World Dialogue on Regulation

Superfluous indicators

Composite indices describe a phenomenon better than their individual components. The NRI represents the multifaceted nature of network readiness better than its individual components like infrastructure environment or business usage can. However, if selected individual components are not relevant to describing network readiness, it would colour the lead index and provide a misleading picture of network readiness. This problem is manifested in the NRI where there are a number of indicators that are only tangentially related to ICTs or network readiness.

For example, state of cluster development, number of utility patents, subsidies for R&D, administrative burden, efficiency of tax system, overall infrastructure quality, extent of staff training are factors common to a number of industries and have little connection with ICT environment, readiness or usage per se. However, they have the same weight as other more directly related ICT indicators. The NRI would be a more accurate indicator if non-relevant indicators were weighted differently to reflect their relevance to ICTs or they were altogether dropped from the composite index. More errors are added to the Index by adding extraneous indicators rather than dropping non-relevant ones.

Missing Indicators

Although the NRI is composed of 48 different indicators, a number of others have been left out of the Index. These missing indicators are more direct measures of what component indices are trying to capture than the superfluous indicators mentioned in the previous section. The next section explores in greater detail some key indicators that the NRI has left out.