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Digital technologies
for a new future
Digital Agenda for Latin America and the Caribbean
Work on this document was coordinated by Sebastián Rovira, Economic Affairs Officer of the Economic Commission for Latin America and the Caribbean (ECLAC),
in collaboration with Wilson Peres and Nunzia Saporito. The drafting committee also comprised Valeria Jordán, Georgina Núñez, Alejandro Patiño, Laura Poveda,
Fernando Rojas and Joaquín Vargas, of the Division of Production, Productivity and Management, and Rodrigo Martínez, Amalia Palma and Daniela Trucco, of the
Social Development Division. The chapters were prepared with input from the consultants Sebastián Cabello and Nicolás Grossman.
The document also included valuable contributions deriving from the seventh Ministerial Conference on the Information Society in Latin America and the Caribbean,
and from the comments and contributions of the official delegations that participated in the meeting.
The boundaries and names shown on the maps included in this publication do not imply official endorsement or acceptance by the United Nations.
United Nations publication
LC/TS.2021/43
Distribution: L
Copyright © United Nations, 2021
All rights reserved
Printed at United Nations, Santiago
S.20-00960
This publication should be cited as: Economic Commission for Latin America and the Caribbean (ECLAC), Digital technologies for a new future (LC/TS.2021/43), Santiago, 2021.
Applications for authorization to reproduce this work in whole or in part should be sent to the Economic Commission for Latin America and the Caribbean (ECLAC), Documents
and Publications Division, [email protected]. Member States and their governmental institutions may reproduce this work without prior authorization, but are
requested to mention the source and to inform ECLAC of such reproduction.
3
Foreword 5
I. Towards a sustainable digital society 9
A. The systemic impact of digital disruption 11
B. The difficult balance between digitalization and sustainability 13
C. The roll-out of 5G networks: essential to the new models of industrial production and organization 16
D. The mass take-up of new technologies requires more infrastructure investment 18
1. Telecommunications are moving to the cloud: the transformation of the sector 18
2. The digital transformation driven by 5G networks will have a significant
economic impact but require large investments 20
Bibliography 24
II. Digitalization for social welfare and inclusion 25
A. Divides in broadband access 27
B. The use and take-up of digital technologies 32
1. Distance learning: essential but inaccessible for many 32
2. Digital health care in the pandemic emergency 34
3. Digitalization, the labour market and employment 36
4. Financial inclusion: the advance of financial technology (fintech) 38
5. Smart cities: a hub of inclusive and sustainable development 41
C. Universalizing access 43
Bibliography 45
III. Digitalization for productive development 47
A. Digitalization and productivity 49
1. Productivity dynamics in Latin America and the Caribbean 49
2. Digital technologies and productivity 51
B. The digitalization of production chains 54
1. The potential of disruptive technologies to dynamize theregion’s sectors 54
2. Agro-industry 56
3. Manufacturing 58
4. Retail 60
C. The digital ecosystem and the main barriers todigitalization of production 61
1. The digitalization of production processes in the region 61
2. Factors that enable and constrain the digitalization ofproduction 64
D. Digital policies for recovery and the transformation ofproduction methods 66
Bibliography 69
IV. Digital governance, institutions and agendas 71
A. Digital agendas: empowerment and cross-sectoral policies 73
B. Competition, privacy and data security at the heart ofdigital agendas 79
C. Fifteen years on from the first regional digital agenda: strengthening competition 82
D. The regional digital market at the heart of subregional integration mechanisms 84
Bibliography 86
Annex IV.A1 87
Contents
Índice
Prólogo
Tecnologías digitales para un nuevo futuro
5
Foreword
7
In the two years since the sixth Ministerial Conference on the Information Society in Latin America and
theCaribbean, held in Cartagena de Indias (Colombia) in April 2018, issues in the digital sphere that were
then considered to be emerging or incipient have come to occupy centre stage. Meanwhile, the coronavirus
(COVID-19) pandemic has had an unprecedented economic and social impact on Latin America and the
Caribbean. It is estimated that the region’s GDP has contracted by about 7.7%, that the value of exports has
fallen by 13% and that reduced demand and the slowdown of supply have led to the closure of over 2.7 million
businesses, resulting in more than 18 million unemployed. All these dynamics will have major effects on the
level of inequality and poverty in the region, and it is estimated that the number of people living in poverty
will increase by more than 45 million.
In respect of digitalization, 15 years on from the approval of the first Digital Agenda for Latin America and
the Caribbean, the region is facing a new world and a challenging context. Some of the expectations of that
time have been fulfilled, but others have not.
Digital technologies have grown exponentially, and their use has globalized. Ubiquitous and continuous
connectivity has reached much of humanity thanks to the mass take-up of smartphones and the consequent
access to information, social networks and audiovisual entertainment. The acceleration of technical progress in
the digital realm has made the use of devices and applications employing cloud computing, big data analysis,
blockchains or artificial intelligence routine. The technological revolution has combined with a change in the
strategies of the companies at the forefront of digital technology use to greatly increase the role of global
platforms, the result being that excessive economic and political power is wielded by no more than twenty or
so corporations based in two or three world powers, an all too small group of firms with market capitalizations
of close to or more than a trillion dollars.
Technological progress has gone along with socially negative outcomes, such as the exclusion of a large
proportion of the world’s people from the benefits of digitalization, essentially because their incomes are
too low for them to have meaningful connectivity (i.e., high-quality access), access to devices, fixed home
connections and the ability to use these day to day. A large demand gap has thus opened up, as coverage
is adequate but is not reflected in connections and usage. Other problems have also worsened, such as the
proliferation of fake news and cyber attacks, the growing risk to privacy and personal data security, and the
large-scale production of electronic waste.
The global backdrop to the unresolved balance between the benefits and costs of digitalization is more
adverse than was anticipated 15 years ago. Geopolitical struggles, often centred on digital patents, standards
and production, have markedly weakened multilateral decision-making and action. The environmental crisis has
escalated into an environmental emergency or, according to some analysts, an environmental catastrophe.
The increase in inequality in many countries and the exclusion of vulnerable population groups is making it
even more difficult to build social and political systems capable of adequately steering digital development.
The COVID-19 pandemic has accentuated all these problems and driven the world into the worst economic
crisis since the Second World War, with all the attendant negative effects on jobs, wages and the struggle
against poverty and inequality. Digital technologies have played a key role in addressing the effects of the
pandemic. However, the benefits from their use are limited by structural factors, such as limits on connectivity
(access, use and speed), social inequalities, productive heterogeneity and low competitiveness, and restricted
access to data and information management, among other factors.
Thus, new opportunities and new challenges are opening up for the countries of Latin America and the
Caribbean. The region will be the hardest hit by the crisis and will have to confront long-standing problems
from a position of greater structural weakness. In particular, it will have to surmount the slow economic growth
of the last seven years, with falling investment and stagnant productivity, while at the same time vigorously
recommitting itself to the struggle against poverty and inequality. To overcome these problems, it will have to
embark on a big push for economic, social and environmental sustainability leading to progressive structural
change based on the vigorous creation and incorporation of technology to diversify the production system.
Foreword
Eco
nomic Commission for Latin America and the Caribbean (ECLAC)
8
Against this background, the present document seeks to contribute to the debate and to the deployment
and use of digital technologies at national and regional level in support of development. Its contents have
been organized into four sections. The first section discusses the need to move towards a sustainable digital
society within the framework of the systemic impact of digital disruption. The second analyses the effects of
digitalization on social welfare and equality, posits the need to universalize access to these technologies and
assesses the cost of doing so. The third examines the relationship between digitalization and productivity
and the impact on agricultural, manufacturing and services production chains, and looks at some policies for
post-pandemic recovery involving economic transformation. Lastly, the fourth section analyses the state of
digital agendas in the region, in particular with regard to data management, and presents recommendations to
strengthen regional cooperation and the move towards a regional digital market. It also summarizes the main
conclusions of the working meetings and panels of the seventh Ministerial Conference on the Information
Society in Latin America and the Caribbean, which was held virtually in November 2020 and chaired by Ecuador.
The proposals put forward in the document, once discussed and further developed at the Conference, will
open the way for more inclusive and sustainable digitalization, i.e., digitalization that creates the conditions
not only for faster recovery from the current crisis but for a more productive and efficient use of these digital
technologies and for greater productivity, better jobs and higher wages, helping to reduce the high levels of
inequality in Latin America and the Caribbean. In short, the digitalization that is needed for a new future and
for progress towards a digital welfare State.
Alicia Bárcena
E
xecutive Secretary
Economic Commission for
Latin America and the Caribbean (ECLAC)
Chapter I
Digital technologies for a new future
9
Towards a sustainable
digital society
A. The systemic impact of digital disruption
B. The difficult balance between digitalization and sustainability
C. The roll-out of 5G networks: essential to the new models
of industrial production and organization
D. The mass take-up of new technologies requires
more infrastructure investment
Bibliography
CHAPTER
I
Chapter I
Digital technologies for a new future
11
A. The systemic impact of digital disruption
Since the late 1980s, the digital revolution has transformed the economy and society. First came the
development of a connected economy, characterized by mass take-up of the Internet and the roll-out of
broadband networks. This was followed by the development of a digital economy via the increasing use of
digital platforms as business models for the supply of goods and services. Now the movement is towards
a digitalized economy whose production and consumption models are based on the incorporation of digital
technologies in all economic, social and environmental dimensions.
The adoption and integration of advanced digital technologies (fifth-generation (5G) mobile networks,
the Internet of things (IoT), cloud computing, artificial intelligence, big data analysis, robotics, etc.) means
that we are moving from a hyperconnected world to one of digitalized economies and societies. It is a world
in which the traditional economy, with its organizational, productive and governance systems, overlaps or
merges with the digital economy, with its innovative features in terms of business models, production,
business organization and governance. This results in a new, digitally interwoven system in which models from
both spheres interact, giving rise to more complex ecosystems that are currently undergoing organizational,
institutional and regulatory transformation (ECLAC, 2018).
These dimensions of digital development are constantly evolving, in a synergistic process that affects
activities at the level of society, the production apparatus and the State (see diagram I.1). This makes the
digital transformation process highly dynamic and complex, and thus challenging for public policies insofar
as it requires constant adaptation and a systemic approach to national development. Within this framework,
5Gnetworks will make the convergence of telecommunications and information technologies viable, changing
the structure and dynamics of the sector, while the adoption of digital technologies and artificial intelligence
(as general purpose technologies) marks a new stage, that of the digitalized economy.
At the societal level, digital disruption leads to changes in communication, interaction and consumption
models that are reflected in greater demand for devices, software with more functionalities, cloud computing
and data traffic services and the basic digital skills needed to use the associated technologies. In turn, the digital
economy represents an opportunity for consumers to access information and knowledge of all kinds in various
formats, goods and services, and more streamlined forms of remote consumption. The move towards the
digital economy should mean that consumers’ needs can be met with smart products, often associated with
advanced services that are highly customized. All this means an increase in consumer welfare, accompanied
by a reconfiguration of the digital skills needed for more advanced digital consumption and for the new labour
requirements resulting from the new production models. At the same time, the new forms of consumption
are associated with potential benefits from reduced material use and more sustainable environmental choices,
insofar as these are based on more and better information (about the environmental footprint of a product,
for example) or reward more environmentally friendly practices.
1
The development of the digital economy has radically changed the value proposition of goods and services
via the reduction of transaction and intermediation costs and the exploitation of information from data generated
and shared on digital platforms. These digitally enabled models facilitate the generation and capture of data which,
when processed and analysed with smart tools, can be used to improve decision-making and optimize supply.
This results in more streamlined operating processes, in market segmentation and in product customization
and transformation. Data and digitalized knowledge become a strategic production factor (ECLAC,2016). All
this entails a need for regulatory changes in a variety of areas ranging from telecommunications to trade,
taking in competition and data protection and cybersecurity policies on the way.
1
For example, the fintech company Ant Group, an affiliate of Alibaba, implemented an application on its payment platform that has engaged over 500 million Chinese
citizens in carbon-saving consumption activities, thus bringing about a change in citizen behaviour. When its users perform some activity that has a positive impact
in the form of reduced carbon emissions, such as paying bills online or walking to work, they receive “green energy” points. Once users accumulate enough points
virtually, a real tree is planted. Since its launch in August 2016, Ant Forest and its NGO partners have planted around 122 million trees in some of China’s driest
areas (UNEP, 2019).
Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
12
Diagram I.1
Dimensions of digital development and the effects on society, the production sector and the State
Risks
Greater inequality
Reduced competitiveness
Economic concentration
Institutional crisis
Geopolitical polarization
Telecommunications and
information technology pillar
Digital infrastructure
Telecommunications services
Software and systems
Information technology services
Multifunctional devices
Digital economy
Digital goods and services
Applications and digital platforms:
marketplaces, social networks,
video streaming
Digital content and media
Sharing economy
The digitalized economy
E-business
E-commerce
Industry 4.0
Agricultural technology
(agritech), financial technology
(fintech), automotive technology
(autotech), etc.
The smart economy
Production sector
New management models
New business models
New production models
Industrial restructuring
Society
New models of communication
and interaction
New models of consumption
State
Digital government
Citizen participation
Network and service coverage
High data transmission speeds and low latency
Access to information technology services and software
Affordability of devices and services
Welfare and
sustainability
Productivity and
sustainability
Efficiency, effectiveness
and sustainability
Information and knowledge
Online goods and services
Access to public services
Consumption on demand
and customization
Data privacy and security
New jobs, new skills
Smart products
Products as services
Informed and customized
consumption
Premium on responsible
consumption
Data privacy and security
New jobs, new skills
Innovation and entrepreneurship
Market access
Efficiency in management,
marketing and distribution
Data as a strategic asset
Cybersecurity and data privacy
Industrial reconfiguration
Automation and robotics
Sophisticated production
Digital transformation
of production (data-based
productivity)
Cybersecurity and data privacy
Digital government
Digital innovation in the State
Digital tax efficiency
Digital citizenship and
citizen participation
Open data and transparency
Cybersecurity and data privacy
State digital innovation
Governance of public services
(education, health,
justice, security)
Governance for digital
transformation (cybersecurity,
competition, tax, trade, etc.)
