Singapore and Hong Kong, ranked first and third respectively, make up two of the top three countries ready to welcome the next billion internet users on the back of their advanced, but still growing, digital economies, according to the Digital Evolution Index developed by MasterCard and The Fletcher School at Tufts University.

Sweden (#2), the UK (#4) and Switzerland (#5) round out the top five, among the 50 countries measured. China, Malaysia and Thailand ranked as the top three fastest moving digital economies, a result of their rapidly increasing internet and smartphone population. Six of the top 10 in this category are Asian countries.

Today, there are 2.9 billion internet users in the world. While a staggering number, businesses and governments have an opportunity to expand their reach by bringing the remaining 60% of the global population online.

"Asia is a hotbed of digital adoption - we're seeing developed markets in the region claiming the top spots in the Index, and emerging markets showing immense potential with their rapid pace of digital adoption," said Raj Dhamodharan, group head, emerging payments, Asia-Pacific, MasterCard. "This new index helps businesses and governments in Asia make sense of the evolving digital landscape in each of their markets, reveal trends and also provide valuable insights into current and future Internet users."

The study identified four interdependent drivers - supply, demand, institutions and innovation - that define each country's digital evolution and can serve as strategic evaluation points for future growth.

"There is very little about the digital past and present of the West that instructs us about the digital present and future of the rest," said lead researcher Bhaskar Chakravorti, senior associate dean of international business and finance at The Fletcher School. "The momentum and direction of countries over time result from the interplay of these systemic elements. In the experience of the West the four drivers are more tightly connected."

"In the case of emerging markets - where the next billion e-consumers are - some of these drivers move much faster than others; the trajectory is non-linear and you could end up with surprises such as Alibaba in China or Flipkart in India or M-Pesa in Kenya. Specifically, understanding the institutions and innovations in these parts of the world is essential to knowing where the world's digital evolution will pop next," Chakravorti added.

Digital growth trajectory

While developed markets dominate the top spots, a different picture emerges when measuring the pace of digital adoption. The study analyzed each market's evolution from 2008 to 2013 to understand country benchmarks, track progress and identify areas for improvement. Countries were grouped into four trajectory zones:

* Break out - These countries currently have low readiness scores, but are rapidly evolving. India, China, Brazil, Vietnam, and the Philippines are examples. If their evolution rates sustain, these countries will emerge as strong digital economies, but the Index shows that the next phase of growth may be harder to achieve.

* Stall out - While possessing a history of strong growth, these countries (most of Western and Northern Europe, Australia and Japan) have matured. Innovation and seeking markets beyond domestic borders will be critical to continuing growth.

* Stand out - These countries, such as Singapore, Hong Kong, the United States, and New Zealand, have and continue to maintain high levels of digital transactions, supported by cutting edge infrastructure and sophisticated domestic consumers. To remain Stand Out markets, these countries must continue to fast-track innovation.

* Watch out - These countries face challenges, but with a combined population of 2.5 billion people, they represent significant opportunities for investment. Indonesia, Russia, Nigeria, Egypt, and Kenya are examples.