In a report published Tuesday, the Business Software Alliance says technology innovation is critical because it boosts productivity and spurs economic growth.
The BSA study ranked 66 major nations, with the U.S. in the top position because of years of investment in the industry, world-class universities, a culture of innovation, and a strong legal system.
The study says China’s upward progress has slowed in recent years partly because of weak protection for intellectual property.
India rose strongly in the rankings because of more research and development and growing university enrollment.
Malaysia’s improved R&D efforts also helped it move up strongly.
The authors say Europe has a strong information technology industry, but they warn it is weakened by rigid labor laws that make it difficult to let workers go when companies fail.
Seventy-five percent of venture capital efforts fail, so laws that make it difficult to fire workers discourage companies from taking risks on new ideas and products.