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
The digital transformation of the production sector is taking the form of new management, business and
production models that are facilitating innovation and the introduction of new markets and disrupting traditional
industries. The expansion of the industrial Internet, smart systems, virtual value chains and artificial intelligence
in production processes is speeding up innovation and generating productivity gains, with positive effects on
economic growth. In addition, all this is driving the transformation of traditional industries through automotive
technology (autotech), agricultural technology (agritech) and financial technology (fintech), among others.
In particular, smart production models can bring increased competitiveness with a smaller environmental
footprint, as companies are using digital tools to map and reduce their footprint in order to assess their impact
on climate change and modify their production processes.
A similar process ought to take place in the public management models of State bodies, in order to meet
citizens’ demands and improve government action. The adoption of these technologies by such institutions
would increase the efficiency and effectiveness of provision for services such as health care, education
and transport. It would also improve citizen participation in democratic processes, increase transparency
in government operations and facilitate more sustainable practices. In particular, smart city solutions are
transformative because of their potential social, economic and environmental impact, especially in a region
where 80% of the population is concentrated in cities.
Chapter I
Digital technologies for a new future
13
Despite all this potential, however, digital development that is not governed by principles of inclusiveness
and sustainability can reinforce patterns of social exclusion, as well as unsustainable exploitation and production
practices. Although digitalization can make a major contribution to the three dimensions of sustainable
development (growth, equality and sustainability), its net impact will depend on the extent to which it is
adopted and on its system of governance.
In the current situation, the economic and social crisis generated by the COVID-19 pandemic and physical
distancing measures have precipitated many of the changes discussed, as preference has been given to
online channels in an attempt to maintain a certain level of activity (see diagram I.2). This acceleration of digital
transformation in production and consumption seems irreversible. The pandemic has created a greater need
to reduce digital divides and has shown the importance of these technologies, for example, in contact tracing
applications. To carry forward the recovery, digital technologies must be used to build a new future through
economic growth, job creation, the reduction of inequality and greater sustainability. This is the way to achieve
the 2030 Agenda for Sustainable Development and meet the Sustainable Development Goals (SDGs).
Diagram I.2
Latin America and the Caribbean: towards reactivation, 2020
Digital transformation
(5G networks, cloud computing,
Internet of things, artificial
intelligence, robots)
New realityEconomic crisis Priorities
Digitalized economyConnected economy
Online
business
models
Smart
production
models
-7.7%
GDP
Exports -23%
Firms -2.7 million
Unemployed +18 million
Poor +45.4 million
Online consumption models
Social welfare
Resilient production
Sustainability
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
B. The difficult balance between digitalization
and sustainability
Digital technologies foster ecological innovations that contribute to sustainable development by reducing
environmental impacts and optimizing resource use. As these technologies evolve and converge with
biotechnology and nanotechnology, they could generate exponential innovations that contribute to a sustainable
future. Digitalization has both positive and negative impacts on the environment. On the one hand, it can
dematerialize the economy by facilitating the supply of the digital goods and services that represent an
increasingly large part of the economy and exports; an increase in the importance of digitally supplied services
reduces movements and thence emissions. A more profound change in consumption is expected with the
development of the product as a service (PaaS) model, which makes it possible to compare the desired
outcome of using a product without purchasing it. Mobility as a service (MaaS) uses this model to combine
transport services from public and private providers through a unified gateway that creates and manages
journeys. This reduces carbon emissions and optimizes the space occupied by vehicles, helping progress
towards more sustainable cities.
At the same time, new business models such as the gig economy are optimizing the use of existing
resources by multiplying the opportunities for employing capital goods. Thus, for example, the supply of
accommodation services can expand without the need for new hotel construction, or the supply of urban
Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
14
mobility services can be increased by making use of vehicle downtime: the demand for units does not rise,
and there are consequently savings in materials and energy. Urban navigation applications, meanwhile,
reduce journey times and emissions. In the production sector, the incorporation of artificial intelligence into
decision-making optimizes resource management and reduces the environmental footprint in areas such as
the exploitation of natural resources, manufacturing, logistics and transport, and consumption. Digitalization
also makes it possible to disintermediate activities, reducing transaction costs and links in value chains, with
the consequent savings in energy and inputs.
The Global e-Sustainability Initiative (GeSI) study #SMARTer2030 estimated that by implementing digital
solutions in different sectors of the economy, total global carbon dioxide equivalent (CO
2
e) emissions could be
reduced by 12 gigatons (Gt) by 2030, providing a path to sustainable growth. The most significant contribution
to this reduction would be made by mobility solutions, followed by applications in the manufacturing and
agricultural sectors (see figure I.1). Real-time traffic information, smart logistics and lighting and other digitally
enabled solutions could reduce CO
2
e by 3.6 Gt, including savings in emissions from journeys forgone. Smart
manufacturing, including virtual manufacturing, customer-centred production, circular supply chains and smart
services could save 2.7 Gt of CO
2
e. Besides lower carbon emissions, benefits would include a 30% increase
in agricultural crop yields, savings of more than 300 trillion litres of water, a reduction of 25 billion barrels per
year in oil demand and a decrease of 135 million vehicles in the global vehicle fleet (GeSI, 2015).
Figure I.1
Potential for reducing carbon dioxide (CO
2
) by 2030, by type of digital solution
Smart manufacturing
(22)
Smart agriculture
(17)
Smart buildings
(16)
Smart energy
(15)
Smart logistics
(10)
Optimized traffic control
(6)
Connected private transport
(5)
E-working
(33)
E-commerce
(2)
E-health
(1)
E-learning
(1)
E-banking
(0)
Source: Global e-Sustainability Initiative (GeSI), #SMARTer2030: ICT Solutions for 21st Century Challenges, Brussels, 2015 [online] https://smarter2030.gesi.org/
downloads/Full_report.pdf.
On the other hand, increased digital development generates negative effects associated with energy
consumption (data centres and networks), polluting hardware (screen) production processes, and business
models that encourage the rapid replacement of devices. Likewise, the increased use of audio and video
solutions and of data in general tends to result in a continuing rise in energy consumption. However, while
electricity consumption and the carbon footprint of the information and communications technology (ICT) sector
increased between 2007 and 2015, the rate of increase slowed down considerably despite strong growth in
subscriptions and data traffic. Intensity indicators show that substantial progress has been made with energy
consumption and carbon footprint generation, as each subscription or each GB transmitted has a decreasing
impact (81 kg CO
2
e/subscription in 2015 compared to 134 kg CO
2
e/subscription in 2007, and0.8 kg CO
2
e/GB
in 2015 compared to 7 kg CO
2
e/GB in 2007) (Malmodin and Lunden, 2018) (see figure I.2).
Chapter I
Digital technologies for a new future
15
Figure I.2
The carbon and energy footprint of information and communications technologies (ICTs)
and trends in Internet traffic and data centre workloads
0
100
200
300
400
500
600
2015 2016 2017 2018 2019 2020 2021
Index (2015=100)
Internet traffic
Data centre workloads
Data centre energy consumption
2007 2010 2015
Carbon footprint of the ICT
sector (tMCO
2
)
620 720 730
Operational electricity consumption
of the ICT sector (TWh)
710 800 805
Carbon footprint per ICT subscription
(kg CO
2
/subs)
134 107 81
Carbon footprint per GB in networks
(kg CO
2
/GB)
7 3 0,8
Operational electricity consumption
per subscription (kWh/subs)
153 119 89
Operational electricity consumption
per GB in networks (kWh/GB)
7.6 3.3 0.88
Source: J. Malmodin and D. Lunden, “The energy and carbon footprint of the global ICT and E&M sectors 2010–2015”, Sustainability, vol. 10, No. 9, Basel, Multidisciplinary
Digital Publishing Institute (MDPI), 2018; International Energy Agency (IEA), Digitalization and Energy, Paris, 2017.
In addition, the development of advanced technologies such as 5G, the Internet of things and artificial
intelligence should help reduce global carbon emissions by up to 15%, or almost a third of the 50% reduction
proposed for 2030, via the development of solutions for the energy, manufacturing, agriculture and natural
resource extraction, construction, services, transport and traffic management sectors (Ekholm and Rockström,
2019). This can offset some of the negative effects of the production and use of these technologies, which
involve high energy consumption (1.4% of the world total), massive generation of e-waste and extraction of
natural resources such as copper and lithium (see diagram I.3) (Malmodin and Lunden, 2018).
Diagram I.3
The effects of digitalization on sustainability
• Energy consumption
•
•
2015
3.6%
1.4%
49.8
-15%
Global carbon emissions
in 2030
•
Dematerialization
•
Disintermediation
•
Resource management
optimization in
manufacturing, logistics
•
Conscious consumption
of global energy consumption
million tons of electronic waste
of CO
2
emissions
Polluting hardware
production processes
Devices with short
replacement cycles
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of B. Ekholm and J. Rockström, “Digital technology can cut global emissions
by 15%. Here’s how”, Cologny, World Economic Forum (WEF), 2019 [online] https://www.weforum.org/agenda/2019/01/why-digitalization-is-the-key-to-
exponential-climate-action/; J. Malmodin and D. Lunden, “The energy and carbon footprint of the global ICT and E&M sectors 2010–2015”, Sustainability,
vol. 10, No. 9, Basel, Multidisciplinary Digital Publishing Institute (MDPI), 2018.
Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
16
C. The roll-out of 5G networks: essential to the new
models of industrial production and organization
The fifth generation of mobile networks (5G) will be disruptive to industrial organization and production
models because of its technical characteristics (higher transmission speeds, of up to 20 Gbps), ultra-reliable
low latency (less than a millisecond), increased network security, massive machine type communications and
enhanced device energy efficiency. Thus, the roll-out of these networks will make it possible to extend wireless
broadband services beyond the mobile Internet to complex Internet of things systems, with the low latency
and high level of reliability needed to support critical applications in all economic sectors (see diagram I.4).
Diagram I.4
The evolution of mobile networks and their technical characteristics
3G
2001
2G
1991
4G
2010
5G
2020
HD
HD
Data transmission
0
Up to 40 kbps
Up to 20 Mbps
Up to 1 Gbps
Up to 20 Gbps
1G
1980
Impact on industry Impact on industry Impact on industry Impact on industry Impact on industry
• No impact
on industrial
applications
• Text messages
from and to
remote machines
• Video monitoring
•
Remote access
to machines
(teleservice)
•
Remote
conditioning
monitoring
• Mobile technical
services
• Services via
smartphones
•
Wireless
environment
networks
• Autonomous
logistics
•
Assisted work
• Robots and
autonomous
machines
•
Wireless backhaul
•
Real-time data
analytics
•
Carbon footprint
management
Latency N/A 300-1 000 ms 100-500 ms < 25 ms < 1 ms
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Micron Technology, “5G, AI, and the Coming Mobile Revolution”, Boise,
2020 [online] https://www.micron.com/insight/5g-ai-and-the-coming-mobile-revolution; Siemens, “Industrial 5G: for the industry of tomorrow”, Munich, 2020
[online] https://new.siemens.com/global/en/products/automation/industrial-communication/5g.html.
5G mobile networks will support innovative uses in virtually all industries. Enhanced broadband experiences,
the large-scale Internet of things and mission-critical services will provide a basis for innovative uses offering
segmented levels of latency (see diagram I.5). Although edge computing can be used in a 4G environment,
the combination of this with 5G networks and artificial intelligence (AI) is expected to open up new uses
in vertical industries and speed up the adoption of Industry 4.0 models, yielding gains in productivity and
competitiveness and improvements in sustainability.
5G networks make it possible to build smart factories and take advantage of technologies such as automation
and robotics, artificial intelligence, augmented reality and the Internet of things at different stages of the value
chain (see diagram I.6). Having real-time access to information for decision-making along an entire value chain is
a key competitive advantage when it comes to making efficient use of resources and better meeting demand.
Cloud-based solutions make it possible to better integrate the different stages of the chain. The same software
can be used for the design, simulation and implementation of configurations and instructions for running physical
production lines, thus improving the quality and flexibility of operations. This type of solution replaces traditional
assembly processes and provides greater flexibility to reconfigure production plants in the event of changes
Chapter I
Digital technologies for a new future
17
in the product or in demand. They serve to streamline processes and cut costs, as well as reducing delivery
times, improving logistics management and capturing the attention of consumers. Other particularly important
uses include industrial automation and control systems, planning and design systems, and field devices that
provide information for complete process optimization. In addition, the incorporation of artificial intelligence
into decision-making allows resource management to be optimized with a view to reducing the environmental
footprint in areas such as natural resource exploitation, manufacturing, logistics and transport, and consumption.
Diagram I.5
Applications of sectoral 5G networks depending on the levels of latency required
Big data for
real-time
decision-making
ControlledUltra-low Medium
Augmented reality
with landmarks
Autonomous
transport
Industrial
automation
Virtual
reality
High-quality
video
Real-time
collaboration
Robotics
Man-machine
interaction
Gaming
Household
sensors
Contextual
recommendations
Contextual
content
Remote
surgery
Telemedicine
Sensorized clothing
Latency
requirements
A
u
t
o
m
o
t
i
v
e
I
n
d
u
s
t
r
y
H
e
a
l
t
h
L
i
f
e
a
n
d
w
o
r
k
S
m
a
r
t
c
i
t
i
e
s
Source: Detecon International, “5G campus networks: an industry survey”, Cologne, 2019 [online] https://www.detecon.com/drupal/sites/default/files/2019-10/kor%20
190613_5G_Market_Survey_final_0.pdf.
