Luxembourg has fallen further in the World Digital Competitiveness Ranking 2024 published by the International Institute for Management Development (IMD). The country has fallen three places--to 29th place--since last year and is a little further away from its 21st position in 2019. The World Digital Competitiveness Ranking evaluates 67 countries on the basis of their ability to transform their governance and economic models using digital technologies. The institute uses 59 indicators, 38 of which are based on statistical data and 21 on a survey of business leaders.

The rating of these countries is based on three main pillars: “knowledge,” which measures the capacity of human capital to understand and implement new technologies; “technology,” which examines the regulatory, financial and technological environment enabling the development of digital technologies; and “future readiness,” which assesses the degree of adoption of digital technologies within governments, businesses and society in general. Each pillar is broken down into three sub-factors, and the overall ranking is the result of aggregating performance on these nine criteria. To better reflect the evolution of digital technologies, the 2024 edition has also included five new ones.

Singapore is the leader in this 2024 edition, ahead of Switzerland and Denmark. The United States has been the undisputed leader of the IMD rankings since 2018--apart from coming second in 2022--and has slipped back to 4th place. The Netherlands (8th place) suffers the biggest drop in the top 10, falling six places compared to the 2023 ranking. In neighbouring countries, the changes compared with last year are very mixed. While France, in 20th position, has risen seven places, Belgium has fallen six places (to 21st). Germany, meanwhile, remains in 23rd position.

Luxembourg faces the challenge of qualified digital profiles

Luxembourg has made progress in the “knowledge” pillar, moving up nine places to 24th place. This improvement, the first since 2020, is due in particular to the improvement in the pro-business environment in the cities and the high proportion of female graduates. The international experience of the workforce remains a major strength of the country, ranked 9th on this indicator. Another positive point is that the country has significantly improved its proportion of graduates in scientific and technical subjects in the space of a year, moving up from 50th to 36th place.

However, the level of digital and technological skills in the workforce remains a matter of concern. of concern. Luxembourg ranks only 37th on this indicator, despite the fact that “in a context of digital revolution and difficulties in finding suitable profiles, training--both initial and continuing--is a key strategic issue,” says the Chamber of Commerce.

Regulation: a brake on digital transformation

This lag in digital transformation is confirmed by the second pillar: “technology,” which remains a weak link in the country, not least because of the regulatory framework perceived as a brake by the majority of companies. For example, the survey participants downgraded the country to 64th position (a drop of 50 places) when it came to the ability of immigration laws to support the recruitment of foreign workers. The same was true for support for the development of technological applications (57th, down 39 places) and for encouraging innovation in scientific research (52nd, down 40 places). The correct application of intellectual property rights is also a major problem in the eyes of entrepreneurs (53rd, down 39 places).

Luxembourg’s ranking for ‘capital’ is slightly better than its ranking for the regulatory framework. However, the country fell 34 places both in the ‘IT & media stock market capitalisation’ category (42nd) and in the availability of finance for technological development (56th). Worse still, Luxembourg’s ranking has dropped in the ‘banking and financial services’ and ‘venture capital’ categories, falling to 65th place out of the 67 participating economies.

The country’s performance on the ‘technological framework’ sub-factor is also mixed. On the one hand, the country is making progress in the use of 4G and 5G networks (moving up from 55th to 36th place) and broadband penetration (moving up from 31st to 20th place). On the other hand, it has slipped out of the top 20 for average bandwidth speed, and entrepreneurs feel that communications technologies are not up to their needs.

Lags behind in resilience and anticipation for the future

In 54th position, Luxembourg recorded its worst result in the “future readiness” pillar. Business leaders clearly downgraded the country in terms of companies’ ability to react quickly to risks and opportunities (down 23 places) and in terms of companies’ use of ‘big data & analytics’ to make decisions (down 27 places).

The survey results also point to difficulties in terms of support for public-private partnerships for technological development (61st) and a lack of awareness of cybersecurity among businesses (56th). This puts the country in 47th place for fear of entrepreneurial failure.

This article was originally published in .