The U.S. touts its digital dominance—but it lags behind many other countries

The United States has a well-developed digital economy, encompassing about 18% of its total economy, according to several sources and research from the International Data Center Authority (IDCA). This is above the world average of 15%. But the U.S. can always do better.

The IDCA defines a digital economy as representing all economic activities that are reliant on or significantly enhanced by the use of digital technologies, including digital infrastructure, AI, and digital services. Having worked with hundreds of public data sources and its own surveys to create its Digital Readiness of Nations Index, the IDCA’s Global Digital Economy Report (2025) is a unique deep dive into the current development of the world’s digital economies.

Digging Into Digital Economy Data

This Index places the digital economies of the nations of the world into four categories: Phase III (Advanced), Phase II (Significantly Developed), Phase I (Early-Stage), and a Pre-Phase. It examines all the data sets across four broad categories—economy, environment, social, and governance—to rank the nations on a scale of 0 to 100. The Index considers relative progress, that is, how well each nation has developed its digital economy with respect to its economic resources and social development.

Doing this shows only six nations that are currently in an advanced, Phase III stage of development. Surprisingly enough, despite its economic size and potential, the United States is not one of them. In fact, none of the world’s G7 or even G20 nations have reached this advanced status, either. Today, Phase III has been accomplished only by the small nations of Scandinavia, Finland, and Switzerland. An aggressive commitment to the use of sustainable energy, relative income parity, and strong government institutions are all characteristics of this group.

The U.S. Is Not the Exemplar

So far the largest nations of the world, including the United States, have not been able to match these smaller countries. The U.S. and its G7 cohort are instead ensconced among a group of a few dozen nations within the Phase II group, all of which show significantly developed digital economies. Digging into the data finds that within this group, the U.S. lags Canada, France, Germany, Japan, South Korea and the U.K. in its commitment to sustainable energy, income parity, and strong government institutions.

Expanding the focus to the G20 group of nations finds more diffuse progress. Because membership in the G20 club is simply based on the size of a nation’s overall economy, not its relative development or wealth, there are several still-developing nations in the G20, including Brazil, China, India, Indonesia, Mexico, and South Africa. There are also the troubled economies of Argentina and Russia in this group. All the nations cited here are in Phase I, still at an early stage of their digital economies. It must be noted, though, that Brazil, China, and to some degree India, continue to make considerable progress toward fully developed economies and a higher stage of digital economy development.

So despite leading the world in the size of its overall economy and digital economy, having reached its status on the back of compounded historic economic dominance, the U.S. is not truly an exemplar for the world. What can the nation do to improve its standing?

Create a national strategy and policies

American business and government leaders pride themselves on how the U.S. has long been the world’s capital of innovation and IT development without the “help” of national strategies or focused policies. But ad hoc development on the scale envisioned for the AI age will end up being more chaotic—and less effective—than necessary. The U.S. does not need to reach EU levels of regulation and enforcement, but its federal government can do more to meet today’s “Sputnik challenge,” or watch China and the EU run away with leadership of AI and digital economies.

Build more sustainable energy

Renewable energy delivers 20.3% of the electricity consumed within the United States, below the world average of 30%. Nuclear energy adds another 18.2% to the U.S. grid, which technically brings it close to the world average for sustainable energy. But this is not good enough. The U.S. remains the world’s second-largest producer of greenhouse gases and lacks a true commitment to sustainable energy progress.

Focus on workforce development

Even though the U.S. has the world’s largest IT-skilled workforce, it needs to upskill and retrain millions of people to prepare for the skills demanded by the continued growth of AI development and AI-driven data centers. The IDCA’s own report recently found a workforce deficit of over 100 million IT workers globally. There are already several hundred billion dollars’ worth of large, advanced AI data centers being planned in the U.S., but without a workforce adequate to the challenge, these new facilities will be underused and mismanaged. Tapping into a holistic and dynamic set of professional training programs is key here.

Ensure smart buildouts

More than 40% of the world’s data centers are located in the U.S., and projections show that this dominance will continue. But it will be a grave mistake to build data centers along the same old, general purpose, inefficient lines. The new data centers, whether a small 10-megawatt building or sprawling gigawatt-sized campus, must all be built to suit, with the most efficient energy management and computational efficiency available. Developers must not only be smart about building them but also focus on “smart” environments that support more robotic manufacturing, autonomous transportation, sensor-driven energy management, and AI-driven services to businesses and consumers.

A high bar

In summary, it would be unfair to say that the U.S. significantly lags the G7, or any other group of nations, in the development of its digital economy. The situation is not dire, and the U.S. has not already given away the game. In fact, we see an influx of announcements for data centers and AI investments committing to the U.S. economy. 

However, due to its sheer size and potential, what might be great for some countries is considered poorly accomplished by our benchmark. The world’s largest economic power needs to judge itself solely by the standards of what it can accomplish, comparisons be damned. U.S. government and business leaders must work much harder to deliver on the nation’s potential.