Diagram I.6
Digital transformation of the production chain
Internet of things
Internet of things
5G
Consum
•
Geolocation (drones, machinery
and other assets)
Meteorological information systems
(Internet of things)
Performance monitoring
(Internet of things or drones)
Smart management (irrigation,
fertilization, machinery)
Predictive maintenance (Internet of things,
big data, articial intelligence)
•
•
•
•
• Fast prototyping (3D)
Business-to-consumer platforms
for product design cooperation
•
•
Electric vehicles
Product traceability
•
•
•
•
•
•
•
• Product-as-a-service
•
•
•
•
•
•
•
•
•
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
In addition to driving sustainable industrialization, digital transformation can provide social and environmental
value through the development of education, health, transport, city and teleworking applications, as discussed
in chapter II.
Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
18
D. The mass take-up of new technologies requires
more infrastructure investment
1. Telecommunications are moving to the cloud:
the transformation of the sector
Telecommunications service operators (TSOs) need to become more competitive (reduce their capital and
operating expenditure) and make their services more responsive. 5G technology creates an opportunity for
them because it allows network functions to be virtualized with lower operating costs. It also allows processes
to be automated and made more flexible, with all the consequent scalability and greater dynamism in network
management. Network operators will become digital service providers, disrupting the sector’s business model.
4G technology marked the beginning of a path towards network virtualization that will be consolidated
with 5G technology. Network virtualization allows resource managers to integrate fixed and mobile services,
separating them into layers so as to provide each business or individual user with the services they require.
Thus, innovative uses requiring different levels of latency can be explored in industry, health services, education,
transport, work and home life and cities.
Cloud computing is one of the drivers and enablers for the processing of the large amounts of data
generated by the ever-increasing connectivity of things. As this connectivity increases, a crucial factor will be
the use of artificial intelligence and the ability of cloud computing to achieve the low latency times required by
autonomous vehicles, virtual or augmented reality and certain industrial automation services. Edge computing
will supplement cloud computing, which will be provided in a decentralized or distributed manner according
to the requirements of the different services (the network gateway, the customer’s installations or peripheral
devices), as in so-called hyperscale computing (higher latency). These new needs converge with a parallel
process in the universe of telecommunications operators, which are resorting to “cloudification” to cut network
costs and increase the responsiveness, security and analytical capacity of the data they carry.
These needs and trends are leading to a new convergence between the world of telecommunications
and the information technology sector, which provides public cloud services. Telecommunications service
operators see that hyperscale public cloud providers could become competitors in the provision of connectivity
services. Globally, traditional telecommunications providers such as AT&T and Verizon are working with cloud
service providers such as Microsoft and Amazon to add network edge computing to network centres in order
to implement 5G technology (see diagram I.7). The two will need each other to achieve an infrastructure capable
of providing connectivity and computing capacity to businesses and devices. It is therefore to be expected that
more and more partnerships will arise between these actors in order to develop the new supply of integrated
services that will make access to the technologies of the fourth industrial revolution viable.
One indication of the transformation in the sector is the tendency to sell off or split up the business, with
one part operating the infrastructure network and the other operating the service itself. Just over a decade
ago, operators controlled all the passive and active components of the telecommunications infrastructure.
Today, telecommunications operators are choosing to split vertically, forming companies that specialize in
managing their property assets or selling their towers and sites to new infrastructure network operators. By
the end of the first quarter of 2019, over 50% of all towers in Latin America and the Caribbean were in the
hands of specialized companies and not these operators (Euromoney Global Limited, 2019). The separation of
network management from service provision is motivated by considerations of specialization and the need for
sufficient scale to provide services efficiently. This is why some operators have chosen to divest themselves
of their data centres. In January 2021, for example, Telefónica signed an agreement with American Tower
Corporation to sell its telecommunication towers division in Europe (Germany and Spain) and Latin America
(Argentina, Brazil, Chile and Peru) (Telefónica, 2021).
Chapter I
Digital technologies for a new future
19
Diagram I.7
Convergence between telecommunications operators and information technology:
network virtualization, cloud distribution and network edge computing
Strengths of telecommunications operator Strengths of cloud provider
Devices Firm
Access
point
Network
aggregation
points
Core
network
Internet
exchange
Hyperscale/
private cloud
National
backbone
International
backbone
End devices
Customer premises:
households, offices,
factories, etc.
Mobile telephony towers,
street distributors
(fixed or mobile)
C-RAN exchange Central offices,
central data centres
and exchange centres
Interconnection points,
Internet exchange,
placement
Data centres
Device
Network/multiple access
Regional
Latency 2 ms <5 ms ~20 ms 20-25 ms 25-50 ms 30-75 ms
Access network
Edge computing (reductions in latency to the left)
Customer premises
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Changes in business models are transforming the industry (see table I.1). The virtualization of networks and
the need to process large amounts of data are leading to convergence with the information technology sector that
is encouraging the entry of new players. Maximizing the benefits of technological innovation requires a clear vision
of these challenges and a regulatory framework designed to encourage the development of new value chains.
Table I.1
The new dynamics of interaction between new and traditional actors and disruptive developments
Passive
infrastructure
Devices
Operators
Traditional players
Active/network
infrastructure
Disruptive developments
New players
Over-the-top
(OTT) services
AMX, TEF, MIC, TECO
Ericsson, Huawei, Nokia,
Samsung, ZTE
Samsung, Apple, Xiami,
Huawei, Oppo, LG
AMX, TEF, MIC, TECO
Service and content platforms
Unbundling, management specialization,
asset sweating, sharing
Virtualization, consolidation, sharing,
cybersecurity, trade war
Scale, operating systems, Internet of things,
wearables, sensorization
Consolidation, heavy regulation, spectrum cost,
unlicensed use (Wi-Fi)
Softwarization, network slicing, business-to-business
(B2B) services, vertical industry services, content,
cloud/big data, artificial intelligence
American Tower, SBA, Phoenix,
Cellnex, Telxius, Telesites
OpenRAN (Parallel Wireless, Altiostar)
CloudCos (AWS, Azure, Google)
Internet of things players, 5G
Internet service providers (ISPs) offering
dynamic IP addresses, private networks,
wholesalers, satellite/HAPS
Heavy fragmentation by niche
Cloud (infrastructure as a service, platform
as a service, software as a service)
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
20
2. The digital transformation driven by 5G networks will have a
significant economic impact but require large investments
The transition to 5G technology began in late 2018 in the United States, China and the Republic of Korea, and
it is expected to start being deployed more systematically in Latin America and the Caribbean during 2021.
At the same time, the development of high-performance satellites, coupled with new models for the use of
unlicensed radio spectrum such as Wi-Fi, will be drivers of innovation aimed at increasing connectivity options
and improving coverage.
Implementing the procedures for moving from 4G to 5G technology could increase Latin America’s GDP
by between US$229 billion and US$293 billion by 2030 (Katz and Cabello, 2019). This finding is based on
two scenarios. The first is a baseline scenario of urban-suburban deployment centring on first- and second-tier
metropolitan centres, with network speeds and capacities remaining consistently lower in rural areas. The
second is a national maximum scenario, with a service speed and quality experience that is more uniform in
the areas where 95% of the population lives. This measurement is based on consideration of three areas of
impact for mobile expansion:
1.
The impact on digital transformation: benefits in the form of connectivity, digitalization of households
and the production system, growth of digital industries.
2.
The impact on GDP growth: the effect of the level of digitalization on GDP, partly because of investment
in network roll-out, but mainly as a result of spillover effects (positive externalities) on the economy
as a whole.
3.
The impact on the GDP of certain industrial sectors: the spillover effects from increased operational
efficiency and improved productivity in certain industrial sectors.
Figure I.3 shows the impact of improved connectivity on GDP in the six countries analysed, ranging from
US$104 billion for Brazil to US$15 billion for Peru, and attributable to direct and indirect effects in a high-impact
scenario. The adoption of use cases facilitated by the technological leap could have a combined impact on the
efficiency of companies and the public sector, as well as on the scope and coverage of services. At the sectoral
level, it is estimated that the greatest benefits from the substantial improvement in quality and efficiency
will come in public services (health care, education and security, including smart city services such as traffic
management). A considerable increase in value is also expected in professional services, manufacturing and
logistics, commerce and services, and agroindustry.
Figure I.3
Latin America (6 countries): the impact of mobile expansion on GDP and by economic sector to 2030
Argentina
Brazil
Chile
Colombia
Peru
Mexico
Argentina
Brazil
Chile
Colombia
Peru
Mexico
10.6
48.5
13.9
12.3
85.9
25.0
15.4
0 10 20 30 40 50 60 70 80 90 100 110
68.4
17.4
14.8
103.9
30.0
+0.40%
+0.48%
+0.40%
+0.49%
+0.44%
+0.53%
+0.42%
+0.53%
+0.40%
+0.56%
+0.67%
US$ 229.97 billion US$ 292.81 billion
+0.46%
Billions of dollars
Baseline scenario: urban and suburban coverage Maximum scenario: national coverage III
Annual growth
Billions of dollars
Annual growth
A. GDP impact
0 10 20 30 40 50 60 70 80 90
Latin American
total
Chapter I
Digital technologies for a new future
21
2
4
5
6
9
9
14
6
25
27
35
44
2
5
6
7
11
11
16
18
31
34
41
55
0 10 20 30 40 50 60
Maximum scenario
Baseline scenario
B. Impact by economic sector
Billions of dollars
Public services (health, education,
security, smart cities)
Professional services
Manufacturing
a
Commerce
Agribusiness
Financial services
Entertainment
Transport
Mining
Real estate
Construction
Basic services (water, electricity, etc.)
Source: R. Katz and S. Cabello, The Value of Digital Transformation through Expansive Mobile in Latin America, New York, Telecom Advisory Services, 2019.
a
Includes all production subsectors except food processing.
The investment in capital goods required to roll out these networks in the six countries considered
ranges from US$50.8 billion in the urban-suburban scenario to US$ 120.07 billion in national scenario III
(maximumimpact). This implies that telecommunications service operators would have to increase their annual
capital expenditures by between 10% (baseline scenario) and 40% (maximum scenario) from their current
values. The deployment of 5G technology requires the installation of a denser network with greater capillarity.
In addition to telephone antennas and other components, small cells must be installed to extend coverage and
fibre optics to connect the installations. The use of small cells and new multiple-input multiple-output (MIMO)
antenna techniques is a key factor in this cost, since it will mean acquiring and maintaining two to three times
more sites by 2030 than the industry had accumulated in those countries by the end of 2018, assuming that
the number of base stations needs to grow three- or fourfold (see figure I.4).
Figure I.4
Latin America (selected countries): estimated total and annual investment required for mobile
expansion in the next seven years and projected growth in sites needed by 2030
A. Investment needed over seven years
0 5 10 15 20 25 0 10 20 30 40 50
7.4
37.4
12.6
5.2
48.4
9.1
2.6
12.9
5.4
1.7
22.7
5.5
$ 0.79
$ 3.24
$ 0.24
$ 0.78
$ 1.84
$ 0.37
Argentina
Brazil
Chile
Colombia
Peru
Mexico
Argentina
Brazil
Chile
Colombia
Peru
Mexico
Billions of dollars
Baseline scenario: urban and suburban coverage
Maximum scenario: national coverage III
50.8 billion dollars 120.1 billion dollarsTotal:
$ 1.30
$ 6.92
$ 0.74
$ 1.80
$ 5.34
$ 1.05
Billions of dollars
Figure I.3 (concluded)
Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
22
B. Projected growth in sites needed by 2030
1 326
28 183
78 125
34 364
29 776
43 341
168 416
2.1
2.5
2.2
2.6
2.5
2.8
0.5
2030 v. 2018
Argentina
Brazil
Chile
Colombia
Peru
Mexico
Costa Rica
Number of sites
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of R. Katz and S. Cabello, The Value of Digital Transformation through
Expansive Mobile in Latin America, New York, Telecom Advisory Services, 2019.
Note: The numbers adjoining the bars are the amount of annual investment (in billions of dollars) required for mobile expansion, assuming an investment horizon of
seven years. The capital spending figures do not include spectrum expenditure.
Infrastructure sharing can be a way to cope with this level of investment. However, it poses challenges for
regulation, as the more infrastructure is shared, the greater the risk of anti-competitive behaviour. Regulatory
attention will need to increase as the number of operators and wholesale networks consolidates and as
sharing needs increase.
In addition to transmission networks, the region needs to be equipped with more information technology
infrastructure to support the exponential growth of data and the provision of new cloud services. According to
the Datacenter Technologies Cooling Market Map Thompson and Wentworth (2019), there are 151 data centres
in the region, located in 24 countries: 118 in South America and 33 in Central America and the Caribbean. The
region has invested very little in data centres in relation to its population (Thompson and Wentworth, 2019)
(see figure I.5). For example, Argentina, with a population of 44 million people, has 30,000 square metres in
operation, the same space as Austin, Texas, with 1.9 million.
Figure I.5
Latin America (6 countries): operational floor area of data centres, multiple operators, 2019
(Thousands of square metres)
18
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170
27
30
54
71
165
Colombia
Peru
Argentina
Chile
Mexico
Brazil
Source: D. Thompson and E. Wentworth, “Buenos Aires: multitenant datacenter market”, Datacenter Technologies Cooling Market Map, New York, 451 Research, 2019.
Figure I.4 (concluded)
Chapter I
Digital technologies for a new future
23
Cloud services have become dominant as drivers of the digital transformation. The cloud provides flexible
information technology resources that create the conditions for transformed business models and service
provision, nimble marketing processes and easy experimentation with new services without the need for new
information technology resources, as well as offering greater cybersecurity. Governments and companies have
slowly adopted the cloud in their operations, but this trend has been accelerated by physical distancing measures.
