The U.S. and Japan have the top national environments for their IT industries to grow and flourish, including intellectual-property protections and IT infrastructure, according to a study released by the Business Software Alliance (BSA) Wednesday.

The study, conducted by The Economist Intelligence Unit (EIU), ranked 64 nations on several factors, such as PC ownership, broadband adoption, government regulation, enrollment in higher education, IT employment, research and development spending and cybercrime laws.

Using 25 weighted factors, the EIU ranked the U.S. first in IT competitiveness and Japan second. Also in the top five: South Korea, the U.K. and Australia.

India ranked 46th out of 64 countries included in the study, while China ranked 49th. Iran, Nigeria and Azerbaijan were the bottom three on the list.

While several members of the U.S. Congress have voiced worries about U.S. competitiveness in recent months, the nation stacks up well in all six umbrella categories, said Denis McCauley, EIU's director of global technology research. The U.S. has a robust IT infrastructure and skilled workers, he said.

"Still, the U.S. is a magnet for talent overseas," he added.

But the U.S. faces several challenges, he added. The U.S. government lacks a national policy to increase broadband adoption, and attempts to allow increased immigration have stalled, McCauley said.

"There's no getting around the U.S. has great strengths," he said. "By the same token, I'd say there are some risks for the U.S., and one of the risks is being complacent. There's valid worry about slippage."

India and China rank relatively low in the study because of a lack of intellectual-property protections and because in per capita rankings, the two countries are low in areas such as PC ownership and research investment, McCauley said. IT infrastructure in the two countries is limited to urban areas, he added.

"They need to do a much better job of diffusing [IT] to more of the population," he said.

China and India's low labor costs gained the countries advantages, but in the future, they will face wage competition from nations such as Vietnam, Brazil and Russia, McCauley added. Few countries have been able to overcome major legal and infrastructure weaknesses to jump start their IT industries, and China and India need to improve their other factors as their cost advantages erode, he said.

Countries most likely to move up in the rankings are "skills-rich" nations that can develop niche IT industries, the study said. In addition to Vietnam, Brazil and Russia, other likely movers include Malaysia, Estonia, Lithuania and Chile, the study said. Estonia ranked 25th, while Vietnam ranked 61st.

BSA commissioned the study to set a benchmark that governments could use to improve their IT competitiveness, said Robert Holleyman, the BSA's president and CEO.

"We find governments around the world that want to know what they can do to enhance their competitiveness," Holleyman said. "This will be a great survey to provide a government official not only in the U.S., but internationally."

IDG News Service

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