the digital proficiency of its companies, such as employee training (72% versus 66% globally), technology development (70% versus 66% globally), and digital skills (72% versus 68% globally). In addition, the country scores 70% in the development and application of technology metric.
The satisfaction of German manufacturing executives with regard to their digital competencies reflects decades of investment in vocational training through the dual education system, close collaboration between universities and industry, strong industry associations that coordinate skills development, and targeted government programs supporting manufacturing digitization.
The Fraunhofer Institutes, combining research with practical application, exemplify how institutional infrastructure enables technology transfer. German manufacturers have successfully integrated digital tools into operational practice.
However, German manufacturing shows notable weaknesses in other capability dimensions that reveal the limits of this model: venture capital access is deemed low, scoring just 44% (versus 51% globally), with knowledge transfer rating 52% (versus 57% globally), and big data analytics at roughly 50% (versus 56% globally).
Germany demonstrates a dual profile where operational excellence in adopting and applying technologies exists, but weaker entrepreneurial dynamism in creating and scaling disruptive innovations hinders the ability of its manufacturing sector to be truly world-leading.
Even for a global digital leader, national capabilities don’t automatically diffuse across sectors or geographies.
US: sectoral inequalities despite global leadership
The US demonstrates pronounced capability variation between industries and regions, revealing how digital leadership at the national level can coexist with internal disparities. Executives in IT and communications report venture capital access around 64% (versus 51% globally), knowledge transfer at 66% (versus 58%), and intellectual property protection at 76% (versus 68%). These reflect the concentration of innovation ecosystems in hubs such as Silicon Valley, Seattle, Boston, and Austin, where investors, entrepreneurs, and research institutions create self-reinforcing advantages.
Yet US manufacturing tells a different story. Venture capital access drops to 42% (below the 51% global average), big data analytics to 50% (versus 56% globally), and knowledge transfer to 54% (versus 57% globally). This divergence mirrors the geographic split between high-tech coastal regions and traditional industrial centers in the Midwest and the South.
The implications are significant. Even for a global digital leader, national capabilities don’t automatically diffuse across sectors or geographies. Once concentrated, digital ecosystems reinforce themselves through capital, talent, and supplier networks, while lagging regions struggle to catch up. This creates a structural digital divide, economically and politically, where national competitiveness masks uneven opportunities and resilience to shocks.
The result is a system that is excellent at digital implementation but is still developing the institutional and financial mechanisms required for frontier innovation.
China: defying structural constraints
China, on the other hand, presents a different model in which scale drives adoption even amid institutional constraints. Manufacturing executives report high satisfaction with communications technology (78%) and company agility around 66%, reflecting rapid adoption of digital tools across vast domestic markets. However, venture capital access (~48%), intellectual property protection (~56%), and knowledge transfer (~52%) all remain below global averages.
The result is a system that is excellent at digital implementation but is still developing the institutional and financial mechanisms required for frontier innovation.
China’s experience shows that market size can accelerate diffusion but not necessarily sustain private-sector leadership in technological breakthroughs. However, in recent years, it has also demonstrated that changes in institutional focus can help economies leapfrog digital leaders in certain sectors or services. China’s dominance in AI-related technologies and input production demonstrates this.
Ultimately, digital competitiveness in a fragmented world depends on bridging divides.
Who’s doing what well, and where?
Countries demonstrate different viable pathways to digital competitiveness, each with distinct trade-offs. For business leaders, understanding which industries and countries are successfully addressing specific digital challenges can inform partnership strategies, investment decisions, and talent development priorities.
Ultimately, digital competitiveness in a fragmented world depends on bridging divides. Success lies not in achieving headline scores in isolated sectors but in ensuring digital transformation spreads broadly, inclusively, and sustainably across the economic landscape. Economies that combine robust governance, adaptable companies, and continuous human capital development across all industries – not just priority sectors – will prove more resilient than those dependent on narrow excellence. As geopolitical tensions continue to reshape the institutional environment for digital strategy, this broad-based resilience becomes critical for sustained digital competitiveness.
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