Teleworking, telemedicine, tele-education, video-conferencing, video on demand, e-commerce, e-banking and
online official procedures are now carried out on a large scale and have become part of everyday life.
The most widely used application is software as a service, with solutions such as email, video conferencing,
office applications, customer relationship management, resource planning, workflow automation and security.
In addition, it enables the use of e-commerce support tools, such as chatbots and messaging, which expand
communication channels with customers. In 2019, software as a service uses constituted almost 50% of the
cloud market in Latin America and the Caribbean, followed by infrastructure as a service uses, with 46%, and
platform as a service uses, with 4.3% (GlobalData, 2020). The region accounts for 8% of global cloud traffic,
and this traffic is expected to grow by 22% on average per year up to 2023.
Internet exchange points (IXPs) are crucial to the digital infrastructure. There are 101 IXPs in Latin America and
the Caribbean, of which 60% are in Argentina and Brazil. In February 2020, the aggregate traffic of all IXPs in the
region averaged 9 terabits per second (Tbps), a figure that increased significantly during lockdowns. In Brazil, it
peaked at 8.79 Tbps in mid-March, as compared to an average of 4.89 Tbps. In Chile, total average traffic increased
from 732 gigabits per second (Gbps) to 1.96 Tbps and has settled at around 1 Tbps (Graham-Cumming, 2020).
There are still very few data centres belonging to content distribution networks (CDNs), although the main
ones have their own points of presence in many Latin American and Caribbean countries, in addition to hundreds
of caches installed at IXPs and in the networks of Internet service providers (ISPs). This is fundamental, since
in the last decade content has been located closer to the user. Some 90% of the content searched for by users
is located two jumps or less (in topological terms) from the user’s ISP. Therefore, although underwater cables
are still essential, it is very important to promote the growth of infrastructure that allows content to be stored
close to the user in order to make access more efficient (IXPs, data centres and caches) (Echeberría, 2020).
Many data centres in the region were built and designed to meet business demand. But now there is
demand for more powerful services, and investment in data centres needs to be increased. Some of the
content distribution network operators are coming up against limits in the data centre market when they try
to set up more points of presence. In the short term, more data centres will be needed to meet demand from
companies as they continue moving their services to the cloud and to respond to higher power requirements.
In sum, the impacts of the digital revolution have become more visible and intensified with the pandemic,
reinforcing long-term trends. As will be seen in the following chapter, applications linked to the remote provision
of education, health and shopping services, as well as those used for teleworking and social connections, have
grown and permeated large areas of society, although digital divides are preventing the universalization of
their use and impact. At the same time, despite the positive effects of dematerialization, digital development
has sustained or even exacerbated growth patterns that are intensive in energy and raw materials, increasing
the generation of greenhouse gases and waste. The positive effects are present and palpable, but so are the
negative effects. Taking advantage of the former while reducing the latter means changing the pattern of digital
progress and setting it on a path of inclusiveness and sustainability. This process is not automatic and involves
all economic and social sectors. The digital revolution must be integrated into a big push for sustainability
by means of a progressive structural change that develops the digital sector in the region through large
investments, that encourages the take-up of these technologies in the production apparatus and governments,
and that universalizes access and develops the capacities required for full use to be made of them. The final
outcome will depend on the implementation of strategies, policies and actions that are timely and capable of
repurposing digitalization in pursuit of sustainable development.
Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
24
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Belkhir, L. and A. Elmeligi (2018), “Assessing ICT global emissions footprint: trends to 2040 & recommendations”, Journal
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de contenido, cables submarinos y centros de datos”, Productive Development series, No. 226 (LC/TS.2020/120),
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solutions-drives-22-4-cagr-increase-in-latin-americas-cloud-computing-services-market-from-2019-to-2023/.
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Telecom Advisory Services.
Malmodin, J. and D. Lunden (2018), “The energy and carbon footprint of the global ICT and E&M sectors 2010–2015”,
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Chapter II
Digital technologies for a new future
25
Digitalization for social
welfare and inclusion
A. Divides in broadband access
B. The use and take-up of digital technologies
C. Universalizing access
Bibliography
CHAPTER
II
Chapter II
Digital technologies for a new future
27
A. Divides in broadband access
The digital revolution has changed and will continue to change consumption, production and business models. In
addition to increasing the productivity and well-being of users, these changes can fit well with objectives of growth,
employment, inclusion and environmental sustainability (ECLAC, 2020c).
However, this does not happen automatically; rather, the development and adoption of digital solutions are
strongly influenced by structural factors. In countries where production structures are excessively heterogeneous
and undiversified in product terms and where there are highly informal and insecure labour markets and
socioeconomic constraints on access and connectivity, a large part of society is unable to appropriate the value
generated by digital technologies. In particular, connectivity, understood as adequately fast broadband and
ownership of access devices, affects the exercise of the rights to health, education and work, and the lack of it
can lead to increased socioeconomic inequalities.
Digital development that does not respect human rights in the digital environment (digital rights) and that is
not based on principles of inclusion and sustainability can reinforce patterns of social exclusion and unsustainable
methods of resource exploitation and production, as well as exacerbating their negative environmental impacts.
In this case, the net effect will depend on the way in which business strategies tie in with policy actions aimed
at steering digitalization towards development with equality and sustainability.
Inclusion, as a way of being in or belonging to a society, is affected by the digital revolution and the ability
of individuals, society, markets and States to adapt and respond. Moreover, the pandemic and compulsory
lockdowns have created a need to find new ways of sustaining social and civil practices through digital platforms.
It is thus urgently necessary to strengthen digital citizenship associated with the way people participate in the
digital society and economy. It is also necessary to understand the new forms of power and the new public
sphere emerging from the digital realm, dominated as this is by a few global companies. Although the digital
space could be thought of as a continuation of the analogue space, it also involves new tools and forms of
participation (ECLAC, 2016; Claro and others, 2020).
Digital citizenship requires people to have new capabilities and skills if they are to be part of this new way of
being a citizen. Digital transformation in Latin America and the Caribbean is taking place in a context of structural
inequality which influences the different fields of action and results. This will prevent many people from taking
advantage of the opportunities offered by new technologies unless action is taken to make these opportunities
visible and equalize access to them. Thus, public policies have an increasing role to play in ensuring that the changes
resulting from the digital transformation pave the way for faster progress with inclusive social development and
do not widen gaps in a region with high levels of inequality in several dimensions of development.
As of 2019, 66.7% of the inhabitants of Latin America and the Caribbean used the Internet. This is remarkable
in terms of the speed and extent of the spread of a technology in the region, and was possible because the
incorporation of technological progress has been combined with strategies of vigorous competition by private
or public companies (depending on the country) and with the implementation of support and regulatory policies
for the sector. Despite this great progress, one in three inhabitants of the region has limited or no access to
digital technologies because of their economic and social situation, with the main variables being income, age
and place of residence.
The context of the pandemic has highlighted the benefits of using digital technologies in different economic
and social spheres. However, it has also shown that these benefits are not within the reach of everyone, owing
to the different dimensions of the divides in access to and use of these technologies. Divides in access, in
uses and skills and in opportunities for inclusion in an increasingly digitalized world are reproduced along the
main lines of the region’s social inequality matrix, which includes socioeconomic status, stage in the life cycle,
geographical location, ethnic or racial origin and gender inequalities, among other dimensions (ECLAC, 2016).
One of the main determinants of access is income. The lowest-income quintiles are those with the most
individuals and households excluded from Internet access (see figure II.1). Despite the increase in access
between 2010 and 2018, income-related gaps remain. There are also major differences in the situations of the
region’s countries. For example, Costa Rica has a higher proportion of households with Internet access in the
first quintile (the poorest) than the Plurinational State of Bolivia has in the fifth quintile (the richest).
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
28
Figure II.1
Latin America (10 countries): ratios between the number of households with Internet access
in the top and bottom income quintiles, 2010 and 2018
(Multiples)
0
10
20
30
40
50
60
70
Peru Paraguay
Bolivia
(Plur. State of)
El Salvador Ecuador Mexico Costa Rica Chile Brazil Uruguay
2010 2018
Source: Regional Broadband Observatory, on the basis of Household Survey Data Bank (BADEHOG).
The age groups with the lowest proportions of Internet users are children aged 5 to 12 and adults over 66,
except in Uruguay and Chile (see figure II.2). This situation has remained fairly stable over time despite the increase
in usage in all countries. As early as 2010, Internet use was already high among children aged 5to12 and young
people aged 13 to 20 in Uruguay, possibly as a result of the implementation of the CeibalPlan, created in 2007.
Figure II.2
Latin America (8 countries): Internet users by age group, 2010 and 2018
(Percentages)
Uruguay Costa Rica Chile Paraguay Ecuador Peru Bolivia
(Plur. State of)
El Salvador
0
10
20
30
40
50
60
70
80
90
100
5–12
13–20
21–25
26–65
66 years and over
5–12
13–20
21–25
26–65
66 years and over
5–12
13–20
21–25
26–65
66 years and over
5–12
13–20
21–25
26–65
66 years and over
5–12
13–20
21–25
26–65
66 years and over
5–12
13–20
21–25
26–65
66 years and over
5–12
13–20
21–25
26–65
66 years and over
5–12
13–20
21–25
26–65
66 years and over
Source: Regional Broadband Observatory, on the basis of Household Survey Data Bank (BADEHOG).
Note: Dark colours show the situation in 2010 and the sum of dark and light colours that in 2018.
The type of device and the ability to stay connected in different places substantially affect the development
of children’s and adolescents’ digital skills. The predominant form of access is from a mobile phone at home,
and the least common is ubiquitous multi-device access, i.e., access from several places using different
devices, which can be associated with more highly developed digital skills (see figure II.3).
Chapter II
Digital technologies for a new future
29
Figure II.3
Latin America (4 countries): methods of physical access employed by child and adolescent Internet users, 2016-2018
(Percentages)
0
10
20
30
40
50
60
70
80
90
100
16.6
10.3
11.1
13.9
52.5
59.1
54.4
63.4
13.3
7.5
10.5
4.8
17.6
23.1
24.0
17.9
Brazil Chile Costa Rica Uruguay
Home (multi-device)Home (mobile phone)Everywhere (multi-device)Everywhere (mobile phone)
Source: D. Trucco and A. Palma (eds.), “Infancia y adolescencia en la era digital: un informe comparativo de los estudios de Kids Online del Brasil, Chile, Costa Rica y
el Uruguay”, Project Documents (LC/TS.2020/18/Rev.1), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC), 2020.
Note: There are limitations on the comparability of the four countries’ data, mainly due to differences in sample designs and the inclusion of different variables for
ascertaining key dimensions, such as the socioeconomic level of the population surveyed.
In the countries included in figure II.4, with the exceptions of Uruguay and Costa Rica, the gap between
urban and rural households increased during the period from 2010 to 2018, in some cases even doubling. This
increase was generally due to faster growth in the number of users in urban areas.
Figure II.4
Latin America (10 countries): access divides between urban and rural households, 2010 and 2018
(Percentage points)
0
5
10
15
20
25
30
35
40
45
2018 2010 2018 2011 2018 2010 2017 2010 2018 2013 2017 2009 2018 2010 2018 2011 2018 2011 2018 2010
Mexico Brazil Peru Ecuador El Salvador Chile Paraguay
Bolivia
(Plur. State of)
Costa Rica Uruguay
Source: Regional Broadband Observatory, on the basis of Household Survey Data Bank (BADEHOG).
The percentage of the population with a mobile broadband subscription increased tenfold from 2010 to 2018,
rising from about 7% to 73%. In contrast, growth in fixed broadband access was much lower, rising from
6.6% to 13.3% over the same period (see figure II.5).
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
30
Figure II.5
Latin America and the Caribbean: fixed and mobile broadband subscriptions, 2010-2019
(Percentages of the total population)
0
10
20
30
40
50
60
70
80
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Fixed broadband
Mobile broadband
Source: Regional Broadband Observatory.
Latin America and the Caribbean lags behind other regions of the world in the percentage of the population
with mobile and fixed broadband subscriptions. In both cases, the region is ahead of only the Arab and African
countries (see figure II.6).
Figure II.6
Fixed and mobile broadband subscriptions, 2019
(Percentages of the population)
137.6
97.4
89.0
85.4
73.1
67.3
34.0
35.2
31.9
14.4
19.8
13.3
8.1
0.4
0
20
40
60
80
100
120
140
160
North America Europe Asia and
the Pacific
Commonwealth
of Independent
States
Latin America
and
the Caribbean
Arab States Africa
Mobile broadband Fixed broadband
Source: Regional Broadband Observatory.
One aspect that has become particularly important in the context of the pandemic is connection quality
(estimated from download speeds), since social distancing measures have required a variety of tasks to be
carried out from home, often simultaneously. In September 2020, only six countries had average download
speeds for mobile broadband (the most widely used) of over 25 megabits per second (Mbps), the minimum
considered sufficient for intensive use, i.e., for carrying out several data-intensive tasks simultaneously over
the same connection (see map II.1). The situation is aggravated by the fact that most mobile technology access
devices appear to be smartphones, which are of limited use for remote work or study.
Chapter II
Digital technologies for a new future
31
Map II.1
Latin America: broadband download speeds in megabits per second (Mbps), September 2020
5.5 < = speed < = 18.5 18.5 < speed < 25.0 Speed > = 25.0
A. Mobile broadband B. Fixed broadband
Source: Regional Broadband Observatory.
Note: The boundaries and names shown on this map do not imply official endorsement or acceptance by the United Nations.
In the case of fixed broadband, intensive use is possible in 11 countries (see map II.1). However, as fixed
broadband penetration is much lower than mobile broadband penetration, the opportunity for intensive use
is limited to a small segment of the population.
