The Economist Intelligence Unit's annual study, sponsored by the Business Software Alliance (BSA), reveals that countries in Asia, Latin America and Europe are taking deliberate steps to improve their technology environments, although the U.S. remains the leader in providing the most competitive conditions for the information technology (IT) industry.

The United States still ranks first in the world in the annual IT Industry Competitiveness Index, which was conducted by the Economist Intelligence Unit, the business information arm of The Economist Group. The United States scored a 78.9 out a possible 100 in the index. However, the U.S. lost ground to competitors in a number of areas, while Finland jumped from 13 in the 2008 rankings to number two in 2009 and surpassed the United States in the quality of its business environment.

The study, now in its third year, assesses and compares the IT industry environments of 66 economies to determine the extent to which they enable IT sector competitiveness. The ten highest-ranked countries in the 2009 study are the U.S., Finland, Sweden, Canada, Netherlands, United Kingdom, Australia, Denmark, Singapore and Norway.

Two countries in the top 20 on the 2009 index showed significant advances: Finland and the Netherlands. Finland, ranked 13th in 2008, moved into second place based on its strong performance in the research and development category, particularly patents. The Netherlands, ranked 10th in 2008, moved to fifth place based on its strong infrastructure, primarily resulting from pervasive broadband deployment.

Robert Holleyman, President and CEO of the BSA, notes that even amidst the current economic turmoil the strength of the IT industry in the U.S. and abroad remains strong. "Even in today's uncertain economic climate, the long term prospects of the IT industry remain competitive," Holleyman said. "The fact that the U.S. tech sector is helping to lead the way to recovery is a testament to the importance of technology to both industry and consumers and a telling indication of what will drive our economic growth in the long term, making it even more important for our policymakers to create the right environment for competition and innovation.

"The report also identified some of the key challenges that the U.S. faces in its efforts to retain its leadership position," continued Holleyman. "In particular, we need to improve our IT infrastructure by invigorating broadband deployment, develop technology-neutral IT policies, avoid the siren call of protectionist market practices, and expand access to highly qualified, technically proficient employees to invent, design and produce complex and innovative products."

Six Key Competitiveness Enablers

According to the Economist Intelligence Unit, six factors combine to create a sound environment for the IT sector, including an ample supply of high-skilled workers; an innovation-friendly culture that supports R&D; world-class technology infrastructure; a robust legal environment that protects intellectual property (IP) such as patents and copyrights; an open, competitive business environment; and government leadership that strikes the right balance between promoting technology and allowing market forces to work.