Ireland has kept its place in the top 20 digital economies in the world, according to an annual ranking by the Economist Intelligence Unit (EIU).
Ireland climbed one place to 17th in the 2010 EIU digital economy list, swapping places with Germany. Sweden overtook Denmark to top the rankings.
The EIU said the "digital divide" between richer and poorer nations was closing, partly as a result of a change in the way in which it calculated the strength of a country's digital economy.
As well as examining countries' infrastructure for information and communication technology (ICT) - or its "e-readiness" - the EIU has taken into account the quality of broadband connectivity, usage of 3G and 4G telecoms networks and the percentage of younger people in third-level education.
"We found the availability of ultra-high speed networks to be in considerable need of development," the EIU said.
Ireland scored 7.82 out of a possible 10, according to the study.
Susanne Dirks, head of IBM's Institute of Business Value which co-operates on the report with the EIU, said as a result of "raising the bar", there was a larger dampening effect on the scores of top-tier countries than on those in the lower tiers. Economies such as Hong Kong, Taiwan, South Korea and Japan improved their rankings as a result.
"I probably expected a bit more progress from Ireland," Ms Dirks said. Some of the long-term trends were "worrying" in light of the competition from other countries.
While Ireland has improved its score on Government policy and vision in relation to the digital economy, this was more a case of catching up with other countries rather than leading the way.
Ireland had been "badly in need of progress" on this front, Ms Dirks noted.
Of the factors considered by the EIU, Ireland's worst score was for connectivity.
There were some positives, however. Ireland scored well on consumer and business adoption of digital technology.
"People in Ireland are using ICT. The adoption rates are very high. People are very proactive," Ms Dirks said.
This means there is "even more reason" for the Government to improve connectivity and policy.
Most of the world has achieved "e-readiness" to one degree or another, the report says, citing figures from network equipment provider Cisco indicating that global monthly internet traffic in 2010 is two-thirds higher than it was one year ago.