In ethnic and racial terms, the indigenous and Afrodescendent populations have less access to the Internet
than the rest of the population, although gaps vary significantly between countries (see figure II.7).
Figure II.7
Latin America (5 countries): population aged 15 to 64 with an Internet connection in the home, by ethnicity
(Percentages)
62.5
41.5
40.6
37.3
28.8
51.0
21.0
14.5
13.7
4.6
0
10
20
30
40
50
60
70
Uruguay Brazil Colombia Peru Ecuador
Non-Afrodescendent, non-indigenous population Afrodescendent population Indigenous population
2018 2017
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Household Survey Data Bank (BADEHOG).
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
32
B. The use and take-up of digital technologies
1. Distance learning: essential but inaccessible for many
Experience of and familiarity with the digital world vary according to people’s stage in the life cycle, sex and
educational level. The young population shows higher achievements in cognitive and work-related skills. A
person’s general level of education plays an important role in the acquisition of such skills, and there is a clear
gap between the attainments of men and women. In these three dimensions (age, educational level and sex),
the percentage of the population with high levels of attainment is much lower in the countries of the region
than in those of the Organization for Economic Cooperation and Development (OECD) (see figure II.8).
Figure II.8
Latin America (4 countries) and OECD averages: adults with high levels of attainment in problem-solving
in digital environments, by age, educational level and sex, 2018
(Percentages)
29.8
43.1
10.3
7.0
20.5
47.7
31.7
27.7
14.5
24.1
1.5
0.5
8.2
30.2
16.7
12.4
10.2
13.3
1.9
1.0
12.2
26.2
13.1
7.6
6.6
8.9
1.1
4.3
13.7
7.0
6.3
5.3
7.4
0.4
3.7
11.8
6.1
4.4
0
5
10
15
20
25
30
35
40
45
50
Total Aged
25–34
Aged
55–65
Less than
secondary
Complete
secondary
Tertiary
education
Male Female
OECD Chile Mexico Peru Ecuador
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Organization for Economic Cooperation and Development (OECD), Programme
for the International Assessment of Adult Competencies.
Despite this greater familiarity of the younger population with the digital world, fifteen-year-old
students’ perception of their self-efficacy in the use of digital media is mediocre at best (8.7 on a scale of 0 to 15)
(see figure II.9). Moreover, this self-perception is unequally distributed by socioeconomic level and sex, with
women at a disadvantage (ECLAC, 2020c). These gender gaps may then be perpetuated, considering that
only 35% of women enrol in science, technology, engineering and mathematics degrees.
In March 2020, as a way of containing the pandemic, most countries in the region partially or entirely
suspended face-to-face classes and introduced digitally-based strategies for continuing to provide education.
While the interruption of the school cycle opened up opportunities for adaptation and innovation in education
systems that may lead to major advances, it has also widened educational divides between the most vulnerable
students and those who are better placed in terms of learning outcomes and other educational indicators,
such as school progression and retention.
Thus, for students who have high-quality Internet access and live in environments with stronger digital
skills, this crisis may be an opportunity to carry on learning and even to learn better, given the great potential
of virtual resources (ECLAC/UNESCO, 2020; ECLAC, 2020c). However, a large proportion of students have
little access to digital equipment at home and few skills to take advantage of this opportunity. They are thus
likely to learn less, and this can lead to higher repetition and dropout rates.
Chapter II
Digital technologies for a new future
33
Figure II.9
Latin America and the Caribbean (21 countries): fifteen-year-old students’ perception of auto-efficacy
with digital media, by sex and socioeconomic and cultural level, 2018
5.2
5.8
6.2
7.2
6.9
7.7
7.5
8.7
0
1
2
3
4
5
6
7
8
9
10
Woman Man Woman Man Woman Man Woman Man
Quartile 1 Quartile 2 Quartile 3 Quartile 4
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Building a New Future: Transformative Recovery with Equality and Sustainability (LC/SES.38/3-P/
Rev.1), Santiago, 2020; Organization for Economic Cooperation and Development (OECD), Programme for International Student Assessment (PISA), Paris, 2018.
Note: Index with values from 0 to 15, where 0 is the minimum and 15 the maximum, based on indicators such as “If I need new software I install it myself”,
“If Ihave a problem with a digital device I start to solve it on my own” and “If my friends or family have a problem with digital devices I can help them”.
In 2018, 79% of fifteen-year-old students in the 10 countries of the region that participated in the PISA test
1
had access to the Internet at home and 61% had a desktop computer. These levels are significantly lower than the
average for the OECD countries (92% and 82%, respectively). Moreover, access to such devices at home is very
uneven. In seven of the countries participating in the study,
2
between 70% and 80% of students in the highest
socioeconomic and cultural quartile had a laptop computer at home, compared to only 10% or 20% of students
in the first quartile. These differences are replicated for all the digital devices surveyed (ECLAC/UNESCO, 2020).
In 2018, only 60% of students in the region were equipped to embrace a distance education model
covering essential cognitive skills (language, mathematics, science and social science) using digital media
(see figure II.10). The remaining 40% were not equipped to continue their studies virtually (ECLAC/OEI, 2020).
Figure II.10
Latin America (7 countries)
a
and OECD average: students aged 15 using digital devices
in or out of class for at least 1 hour a week, by subject, 2018
(Percentages)
36
34
38
39
35
63
56
64
61
61
49
42
52
49
45
59
54
59
58
50
0
10
20
30
40
50
60
70
80
90
100
Language Mathematics Science Foreign
language
Social
science
Language Science Foreign
language
Social
science
In class Out of class
Latin AmericaOECD
Mathematics
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Building a New Future: Transformative Recovery with Equality and Sustainability (LC/SES.38/3-P/
Rev.1), Santiago, 2020; Organization for Economic Cooperation and Development (OECD), Programme for International Student Assessment (PISA), Paris, 2018.
a
Brazil, Chile, Costa Rica, Dominican Republic, Mexico, Panama and Uruguay.
1
Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Panama, Peru and Uruguay.
2
Brazil, Chile, Costa Rica, Dominican Republic, Mexico, Panama and Uruguay.
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
34
The digital skills most often taught at school are safe and critical use of the Internet (e.g., considering
the consequences of posting information online or deciding whether to trust the information available). Skills
requiring more technical expertise and knowledge are less frequently taught. In all cases, students in the
OECD are reported to receive a higher level of training in this area at school than those in Latin America
(ECLAC/OEI, 2020). This is compounded by the difference in the ability of teachers and parents to support
platform-based learning processes. Teachers and education system officials have had to find ways to respond
to the demands that have emerged during the pandemic, and this has often meant their being overloaded with
responsibilities, given that they have to cope with their own care and domestic work as well (ECLAC, 2020a).
In this context, the role of adults in the digital education of the new generations is still important. The Kids
Online studies identify three types of mediation: active (adult guidance and supervision), restrictive (prohibition
of access to certain websites, webcam use or the disclosure of personal information) and monitoring (oversight
of sites visited or time spent online) (Livingston and Helsper, 2010). Active mediation is the most important
when it comes to developing digital opportunities for children and adolescents; in particular, it is important for
risk prevention, skills training and self-care strategies. The Kids Online studies in Brazil (2016), Chile (2016) and
Costa Rica (2018) identified gaps in the type of mediation received by children and adolescents. The highest
levels of active mediation in the home were found in the population with the highest socioeconomic status,
with the exception of Chile, where it was in the middle sectors. This is particularly important during periods
when there are no face-to-face classes and studies must be continued at home.
2. Digital health care in the pandemic emergency
Digital transformation is providing new tools for the health sector. Pervasive Internet use has opened up a
new perspective on health care by transcending the logic of face-to-face care, as has been seen during the
pandemic. Among digital or electronic health interventions (e-health), there is growing interest in and use
of telemedicine as an alternative to face-to-face care, with digital technologies being employed to deliver
clinical services remotely and use mobile devices for monitoring (mobile health or m-health), teleradiology or
telerehabilitation (Oliveira, 2020). However, access to these services requires digital infrastructure, technological
capabilities among members of the system and financial resources to cover the costs of digitalization and the
consequent expansion of demand (Fernandez and Oviedo, 2010).
From a public health perspective, digitalization is supporting the transition from curative to preventive
medicine, helping to put patients at the centre and empowering them, and making service management
and delivery more efficient, safe and cost-effective (Odone and others, 2019). Constraints on the provision of
quality care arise from the limited supply of general practitioners and specialists to serve those populations
that are most vulnerable because of their economic status or because they live far from major urban centres.
E-health can help bring care closer to these groups.
During the pandemic, new technologies have made it possible to respond rapidly to the different phases
of the crisis. Digitalization strengthens predictive capacity, and the use of artificial intelligence facilitates
detection, prevention, response and recovery by enhancing diagnosis, epidemiological surveillance, contact
tracing and service automation (see table II.1).
The challenge is to develop the capacity to move forward with digital health care. According to the World
Health Organization (WHO) Third Global Survey on eHealth, applied to 15 countries in Latin America and
theCaribbean in 2015, only eight had a digital health strategy. Table II.2 shows that seven countries have
developed a national telehealth policy or strategy and nine have implemented a telehealth area at the country,
regional or provincial level, with three pilot programmes between them. The implementation of electronic
health records is one of the most prevalent digital strategies in the region (11 countries).
Chapter II
Digital technologies for a new future
35
Table II.1
Applications of artificial intelligence in the different stages of the COVID-19 crisis
Detection Early warning Diagnosis
Detection of anomalies and digital “smoke
signals” (BlueDot)
Patterns of recognition using medical
imaging and data on symptoms (CT scan)
Prevention Prediction Surveillance Information
Calculation of a person’s risk of infection
(EpiRisk)
Real-time infection monitoring and
tracking (application for tracing the
contacts of positive cases)
Personalized news and content
moderation to combat disinformation
(social networks)
Response Delivery Service automation
Use of drones to transport materials; use
of robots in high-exposure hospital work
(Robot Cruzr)
Deployment of virtual triage assistants
and chatbots (Canadian COVID-19 chatbot)
Recovery Monitoring
Monitoring of economic recovery using
satellites, the Global Positioning System
(GPS) and social network data (WeBank)
Source: S. Moller, “Intervenciones sociosanitarias y uso de las tecnologías de la industria 4.0 para enfrentar la enfermedad por coronavirus (COVID-19) en AméricaLatina
y el Caribe”, Social Policy series, No. 234 (LC/TS.2020/87), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC), 2020.
Table II.2
Latin America and the Caribbean (15 countries): e-health policies or strategies, 2015
Country
Does your country
have a national
e-health policy
or strategy?
Does your country
have a national
telehealth policy
or strategy?
Does it have some
telehealth service
implemented at the
country, regional or
provincial level?
Does your country
have a national
system of electronic
health records?
Does your country have a
national policy or strategy
regulating the use of big
data in the health sector?
Argentina Yes Yes Pilot No Yes
Chile Yes No Yes Yes No
Colombia No response Yes Yes No response Yes
Costa Rica Yes Yes Yes Yes Yes
Cuba Yes Yes Pilot Yes Yes
El Salvador No No Informal Yes No
Guatemala No No Yes Yes No
Honduras No No No Yes No
Jamaica Yes No No No No
Mexico No No Yes Yes No
Panama No No No response Yes No
Paraguay Yes Yes Yes Yes No
Peru No Yes Informal Yes No
Trinidad and Tobago Yes No Informal Yes No
Uruguay Yes Yes Pilot No No
Source: S. Moller, “Intervenciones sociosanitarias y uso de las tecnologías de la industria 4.0 para enfrentar la enfermedad por coronavirus (COVID-19) en AméricaLatina
y el Caribe”, Social Policy series, No. 234 (LC/TS.2020/87), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC), 2020.
As in all other areas of well-being, there are socioeconomic, cultural and geographical determinants that
lead to disparities in access to health, with the result that the most vulnerable receive delayed and substandard
care. The health sector still lags behind in the use of high-quality data for the digital transformation of health
care. The experiences of the leading countries bring out the essential dimensions of a digital transformation of
the sector, including the need for a digital strategy that encompasses investments in health data infrastructure,
standards, tools and governance.
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
36
3. Digitalization, the labour market and employment
Before the pandemic, digital technologies and their applications in economic activities were bringing about
radical changes in labour markets and skills. Shifts in production and consumption patterns driven by the
pandemic have hastened the adoption of digital technologies in many sectors and are magnifying their effects
on labour markets. During periods of confinement and restricted face-to-face activities, digital technologies
have been critical in sustaining jobs and business activities. The ability to work from home has enabled many
companies, organizations and institutions to limit the socioeconomic impact of the crisis.
The potential of telework to mitigate the impact of the crisis in the region is constrained by informality
and lack of connectivity. Informal employment, which in 2018 accounted for more than 50% of the total, is
concentrated in sectors where physical interactions are needed and work cannot be done remotely. At the
same time, the quality of connectivity in the countries affects opportunities for teleworking. As was seen
earlier, average connectivity levels in most countries of the region are not good enough for high-consumption
activities to be carried out simultaneously. Different surveys in the region’s countries have shown that only
about one fifth of people in employment have been able to work from home during the pandemic. Specifically,
24.9% of workers in Chile engaged in teleworking activities during the last week of May, as compared to
23.4% in Mexico, 14% in Peru and 17% in Uruguay.
3
In this context, it is estimated that an additional 18 million people will become unemployed in Latin America
and the Caribbean as a result of COVID-19 (ECLAC, 2020b). The impact of the labour crisis differs substantially
by income and education level. The poorest households, informal workers and the most vulnerable will be the
hardest hit. As a consequence, poverty and inequality are projected to increase in all countries of the region,
as reflected in diagram II.1.
