Bahrain's Internet economy is ranked among the 30 best in the world, a new report said.

The research, by The Boston Consulting Group (BCG), a global management consulting firm and the world's leading adviser on business strategy, revealed that globally, the difference between countries with large digital economies and those with low economic activity amounts to about 2.5 per cent of GDP - a material figure for any nation, said a report in the Gulf Daily News (GDN), our sister publication.

The study, titled 'Which Wheels to Grease? Reducing Friction in the Internet Economy', served as a follow-up to BCG's previous report 'The Connected World: Greasing the Wheels of the Internet Economy'.

The 2014 analysis identified 55 indicators of e-friction that inhibit online activity by consumers, businesses, and governments.

The BCG e-Friction Index - introduced in last year's study - then used those indicators to rank 65 economies according to four types of e-friction.

These include infrastructure-related frictions that limit basic access; industry and individual frictions that affect the ability of companies and consumers to engage in online transactions; and information frictions that involve availability of, and access to, online content.

The research expanded on that and outlines how economies can move up the e-friction ladder.

“The Internet has created an unprecedented environment for businesses to grow and flourish, thanks to its permission-less innovation, which makes it possible for everyone to explore the untapped opportunities of today's digital economy,” said Stakeholder Engagement, Middle East of the Internet Corporation for Assigned Names and Numbers (ICANN) vice-president Baher Esmat.

“Countries in the Middle East have the potential to grow their digital economy, and this report by BCG demonstrates how the UAE and Qatar are tapping into this potential and leading the way for growth.”

The 2015 BCG e-Friction Index highlights that Bahrain has one of the world's most advanced and productive Internet economies.

On a global level, Bahrain is ranked 27th - ahead of a number of strong emerging economies such as Brazil, China, India, South Africa and Turkey.

On a regional level, Bahrain is ranked third after Qatar and the UAE.

“In Bahrain, consumers and businesses face few restrictions or constraints on digital activity - what we refer to as 'e-friction,” said BCG Middle East partner and managing director Joerg Hildebrandt.

“The nations that are still lagging behind, however, both in the GCC and in the rest of the world, need to imminently address their sources of e-friction and doing so could have a strong impact on national competitiveness as well as on social and economic development.”

“Based on our study, the broad causes of e-friction include wealth, population density, the urban-rural population mix, literacy, and English-language skills.

“And, while some of these can be influenced by policy initiatives, others require more creative approaches,” he added.

The analysis of economies by their e-friction scores and their per capital GDP points up some interesting - and potentially useful - groupings.

Eight clusters emerge, split into three groups by income levels.

Among high-income economies, 'all-rounders' and 'well-oiled nations' - such as the UAE - have generally low e-friction scores, although the well-oiled set performs less consistently across the 55 indicators than all-rounders do.

“High-income overachievers', such as Bahrain, excel, owing to successful and focused digital-economy initiatives in areas such as infrastructure deployment, and e-government.

“High-income aspirants' - such as Saudi Arabia, Kuwait, and Qatar - have a high per capita GDP despite, rather than because of, the level of friction in their digital economies.

Their performance across the e-friction metrics is generally moderate. - TradeArabia News Service