This tool aims to assist policymakers in evaluating their country’s readiness to address the opportunities and challenges that arise from the digitalization of manufacturing. It offers insights into practical approaches to policymaking, methodologies, and empirically tested role models to inform digitalization agendas and efforts to promote industrialization, aligning them with long-term national development strategies. This tool provides a set of indicators to assess and benchmark a country’s level of readiness for digitalization, and the progress it has made in industrial digitalization and competitiveness in advanced digital production (ADP) technologies, including computer and information services. The tool is divided into three main clusters of foundational capabilities: i) energy and digital infrastructure; ii) basic and intermediate production capabilities, and iii) innovation capabilities in terms of both basic innovation efforts and intermediate innovation outputs. Each layer of the diagnostic toolkit features distinct sets of indicators that capture different dimensions of foundational capabilities. The digital readiness analysis is supplemented by the addition of a fourth layer of diagnostics, which captures a country’s exposure to technologies with digital potential (PTDP) and imported ADP technologies. The indicators used in this layer enable analysts to measure the extent to which firms in a given country have (or have not) absorbed and been exposed to various types of digital production technologies with PTDP (e.g. through imports). It also considers directly imported ADP technologies, including parts and instrumentation and whether a country’s firms have become exporters of ADP technologies, indicating a certain level of industrial competitiveness in digital technologies. Finally, it assesses the engagement of firms with digital services through imports and exports of computer and information services.