Diagram II.1
Latin America and the Caribbean: COVID-19 and the labour market
COVID -19
The Gini index could
rise by between
1% and 8%
OCCUPATIONAL,
SOCIAL AND
ECONOMIC
VULNERABILITY
In 2020
2.7 million firms will close
+18 million newly unemployed
+45.4 million newly poor
Gini in 2018: 46%
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
One cause of the substantial increase in unemployment is related to labour market segmentation and its
consequences in terms of teleworking opportunities. While COVID-19 has accelerated the benefits of telework,
the proportion of people in employment who can telework, which varies between countries, is correlated
with the production structure and worker skills. A medium-skilled worker has a 67% chance of working from
home, while the proportions are 73% for high-skilled workers and 4% for low-skilled workers (see figure II.11).
Telework is not an option for low-income workers. In the first three income quintiles, the likelihood of being
able to work from home is less than 20% (see figure II.12), which increases people’s risk of losing their jobs
during lockdowns. These labour market situations have large effects on income distribution, with increases in
the Gini index estimated at between 1% and 8%.
3
Chile: survey by the Chilean Safety Association (ACHS), 2020, access figures from InvestChile. Uruguay: Equipos Consultores (2020). Perú: Ipsos (2020). Mexico: INEGI (2020).
Chapter II
Digital technologies for a new future
37
Figure II.11
Latin America (7 countries): likelihood of teleworking by level of education
(Percentages)
4
67
73
96
33
27
0
10
20
30
40
50
60
70
80
90
100
Low (<12 years) Medium (12–17 years) High (>17 years)
Can telework
Cannot telework
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of household surveys from the countries.
Note: Simple averages of the figures for Chile, the Dominican Republic, Ecuador, El Salvador, Honduras, Mexico and Uruguay.
Figure II.12
Latin America (7 countries): likelihood of teleworking by income quintile
(Percentages)
97
92
80
41
30
3
8
20
59
70
0
10
20
30
40
50
60
70
80
90
100
Quintile I Quintile II Quintile III Quintile IV Quintile V
Can telework Cannot telework
Source: Economic Commission for Latin America and the Caribbean (ECLAC), “Universalizing access to digital technologies to address the consequences of COVID-19”,
COVID-19 Special Report, No. 7, Santiago, 2020.
Note: Simple averages of the figures for Chile, the Dominican Republic, Ecuador, El Salvador, Honduras, Mexico and Uruguay.
In the face of inadequate unemployment benefits and changing consumer demand, on-demand work platforms
have provided opportunities to supplement the income of the most vulnerable households and individuals. During
periods of confinement, logistics and home food delivery applications substantially increased their number
of users, with downloads increasing by more than 50% in many countries of the region. At the same time,
the absence of specific labour regulations means that those working for on-demand platforms perform their
activities without employment protection or rights, which increases their occupational and social vulnerability.
Many of the labour market changes driven by the pandemic will continue beyond the emergency phase.
Until a vaccine is found and deployed on a mass scale, teleworking will allow many companies to continue
operating and producing, reduce social contacts and mitigate the spread of the virus. At the same time,
changing consumption patterns will increase the presence of on-demand platforms.
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
38
In this context, harnessing the potential of new digital technologies in labour markets without deepening
structural inequalities in the region must involve: (i) universalizing access to the Internet, to devices and
applications and to digital literacy programmes; (ii) developing digital skills and rethinking social protection
systems; and (iii) designing regulatory frameworks for digitalized labour markets.
4. Financial inclusion: the advance of financial technology (fintech)
By financial inclusion is meant public and private initiatives to provide access to financial services for households
and enterprises that are excluded from the traditional financial system for various reasons, and encouragement
for productive agents operating within the traditional financial system to make effective use of products that
foster inclusion (ECLAC, 2018).
In Latin America and the Caribbean, access to the traditional financial system for households and micro,
small and medium-sized enterprises (MSMEs) is limited and unequal, and the supply of products and services
that promote inclusion is low. While less than 50% of the population aged over 15 in the region has access
to the formal financial system, the proportion in North America and Western Europe is close to 90%, and in
developing regions such as Central Asia and North Africa it is between 53% and 72%.
Financial exclusion is explained by supply- and demand-side factors. On the supply side, the greatest
restrictions on credit are due to: (i) the risk perceived by financial institutions, which translates into high interest
rates and restrictive conditions for borrowers, and (ii) a low expected return on the investments necessary
for the inclusion of certain population groups. On the demand side, entry barriers are mainly related to the
lack of financial education, lack of identification with the products offered and the costs involved in complying
with legal and regulatory requirements (ECLAC, 2018).
The use of digital technologies in the financial sector has helped to remove some of the biggest obstacles
to financial inclusion. Their application has changed the way traditional financial sector activities (financing,
investing, trading, payments, planning, etc.) are carried out, with major implications for end consumers
(OECD, 2018). In relation to financial inclusion in particular, digital technologies have expanded supply (new
business models, new products and providers), replaced or changed the role of intermediaries and the costs
associated with them, made it possible to take advantage of economies of scale and scope, and facilitated
and accelerated the design of niche products for certain segments.
Peer to peer (P2P) platforms allow investment, trading, lending and financing transactions to be carried
out at a much lower cost and processed more easily than when the services of an intermediary are used.
Examples of business models using these platforms include donations of funds in exchange for a future reward,
loans or investment in exchange for a return, equity-based platforms where individuals receive a stake in the
companies financed, and those that handle cross-border payments and eliminate payment of the exchange-rate
differential. Moreover, these platforms are used to offer services and products such as professional design
of investment portfolios whose cost and complexity mean they are usually restricted to certain segments.
Digital technologies have helped lower the fixed costs associated with infrastructure and increase the
scale of production to extend service coverage to previously excluded populations. One example is the use of
mobile telephony for people in rural areas, which provides the financial sector with a widely used and low-cost
platform as long as the infrastructure is in place (De Olloqui, Andrade and Herrera, 2015).
For Internet-based companies, and in particular those using big data tools, these technologies make it
easier to design specific products and services for certain market segments. A successful instance of the
application of such tools are the collateral-free cash advances offered to small and medium-sized enterprises
(SMEs) by the payment processor Worldpay and by Liberis, a London-based non-bank financial institution.
The amount and repayment period that each beneficiary SME is able to afford are determined on the basis
of sales projection analysis alone, and all loans are granted within these limits.
Chapter II
Digital technologies for a new future
39
Efficiency savings in internal processes and reductions in overheads achieved by financial institutions
through the application of digital technologies are important for financial inclusion (OECD, 2018). This is because
the costs of risk studies to determine whether to grant credit often exceed the risk-adjusted return, as is also
the case for SMEs and low-income households in the region (ECLAC, 2018).
On the demand side, financial exclusion is also associated with misperceptions of financial services as
being of low utility and difficult to use. In terms of financial education and the matching of providers and
consumers, digital technologies facilitate consumers’ access to information and help them compare products
and make informed investment decisions. They also support the monitoring of financial transactions and access
to courses. All these factors work together to create a financial culture that encourages demand.
An alternative to traditional financial system tools is the use of mobile money. Mobile money accounts
include the ability to transfer money and to make and receive payments through mobile phones. They are
available to the unbanked population and have a large network of physical access points to ensure that they
can be used by people outside the traditional financial system in particular. In this area, Latin America and the
Caribbean lags behind other developing regions, although it has a better ratio of active accounts to registered
accounts (see figure II.13).
Figure II.13
Latin America and the Caribbean and other developing regions: number of mobile money accounts registered and
accounts active over 90 days, population aged over 15 without an account at a financial institution, 2018 and 2019
(Percentages)
0
20
40
60
80
100
120
140
2018 2019 2018 2019 2018 2019 2018 2019
Sub-Saharan Africa East Asia and the Pacific Middle East and North Africa Latin America and
the Caribbean
Source: GSMA, State of the Industry Report on Mobile Money 2019, London, 2019.
Note: Electronic banking or payment services that use the mobile network only as an additional channel are not included. Information on the population aged over
15 without an account at a financial institution is for 2017.
Moreover, Latin America and the Caribbean lags behind other regions in the use of mobile money as
measured by the number of mobile money accounts and the value of transactions (see figure II.14).
Brazil is the leader in the use of applications providing alternatives to the financial services offered by
the traditional financial system, with 28.2% of mobile broadband subscribers having applications for using
financial services (see figure II.15). In contrast, there are several countries where this figure is below 1%.
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
40
Figure II.14
Latin America and the Caribbean and other developing regions: value of mobile money transactions, 2018 and 2019
(Millions of dollars)
50 000
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
500 000
2018 2019 2018 2019 2018 2019 2018 2019
Sub-Saharan Africa East Asia and
the Pacific
Latin America and
the Caribbean
Middle East and
North Africa
Source: GSMA, State of the Industry Report on Mobile Money 2019, London, 2019.
Figure II.15
Latin America and the Caribbean (20 countries): downloads of financial services applications, 2020
(Percentages of all active mobile phone subscriptions in each country)
0.4
0.6
0.6
0.9
1.1
1.5
1.7 1.7
1.7
2.3
2.5
2.5
2.6
2.8
4.9
5.1
5.6
13.1
13.5
28.2
0
5
10
15
20
25
30
Honduras
Bolivia
(Plur. State of)
Paraguay
Guatemala
Costa Rica
Peru
Haiti
Venezuela
(Bol. Rep. of)
Jamaica
Dominican
Rep.
Panama
El Salvador
Ecuador
Colombia
Uruguay
Nicaragua
Chile
Mexico
Argentina
Brazil
Source: Regional Broadband Observatory, on the basis of Economic Commission for Latin America and the Caribbean (ECLAC), Big Data for Measuring and Fostering the
Digital Economy in Latin America and the Caribbean Project; International Telecommunication Union (ITU), World Telecommunication/ICT Indicators Database
2020 [online] https://www.itu.int/en/ITU-D/Statistics/Pages/publications/wtid.aspx; Google Play, App Store and 42matters.
Note: The applications included are: Alipay, Google Pay, Mercado Pago, Nubank, PayPal, TransferWise. The information on active mobile broadband subscriptions
is for 2019.
In Ecuador and Guatemala, meanwhile, fairly extensive use is made of digital applications for small
business management, which suggests a greater awareness of the benefits of digitalization, at least where
administration is concerned (see figure II.16).
Chapter II
Digital technologies for a new future
41
Figure II.16
Latin America and the Caribbean (21 countries): downloads of applications with services for small businesses, 2020
(Percentages of all active mobile subscriptions in each country)
0.5
1.2
2.0
2.6
3.1
3.2
3.6
3.7
4.0
4.1
4.8
5.3
5.4
5.8
6.9
7.7
9.0
9.4
10.4
21.0
25.0
0
5
10
15
20
25
30
Belize
Cuba
Uruguay
Venezuela
(Bol. Rep. of)
Haiti
Chile
Argentina
Costa Rica
Mexico
Panama
El Salvador
Paraguay
Bolivia
(Plur. State of)
Nicaragua
Jamaica
Brazil
Peru
Colombia
Dominican
Rep.
Ecuador
Guatemala
Source: Regional Broadband Observatory, on the basis of Economic Commission for Latin America and the Caribbean (ECLAC), Big Data for Measuring and Fostering the
Digital Economy in Latin America and the Caribbean Project; International Telecommunication Union (ITU), World Telecommunication/ICT Indicators Database
2020 [online] https://www.itu.int/en/ITU-D/Statistics/Pages/publications/wtid.aspx; and 42matters.
Note: The applications included are: PayPal for Business, WhatsApp Business, Rappi Partner Growth, Uber Eats Restaurant Manager, Mailchimp, Google My Business,
Facebook Business Suite and RappiAliado. The information on active mobile broadband subscriptions is for 2019.
5. Smart cities: a hub of inclusive and sustainable development
A smart city is a model of urban development based on the adoption of digital technologies (the Internet
of things (IoT), 5G networks, artificial intelligence (AI), big data, cloud computing, autonomous vehicles and
others) to optimize the efficiency of cities’ operations and services in order to increase the quality of life of
their inhabitants and help improve the environment. This is particularly important for Latin America and the
Caribbean, as more than 80% of the population lives in urban areas, where there are serious deficiencies in
the provision of public services. Poor public transport, high levels of vehicle congestion, air pollution, insecurity,
inadequate waste management and limited access to drinking water, health care and education are problems
which urban development policies need to address, and for which smart city models can be a solution.
The design of a smart city must include three elements: the physical infrastructure that supports the delivery of
services to citizens (road, sanitation and electricity networks, among others), the digital infrastructure that provides
connectivity through devices and sensors connected by high-speed communication networks, and the applications
that provide smart data management to optimize processes and improve quality of life and sustainability.
According to the Smart City Index 2020 report of the International Institute for Management Development
(IMD), Singapore, Helsinki and Zurich are the world’s leading smart cities because of their highly developed
infrastructure providing technological solutions for health care and mobility. In Latin America, Medellín (Colombia) is
the best ranked (number 72 out of 125 cities), followed by Buenos Aires (88) and Mexico City(90) (see table II.3).
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
42
Table II.3
Smart cities in Latin America
Initiatives
• Information on natural disasters
Smart LED lighting
Security cameras
•
•
IMD Smart City Index ranking 2020: 102
Rio de Janeiro
(Brazil)
Initiatives
• Weather and air monitoring
Traffic monitoring
Security cameras
•
•
IMD Smart City Index ranking 2020: 91
Santiago
(Chile)
Initiatives
• Mobility Management Centre
Security Monitoring Centre
“Montevideo Decide” citizen participate platform
•
•
IMD Smart City Index ranking 2020: -
Montevideo
(Uruguay)
Initiatives
• Air quality monitoring
Wi-Fi connection points (CDMXDigital)
Open data
•
•
IMD Smart City Index ranking 2020: 90
Mexico City
(Mexico)
Initiatives
• Medellín Smart Mobility System (SIMM)
Security cameras
Climate and air monitoring
Open data and participatory budgeting
•
•
•
IMD Smart City Index ranking 2020: 72
Medellín
(Colombia)
Initiatives
• Traffic Management Centre (CGT)
“123” oversight system
Air Quality Monitoring Network (RMCAB)
•
•
IMD Smart City Index ranking 2020: 92
Bogotá
(Colombia)
Initiatives
• Smart electricity service (Urban Futurability)
Security video surveillance
Traffic monitoring with IP cameras
•
•
IMD Smart City Index ranking 2020: 100
São Paulo
(Brazil)
Initiatives
• Location of public transport
Security cameras and vehicle monitoring
LED lighting
Open data and online government procedures
•
•
•
IMD Smart City Index ranking 2020: 88
Buenos Aires
(Argentina)
Source: International Institute for Management Development (IMD), “Smart City Index 2020” [online] https://www.imd.org/smart-city-observatory/smart-city-index/.
