In classical economic theory, production is defined as a process in which factors of production (capital goods and labour) are combined to produce an end product. If we apply this definition to the field of vocational education and training, we can see how infrastructure, learning materials and technology are combined with forward planning, curriculum design, course development and teaching work to enable students to develop their competences.

Why are we concerned with investment in technology when we think about the phenomenon of digitization?

Successful digitisation processes have in common the complementary investment (see note 2: "Factors for successful digitization") of resources and efforts in three key aspects: technology, innovation in organisational processes and the development of the necessary competences to support these innovations.

Technology is always a determining variable, given that a "technological advance" can increase the productive capacity of factors, shifting the frontier of production possibilities. But at the same time, since it is a complementary factor that needs other structures to be applied successfully, it is common to observe investments that do not achieve the expected effects.

What is happening in our region?

Emerging countries, such as those in the Latin American and Caribbean region, have certain characteristics that make access to long-term technological investment difficult. Organisations adopt strategies with short-term horizons in response to the risks of operating in highly volatile political, institutional and economic environments, resulting in intensive investments in working capital (current assets) rather than in innovation with long-term financing.

The causes are various and respond to a set of factors that affect capital investment decisions: financial markets in which the cost of obtaining funds is relatively high and complex, making bank credit the most widely used option; political and macroeconomic instability, persistent inflation, systemic financial crises that cause damage to the real economy, low market transparency and profound asymmetry in information accentuated by the existence of monopolies, cartels or groups that reduce the efficiency of emerging markets.

All these particularities force organisations to focus on liquidity management as a way to withstand the shocks that regularly occur, leaving the search for innovation and efficiency in the background. As a result, companies have more expensive capital structures than those observed in developed countries, which hinders their investment in innovation and the search for disruptive processes. In this scenario, the main concern is to manage the continuity and sustainability of the organisation over time.

In addition to the scenario described above, there is a productive matrix made up mainly of micro, small and medium-sized enterprises with senior management that is generally unprepared for innovation and in many cases without the time and resources to innovate.

The effect described above makes the processes of technological diffusion in the region slower and less homogeneous. This presents two parallel challenges for vocational training: on the one hand, to update its training offer to accompany the changes based on a fragmented or even non-existent demand. For example, a study carried out by ILO/Cinterfor identifies that it is mainly vocational training institutions that have brought to the table the need to train in transversal skills for the digital economy and society.

On the other hand, in a scenario of heterogeneous and unsustained demand for training services that require a digital base, it becomes risky to make large investments and long-term planning; given that, in these scenarios of high uncertainty, it is a huge challenge to embark on digital transformation plans because of the time required to carry out such structural changes.

The need to do so, in any case, is not in dispute, as in addition to the direct benefits, more flexible institutions are indispensable for dealing with external disruptions.