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Summary:

Sweden and Finland have long been among the world’s most wired nations — but yet Europe’s substantial lead in networking has never quite translated over into a world-leading startup economy. Perhaps now, however, the circumstances are right to see it happen.

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It’s been 10 years since INSEAD and the World Economic Forum started publishing their annual list of the most networked countries in the world, and boy, things have changed. Back then, most of us had a drastically different conception of what “networked” meant. There was barely any Google, and certainly no Facebook. Apple hadn’t yet released the iPod, let alone any of its iSuccessors, and the mobile phone was still an exception rather than a rule.

Still, not everything changes drastically. This year’s quest to find the most wired nations on earth actually paints a fairly familiar picture.

Sweden tops the rankings, as it did last year. And Europe in general punches hard, counting for 11 places in the top 20, while Asia-Pacific fills another seven spots (led by Singapore, Taiwan and South Korea) while the U.S. (fifth place) and Canada (eighth) make up the rest. It will certainly have government officials in some countries crowing about their successes. But do the numbers mean anything?

Well, of course, this ranking isn’t a perfect way of representing innovation; there are plenty of problems measuring things this way. To begin with, the scores themselves are based on “network readiness,” a rather spongy term that itself incorporates measurements for the market environment, regulatory framework and local infrastructure. That’s about as good as you could probably hope for, but the way such numbers are calculated isn’t flawless. They’re heavily informed by our understanding of what has worked in the past, and not necessarily applicable in the same way to each nation.

For example, China’s connectivity might only rank 36th, but with 1.3 billion residents, it’s likely to have a far greater impact on a global scale than, say, Switzerland with its population of 7.7 million.

Similarly, Europe benefits in other ways by being historically and geographically unbundled. For example, while the rankings are particularly strong across Scandinavia — Sweden, Finland, Denmark and Norway all come in the top 10 — other countries across the continent fare less well. Albania (87) and Serbia (93) are among those mooching around low in the pecking order.

This means that some American states, if listed on their own, might rank very high compared to some European nations. On the other hand, others would likely appear fairly low on the list — Akamai ranks Alaska fairly low in terms of Internet speeds, for example.

Still, the list is informative. It indicates a few countries to watch — those outperforming their economic peers include Malaysia, Tunisia, Chile and China and Tunisia (perhaps giving some credence to the idea of a Facebook revolution). And it shows which ones are moving most rapidly up the list, including Uruguay, Kenya and Mongolia.

But it’s also worthwhile because it is solidifying a trend that we’re starting to see: Highly connected countries can build good startup economies.

What do I mean? Well, in simple terms, I suspect Scandinavia is going to be one of the places a lot of innovation springs from over the next few years. This isn’t necessarily a new idea, since these countries have been ranking highly in all sorts of ways for a while — but I suspect it is going to become more true as a number of other factors come into play.

Connectivity is a surprisingly big part of success in the technology industry, but it’s far from the only factor. There are other important things, too: investment, entrepreneurship, corporate support, training and so on. The same combination of forces is developing in Scandinavian countries, which means the area is poised to have a much greater concentration of startups over the next few years.

The number of entrepreneurs is only going to grow as money is invested back into the industry by successful startup founders (take the guys behind Skype and Rovio as a couple of examples). Second- or third-time entrepreneurs are now starting to emerge (Spotify Co-founder Daniel Ek, for example, cut his teeth with Stardoll, which now has 100 million members). Another shift is seen in the sweeping cuts at Nokia, which should inject a large number of developers into the wild. And now that experience and investment in networks is starting to combine with a sense of free agency caused by said job cuts, which should encourage more people to take a chance with a startup.

So will this be the time when Scandinavian startups — and new companies across Europe’s most prominent nations — come good on all that investment in infrastructure?

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  1. I only..ultimately, its access to venture capital which truly is….

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