Turning a traditional city into a smart city is complex, as it involves a wide range of actors and coordination
between public sector agencies and departments, as well as requiring appropriately trained human resources. In
the countries of the region, smart cities are being developed with varying degrees of planning and coordination.
In some cases, cities have a strategic plan; in others, specific initiatives are implemented, often without the
involvement of digital modernization authorities or coordination with other bodies. The most digitally developed
cities are the largest and those with the highest per capita output (see table II.4).
Table II.4
Latin America (8 countries): development of the smart city model in nine cities
How cities work in the area
of digital innovation
Specially earmarked
digital budget
Agenda with follow-up goals
or indicators
Dedicated authority for digital
policies and innovation
Coordination of the international agenda
Coordination of the national agenda
Coordination of the agenda
with the private sector
NoYes
Buenos
Aires
Mexico
City
São
Paulo
Rio de
Janeiro
Medellín
Montevideo
Riobamba
Salcajá
Santiago
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Note: A deeper red indicates that the aspect concerned is more highly developed.
Chapter II
Digital technologies for a new future
43
Medellín, Buenos Aires, Mexico City, São Paulo and Santiago have plans with clear objectives, protocols
and tools to implement technological solutions and digital communication systems in all areas of government.
The rest of the cities undergoing digitalization are concentrating on specific issues, managed by the department
in charge of each portfolio. In all cases, a leading role is played by private sector and non-governmental
organizations with training and production development activities, even if these are not always coordinated
among public sector bodies. Only Buenos Aires, Mexico City, São Paulo and Montevideo have agencies in
charge of providing comprehensive technological solutions with an earmarked budget, usually reporting directly
to the mayor’s office or the office of the government chief of staff (see table II.5).
Table II.5
Latin America (7 countries): the institutional structures of some smart cities
City Authority Reporting to
Budget
(millions
of dollars)
Buenos Aires
(Argentina)
Secretariat of Innovation and Digital Transformation Ministerial chief of staff 2.9
Mexico City (Mexico) Digital Public Innovation Agency Office of the head of the city government 8.3
São Paulo (Brazil) Department of Information and Technology Municipality of São Paulo 26.6
Montevideo
(Uruguay)
Department of Sustainable and Smart Development Mayor’s office 14.7
Riobamba (Ecuador) Riobamba Digital City Information Technology Management Department,
National Council for Telecommunications
Salcajá (Guatemala) Ecosystem led by a consortium of private firms Digital Development Department (SOFEX) of AGEXPORT
(a private non-profit association)
Santiago (Chile) “Sé Santiago” programme (public-private partnership) Public-private initiative, Metropolitan Regional Authority
and País Digital Foundation
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
To drive the development of smart cities, there needs to be clear governance that considers local aspects
in areas such as the roll-out of traditional (health-care, road, etc.) and digital infrastructure and the development
of human capital. This needs to be coupled with a national governance framework that promotes digital
development (5G networks, the Internet of things, etc.) and regulates technological risks, such as data privacy
and cybersecurity threats. This is vital to give citizens confidence in the use of digital technologies.
C. Universalizing access
The essential requirement for effective participation in the digital age is high-speed broadband access under
meaningful conditions of affordability. This means extending fixed broadband coverage and improving the
speed of mobile broadband connections. The costs involved in connecting households and the necessary
devices, coupled with the difficulties of financing digital infrastructure (e.g., fibre optic cables), are barriers to
digital inclusion. For this reason, ensuring that access and devices are affordable is crucial.
4
Using the prices of mobile and fixed broadband Internet plans and electronic devices, ECLAC (2020c) has
estimated the cost of a basic digital basket that includes monthly connection plans, a laptop, a smartphone
and a tablet. The region’s countries would have to invest an average of about 1% of GDP per year to ensure
access for unconnected households, although with large differences between them (see figure II.17).
Demand subsidies could be used to help lower-income households afford telecommunications services
and the basket of access devices. What is essential, though, is to coordinate public-private actions tailored to
each country that meet socioeconomic, geographical, age and gender criteria.
4
This section is taken from ECLAC (2020c).
Chapter II
Economic Commission for Latin America and the Caribbean (ECLAC)
44
Figure II.17
Latin America (11 countries): monthly cost of digital basket of fixed and mobile broadband services and devices
(Percentages of monthly GDP)
0
1
2
3
4
5
6
7
8
Bolivia
(Plur. State of)
El Salvador Peru Paraguay Ecuador Colombia Mexico Uruguay Brazil Costa Rica Chile
Monthly cost of devices Monthly cost of services
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Building a New Future: Transformative Recovery with Equality and Sustainability
(LC/SES.38/3-P/Rev.1), Santiago, 2020.
A regulatory sandbox can be implemented in this area, with operators being allowed to directly manage some
of the resources to be provided by universal access funds or other funds set up to expand telecommunications
services on a mass scale, using them to cover the costs of providing services to lower-income households.
Authorization could be subject to conditions set by the regulator that incentivized service providers to compete
to offer the best conditions in order to obtain this authorization. This could be supplemented by measures to
make regulations more flexible in certain areas, such as network neutrality. In this case, the use of education,
health and government services could be encouraged by zero-rating access fees.
As regards access to devices, there could be temporary reductions in import duties and sales taxes such as
value added tax (VAT) on devices specified by the regulator, as well as encouragement for public-private partnerships
with suppliers and manufacturers to produce them at low cost in the region and thus improve conditions of supply.
The monthly values of the basket range from 0.32% to 7.29% of monthly GDP, with an average of 1.8% for
the countries in the sample. As regards the financing of the basic digital basket, depending on each particular
case and considering the wide variation in costs, part of it could be covered by universal access funds or
through similar mechanisms existing in each country.
These universalization efforts need to take place within a framework in which the Internet is conceived as a
public good, with secure, universal access so that the entire population can take advantage of its opportunities
and benefits. This process must go together with the universalization of social protection.
It is also necessary to highlight access barriers by age, territory, indigenous or African descent, gender and
income in order to address them quickly and efficiently in the light of their specificities. Physical accessibility
entails special attention for groups excluded from digital technologies, such as people with disabilities, whether
because they are affected by a lack of equipment with specific resources to facilitate their access or because
most of this population live in poor households (Meresman and Ullman, 2020).
Addressing the challenges of digital inclusion means considering not only physical accessibility, but also
skills development and the enforcement of rights in pursuit of a digital citizenship in which no one is left
behind. With technological change and digitalization, new forms of citizenship and participation are putting
pressure on public institutions with new power dynamics that must be taken into account if citizenship is to
be exercised and civic engagement and democracy are to be strengthened. In this area, the countries of the
region must develop and agree on standards for the protection of privacy, rights and accessibility and principles
of inclusive design in digital spaces (ECLAC, 2020a).
Chapter II
Digital technologies for a new future
45
To make progress on these issues, it is essential to implement coordinated digital, social and economic
strategies in order to develop cross-sectoral instruments for overcoming barriers and divides. Thus, in addition
to digital technologies being incorporated into social policies, inclusion goals must be incorporated into digital
and new technology investment policies.
The creation of a regional fund for the universalization of ICTs was proposed at the seventh Ministerial
Conference on the Information Society in Latin America and the Caribbean. This initiative, which will be
coordinated with other ongoing initiatives being carried out by multilateral organizations, is expected to
generate resources to develop infrastructure and universal access projects.
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de directivos y docentes”, Policy Briefs series, No. 24, Santiago, Pontifical Catholic University of Chile (PUC), June.
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para los próximos años”, Documento para Discusión, No. 385, Washington, D.C., Inter-American Development Bank (IDB).
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Santiago, in press.
(2020b), “Sectors and businesses facing COVID-19: emergency and reactivation”, COVID-19 Special Report, No. 4,
Santiago, July.
(2020c), Building a New Future: Transformative Recovery with Equality and Sustainability (LC/SES.38/3-P/Rev.1),
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Project Documents (LC/TS.2020/116), Santiago.
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and internet self-efficacy”, New Media & Society, vol. 12, No. 2, Thousand Oaks, SAGE Publications.
Meresman, S. and H. Ullmann (2020), “COVID-19 y las personas con discapacidad en América Latina: mitigar el impacto y
proteger derechos para asegurar la inclusión hoy y mañana”, Social Policy series, No. 237 (LC/TS.2020/122), Santiago,
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Moller, S. (2020), “Intervenciones sociosanitarias y uso de las tecnologías de la industria 4.0 para enfrentar la enfermedad por
coronavirus (COVID-19) en América Latina y el Caribe”, Social Policy series, No. 234 (LC/TS.2020/87), Santiago, Economic
Commission for Latin America and the Caribbean (ECLAC), August.
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OECD (Organization for Economic Cooperation and Development) (2018), Financial Markets, Insurance and Private Pensions:
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Chapter III
Digital technologies for a new future
47
Digitalization for productive
development
A. Digitalization and productivity
B. The digitalization of production chains
C. Thedigitalecosystemandthemainbarrierstodigitalizationofproduction
D. Digitalpoliciesforrecoveryandthetransformationofproductionmethods
Bibliography
CHAPTER
III
Chapter III
Digital technologies for a new future
49
A. Digitalization and productivity
1. Productivity dynamics in Latin America and the Caribbean
Latin America and the Caribbean is faced with the challenge of speeding up productivity growth and generating
more and better jobs to drive sustainable and inclusive development. In recent decades, growth in the
region’s countries has lagged behind that in both emerging and developed economies. This performance has
been closely associated with the nature of growth. While growth in emerging and high-growth economies has
come mainly from productivity gains associated with structural change and the performance of technologically
sophisticated sectors, in Latin America and the Caribbean most growth is explained by the expansion of the
labour force (see figure III.1).
Figure III.1
Latin America and the Caribbean and selected regions and countries: contributions of productivity
and employment to GDP growth, 2000–2019
(Percentages)
0 20 40 60 80 100
China
India
Japan
Rep. of Korea
United States
Europe
Latin America and
the Caribbean
Contribution of employment Contribution of productivity
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of The Conference Board, Total Economy Database [online] https://www.
conference-board.org/data/economydatabase/total-economy-database-productivity.
From a longer-term perspective, the past 60 years have witnessed a growing divergence between the
region’s productivity and that of the most developed and emerging economies, which has been particularly
pronounced since the 1980s (see figure III.2). In contrast to the developed countries and the emerging
economies of Asia, the countries of the region have not reaped the benefits of successive great waves of
technological transformation, particularly the digital revolution that began in the 1990s and the more recent
and still nascent 4.0 era. In contrast to the region, high-growth economies have seized the opportunity to
accelerate productivity through large investments and a commitment to the adoption of new technologies.
The Republic of Korea, for example, experienced rapid growth accompanied by the sectoral transformation of
its industry and large-scale incorporation of technology into production activities from the second half of the
1960s. Similarly, Taiwan Province of China implemented an ambitious plan to industrialize its economy in the
1980s. Today, its technology sector is one of the most competitive in the world, especially in the production
of electronic components and computers.
Thus, the region’s productivity gap relative to the technological frontier has widened in recent decades,
resulting in a performance that is insufficient to keep up with population growth.
Chapter III
Economic Commission for Latin America and the Caribbean (ECLAC)
50
Figure III.2
Latin America and the Caribbean and selected countries: productivity, 1950–2019
(Thousands of 2019 dollars per worker)
ChinaRep. of KoreaUnited States Germany Latin America and the Caribbean
0
20
40
60
80
100
120
140
160
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2019
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of The Conference Board, Total Economy Database [online] https://www.
conference-board.org/data/economydatabase/total-economy-database-productivity.
The region’s weak productivity growth is mainly due to the lack of productive diversification and the
concentration of production in natural resource-intensive activities (agriculture, fishing, mining and some
industrial sectors) which, although strongly export-oriented, operate with few linkages to the rest of the
production structure and do not have significant effects in terms of technological spillovers and capacity-building.
These marked disparities and the region’s structural heterogeneity are also reflected in the productivity
gaps between small and large firms, which are substantially larger than in other countries and regions
(seefigureIII.3). The labour productivity of a medium-sized firm in Latin America averages less than half
that of a large firm, a figure that falls to 23% for small firms and only 6% for microenterprises. On average,
the productivity difference between micro and large firms is seven times larger in Latin America than in the
European Union (see figure III.3).
Figure III.3
Latin America and the European Union: productivity relative to that of large enterprises, by company size, 2016
(Percentages)
0
10
20
30
40
50
60
70
80
Micro
6
42
23
46
58
76
Small Medium
Latin America European Union
Source: Economic Commission for Latin America and the Caribbean (ECLAC), “Sectors and businesses facing COVID-19: emergency and reactivation”, COVID-19SpecialReport,
No. 4, Santiago, 2020.
