Other countries’ IT industries catching up to U.S.

The U.S. has the world’s best environment for a competitive IT industry, but other countries, including Taiwan, Sweden, and Denmark are quickly catching up, according to a new study sponsored by the U.S.-based Business Software Alliance (BSA).

The U.S. retains its No. 1 ranking from a year ago, and it continues to rank in the top five in all six categories that the Economist Intelligence Unit used to evaluate countries’ IT environments. But the U.S. broadband infrastructure, including broadband penetration, ranks behind many countries in Western Europe and East Asia, and the U.S. is facing a shortage of skilled tech workers, the study said.

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“It’s no exaggeration to say that information and communications technologies are at the very heart of our economy and our society,” Robert Holleyman, BSA’s president and CEO, said in a video release. “The United States has a great deal going for it, but its score has moved downward, while many countries are becoming more competitive.”

U.S. lawmakers need to focus on the country’s IT needs for it to remain the IT innovation leader, Holleyman said. The U.S. score, based on a 100-point scale, fell slightly between 2007 and 2008, from 77.4 to 74.6.

“A deterioration in U.S. performance is possible should tougher immigration controls have a negative impact on the pool of IT talent and the skills base,” the study said. “And as the U.S. and west European economies endure a downturn, the impacts of a heavier regulatory touch and slower growth of technology spending cannot be discounted.”

Several Democrats in the U.S. Congress have resisted tech industry calls to increase skilled immigration limits, saying the U.S. should focus more on training U.S. workers who need better jobs.

Following the U.S. in IT environments is Taiwan, the U.K., Sweden, Denmark and Canada. Those five countries all moved up in the rankings from 2007, with Taiwan jumping from number six to number two.

Japan, ranked second in last year’s study, fell to number 12, and South Korea fell from third to eighth. Japan’s research and development environment, as well as its patent system, caused it to lose ground, the study said.

The study ranks nations in six weighted categories: overall business environment, IT infrastructure, human capital, legal environment, research and development environment and support for IT industry development.

The study ranked 66 nations. India ranked 48th, with its spotty IT infrastructure and a lack of a strong research and development environment holding it back. Russia ranked 49th, and China ranked 50th, largely due to the same problems.

The study ranked Iran last among the 66 nations, Algeria was next to last, and Nigeria had the third weakest IT environment, according to the study.