Digital ecosystem in LAC

Digital ecosystem in LAC

As developed in the previous note, the economic and social impact of the spread of Information and Communication Technologies (ICTs) in the region is affecting important variables that affect competitiveness and development, although it has not yet achieved an equitable distribution among the broadest sectors of the population that would allow them to fully benefit from the digital economy.

Since 2010, access to telecommunications infrastructure in Latin America has been expanding steadily at a rate of 10.5% (ECLAC 2021), thanks to significant investments by private agents and differentiated public policies that have allowed, in a relatively short period of time, half of Latin Americans to become Internet users (encouraged by a decrease in access and equipment costs, followed by an increase in coverage).

Source: Katz 2015

However, this is not enough to close the digital divide in the region. More investment is still needed to expand connectivity and differentiated public policies to tackle the problem of exclusion. In particular, since the COVID19 pandemic, legislative actions have been initiated to treat connectivity and access to devices as a right.

In fact, it is possible to observe that there is a growing trend towards the adoption of legislation/regulation related to digital applications, occupying more space on the public and political agenda. In this ITU survey, 73 countries out of 137 reported in 2019 the adoption of some form of regulation on digital applications in their territories.

Source: ITU

However, when we look at disaggregated data, they indicate that there has been an accelerated growth in internet use in the region, where in just seven years, the adoption of technology has doubled; but they also highlight the lag of rural areas compared to urban areas, and of the region's economies compared to the most developed economies in the world. This is the digital divide in its local and global dimension.

 

We can also disaggregate mobile phone access by gender and geography, showing that there is unequal access between urban men and rural women. This shows that gender and residence interact to produce even deeper gaps in access to the digital economy.


Source: Sociallab
Closing the gap implies (i) developing people's skills to be able to make meaningful use of the internet, (ii) access to quality connectivity and (iii) having online services that are relevant for populations that may be connected today, but do not have access to services that are useful to them.

This is particularly relevant in the case of micro, small and medium-sized enterprises. ICTs offer an opportunity to diversify regional economies and build new industries, as well as to facilitate productive linkages and improve efficiency in value creation. It is a central (though not the only) factor for improving the low productivity of Latin American countries and initiating a process of convergence with more developed economies.

The digital ecosystem in the region is still incipient and has generated positive externalities such as employment and tax revenues, although it is not yet consolidated in the field of services, content development and application; key sectors where value creation has the greatest future potential. While internet users from other countries tend to connect to local sites, Latin American users mainly access platforms and content developed by agents outside the region.

These data show a lack of local content that generates income transfers outside Latin America and the lack of an autonomous development of the digital sector that transforms the productive matrix. We understand that Latin America has a competitive advantage over other regions that it has not yet managed to "exploit" in order to create a regional market that allows for scalability and cost reduction: linguistic unity. But to achieve this, it is necessary that (in the words of Raúl Katz) "... the future agenda lies in the need to combine different approaches - vertical and transversal - that include the development of a digital industry, the adoption of digital technologies in productive processes (mining, agriculture, logistics), combined with the accelerated training of human capital that enhances the two preceding areas".

The process of transition towards a digital economy is a huge opportunity and challenge for vocational training, as the accelerated training of skills for this economy requires organisations that are not only competent in technological issues, but more importantly, have the expertise and capabilities to develop meaningful training processes.

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