Chapter III
Digital technologies for a new future
51
This productivity gap is linked to the region’s weak productivity performance. Stagnating productivity
is the outcome of a dual dynamic in which strong productivity growth in technology-intensive large firms
contrasts with declining or stagnating productivity in the vast majority of small firms, often associated with
their slowness to adopt new technologies (Andrews, Criscuolo and Gal, 2016). Firm size is a crucial determinant
of information technology investment decisions across all industries. Furthermore, returns to innovation are
linked to the presence of complementary inputs, such as skills and financial resources, which are typically
found in large firms (Tello, 2017).
2. Digital technologies and productivity
Productivity growth is the main driver of sustained economic growth. Thus, in the long run, increasing
productivity is the only way to maintain income growth and access to essential goods and services. Since
the first industrial revolution, the introduction of new technologies has contributed to higher productivity in
firms and in the economy as a whole. Crudely put, technical progress is the basis for productivity growth.
The development and incorporation of new technologies into production processes is therefore essential for
growth (see figure III.4).
Figure III.4
Latin America and the Caribbean: productivity per worker and technological readiness, 2010–2018
(Thousands of constant 2017 dollars and technological readiness index values)
0
50
100
150
200
250
300
2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5
Technological readiness index
Latin America and the Caribbean
Rest of the world
y = 324.16x
3.3921
R
2
= 0.7911
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Bank, World Development Indicators [online database] https://
databank.worldbank.org/source/world-development-indicators.
Note: The technological readiness index measures the alacrity with which an economy adopts existing technologies to improve the productivity of its industries, with
an emphasis on its ability to harness information and communications technologies (ICTs) in daily activities and production processes for greater efficiency
and competitiveness.
The cost-effective adoption of new technologies depends on the capabilities and factor endowments of
firms and countries. The production structure, technology intensity in industry and enterprise dynamics are
vital in determining whether the full potential of digital technologies is exploited. Given the structure and
limited level of technological sophistication of the production sector in the Latin American and Caribbean
countries, and considering the business structure there, it is not enough to encourage and facilitate the
adoption of technologies. Enhancing the digital ecosystem requires structural policies to support technological
sophistication, innovation and productivity.
Although the impact of digital technologies on productivity depends on the production structure and the
structural characteristics of firms, digital transformation generates major changes in the organization of firms
and market dynamics (see diagram III.1).
Chapter III
Economic Commission for Latin America and the Caribbean (ECLAC)
52
Diagram III.1
The impact of digitalization on firms and the business environment
Firms: value
creation and
higher productivity
Disruption of the business environment
at different levels
• Competition: creation and consolidation
of value via the appearance of new players
Value chain: creation and consolidation of value
via disintermediation and re-intermediation
Consumers: lower prices
•
•
Value creation at the enterprise level
• Greater operational efficiency
Better decision-making
Greater conn
ectivity
New business models
•
•
•
Business environment:
dynamics of creation,
consolidation and value transfer
Consumers
Competition
Value
chain
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Disruptive changes in firms and the business environment resulting from advances in digitalization have
accelerated recently with the COVID-19 pandemic and the increased use of digital technologies in response to it. The
adoption of digital technologies has become even more of a priority to boost productivity and quality employment.
Technical change has many potential impacts, and there is a strong positive correlation between the
technology intensity of the production structure and the productivity of the economy (ECLAC, 2018); at the
microeconomic level, digital transformation affects productivity and growth through four mechanisms that
improve the efficiency and effectiveness of firms (see table III.1).
Table III.1
Transmission channels through which digital technologies affect the functioning of firms
Transmission channel Mechanism Example
Operational efficiency The digitalization of processes enables business operations to be optimized
through cost reductions and efficiency improvements
Digitalization of customer service
using chatbots
Better and more effective
decision-making
The use of data at scale and advanced analytics algorithms can optimize
decision-making and increase profitability
Algorithms for optimized
creditscoring
Greater connectivity Digital channels and the use of digital marketing and procurement tools
can expand the customer base and improve customer acquisition, increase
access to suppliers and optimize the supply chain
Publicity to capture new customers
in social networks
New business models The virtualization of goods and services and the digitalization of product delivery
are fostering new business models that reduce risk and increase profits
Consumption of music via
digitalapplications
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Besides the direct impacts on business, digitalization is leading to major changes in the competition
dynamics of the value chain and in consumers. New business models are giving rise to increasing participation
by new players who are “digital natives” and bring with them numerous implications for market dynamics
and the economy in general. In some sectors, such as retail, there is direct competition between traditional
offerings and digital disruption. When digital channels play a greater role, traditional players and channels may
be displaced and have to adapt, develop their own digital channels and integrate with other players’ digital
platforms. In some activities, the level of digital disruption may reach the point where digitalization becomes a
matter of survival given the demands of the “new consumer”, an example being tourism service intermediation,
particularly in the context of the pandemic (see box III.1).
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53
Tourism is one of the main drivers of activity and employment in the region, particularly in Central America, the Caribbean and Mexico. Given the nature
of its services, it has been one of the activities most severely restricted and impacted by the pandemic.
The implementation of strict sanitary protocols (mainly involving a combination of testing, isolation, disinfection measures and the use of protective
equipment), together with restrictions on the use of venue capacity and physical distancing, have allowed some activity to resume in most countries
of the region. However, there is still a long way to go before pre-pandemic levels of dynamism are restored. Even once there is a vaccine, many of the
current changes are expected to continue affecting the sector. How it makes the transition to a “new reality” is therefore essential.
Digital transformation can accelerate this transition. First, digital platforms make it possible to develop “contact-free” alternatives to mitigate
the effects on the core business. For example, many museums in the region have developed fully virtual experiences that allow people to visit spaces
and exhibits and interact with them remotely. However, these alternatives have been only limited and inadequate substitutes aimed at offsetting the
negative effects on the traditional business model.
In addition to developing digitalized versions of their products, many actors are creating or expanding business models by means of digital
technologies that are more closely targeted on the local population. For example, many hotels have taken advantage of the delivery boom to offer a
food home delivery service, in some cases creating new exclusive fine dining experiences for the home. Some airlines have developed door-to-door
courier services for international shopping. Local tourism organizations have created e-commerce platforms to enable local businesses and restaurants
to continue to provide some services.
Digital transformation can also support the recovery of traditional activity. For example, the use of traceability applications can optimize lockdown
times and ensure a rapid response to potential contagions. Etihad Airways of the United Arab Emirates worked with Elenium, an automation solutions
provider, to change its check-in operation with a view to optimizing check-in times, providing greater convenience and minimizing infection risk. This
development combines the registration of passengers’ biometric data via their mobile phones, the use of sensors and artificial intelligence algorithms
to recognize baggage and avoid the use of tags, and self-service terminals that facilitate check-in, dispatch luggage and offer personalized shopping.
Digital tools can also help manage some of the impacts of the crisis. The Barceló hotel chain is combining voice recognition with predictive
algorithms to detect which customers are most likely to cancel their bookings and what their level of satisfaction is, in order to optimize capacity
management and provide a better service.
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Digital Tourism Think Tank [online] https://www.thinkdigital.travel/;
Barceló [online] https://www.barcelo.com; Etihad Airways, “Etihad Airways and Elenium use ground-breaking technology to revolutionise the travel
experience”, Abu Dhabi, 20 March 2019 [online] https://www.etihad.com/en-np/news/etihad-airways-and-elenium-use-ground-breaking-technology-
to-revolutionise-the-travel-experience; A. Gómez, “El CEO de Barceló Hotel Group explica cómo aplica la cadena hotelera la inteligencia artificial: así
predicen qué cliente cancelará o dará una mala valoración”, Madrid, Business Insider, 29 October 2020 [online] https://www.businessinsider.es/como-
aplica-barcelo-hotel-group-inteligencia-artificial-744149.
Box III.1
Digital transformation for the survival and development of tourism
Digital transformation can lead to value consolidation and greater concentration of profits through
intensification of economies of scope and “superstar” or “winner takes all” dynamics. The combination of
these factors, together with changes in consumer habits (preference for digital channels and rapid delivery)
is driving the boom in digital platforms.
At the same time, digital transformation is also optimizing the supply chain and bringing it closer to users by
reducing transaction, distribution and marketing costs. This process entails an increase in the disintermediation
of the chain and in the importance of direct sales channels, as in the case of tourism.
Lastly, in some sectors digitalization is resulting in a transfer of value to consumers in the form of larger
consumer surpluses thanks to lower prices, greater transparency and lower search costs. An example is the
digitalization of the music industry, where 96% of the gains from technology are estimated to have gone to
consumers (Nordhaus, 2005).
The coexistence of value creation mechanisms and transfer dynamics means that a positive and significant
relationship between digitalization and productivity growth is not always observed at the macro level, particularly
in periods of transition and disruption. In this context, the region has a window of opportunity in which to
implement the necessary structural reforms and adapt regulatory frameworks with a view to defining its
position on the technological and economic trajectories towards which the world is moving.
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B. The digitalization of production chains
1. The potential of disruptive technologies to dynamize
theregion’s sectors
In the era of digital transformation, public and private activities are seeking to take advantage of the efficiency
revolution brought about by the use and management of large volumes of data, thus benefiting from new
economies of scope and scale. The new Industry 4.0 technologies create the potential for changes in emerging
economies’ production processes to yield gains in productivity and competitiveness that are sustainable over time.
Among the disruptive technologies that can boost productivity, eight stand out for their potential applicability
in the strategic value chains of Latin America and the Caribbean (see diagram III.2):
•
Advanced analytics and artificial intelligence: algorithms and high-performance computers can
be used to identify patterns and perform predictive analytics to facilitate automated learning and
decision-making. This typically involves combining traditional analytics methodologies (such as regression,
search algorithms and linear optimization) with machine learning techniques, which employ methods
such as clustering algorithms, dimensionality reduction, deep learning networks and neural networks.
By 2023, advanced analytics is expected to represent a market worth more than US$ 270 billion globally.
• The Internet of things: sensors and actuators enable the use of smart interconnected devices or
products that can be remotely accessed or tracked. The Internet of things (IoT) allows “smart networks”
to be developed to automate or improve the effectiveness of production and distribution processes,
particularly when it interacts with technologies such as advanced analytics. The main applications of
the Internet of things are in smart cities, smart industry, telemedicine and smart homes. In 2018,
Amazon launched Amazon Go, a fully automated supermarket concept where consumers can shop
without having to interact with anyone or pay at the store. Technologies such as computer vision, deep
learning and sensor networks make it possible to identify consumers and the products they carry and
to charge them automatically and fully digitally at the end of their visit.
•
Advanced robotics: advances in artificial intelligence, computer vision, sensors, motors and hydraulics
are enabling robots to perform increasingly complex tasks, with less repetitive and predictable patterns.
Industrial robotics, for example, represented a US$ 12 billion market in 2016 and is expected to grow
by 4.4% annually between 2016 and 2023. The market for service robots is particularly buoyant. For
example, sales of logistics robots increased by 110% between 2018 and 2019, while sales of medical
robots increased by 28% in the same period.
• Cloud services and digital platforms: digital or virtual platforms are spaces on the Internet that
facilitate the execution of applications or programmes in one place to meet different needs. Most
digital interactions take place remotely in the cloud, reducing the need for storage and processing
on local computers and devices. Cloud computing enables computing services to be delivered over a
network, which reduces usage costs and facilitates the transmission of information. By 2023, these
services are expected to represent a market of more than US$ 350 billion worldwide.
•
Blockchain: a blockchain is a digital ledger that works with a single decentralized, consensual register to
validate information and transactions. The ledger is distributed across multiple nodes in a network and each
block stores a number of valid records or transactions, along with information about that block and how it
is linked to the previous and next block via a unique digital fingerprint. As new records are created, they
are first verified and validated by the nodes in the network and then added to a new block that is linked
to the chain. Furthermore, if this information is stored in encrypted form, its confidentiality is assured
because only those with the encryption key can access it. This would make it possible, for example,
to unify health records, such as individual patients’ medical histories, in a secure and convenient way.
The pharmaceutical industry could use this technology to check medicines and prevent counterfeiting.
Cryptocurrencies, meanwhile, can be thought of as a ledger where every transaction is recorded.
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•
Autonomous and semi-autonomous navigation: this encompasses vehicles operated with reduced
or no human intervention. It includes cars, trains and trucks as well as drones piloted by an operator.
Drones can be used in different types of projects, such as underwater research, shipwreck searches
and salvage operations. They are particularly employed in offshore installations to supplement hull
inspections of ships. Unmanned aircraft have been used mainly to deliver objects to remote locations
and in disaster areas, as they have the advantage of being able to reach and deliver to out-of-the-way
places. Amazon is preparing to deliver orders within 30 minutes of purchase up to 10 miles from the
company’s warehouse using a fleet of drones.
•
3D printing: this belongs to the family of techniques known as additive manufacturing. Additive
processes allow objects to be constructed by creating and consolidating layers, as opposed to moulding
or subtractive techniques. The development of machines with the ability to print objects has attracted
increasing attention in recent years. However, there are still doubts about their true potential. While
some enthusiasts see it as a new industrial revolution, many others take a more sceptical view and
focus on the limitations of the technology and adoption levels, which are still low. Whatever the case
may be, 3D printing still has a great potential acceleration role to play both in the direct manufacturing
of products and parts and in the creation of tools and moulds, e.g., for customized medical implants. In
order to achieve osseointegration, manufacturers use 3D printing to precisely control surface porosity
and thus better simulate real bone structure.
• Virtual reality and augmented reality: immersive technologies such as virtual reality and augmented
reality are being used to reinvent the way content is created and experienced. For example, at Stanford
University’s Neurosurgical Simulation and Virtual Reality Center, virtual reality is being used for detailed
planning of complex brain surgery (e.g., to remove tumours) based on simulations created using information
obtained from CT scans. Immersive technologies have multiple impacts for businesses, such as reduced
production costs thanks to the use of virtual prototypes and lower barriers to entry for new content creators.
New technologies can be used at all stages in the operation of different sectors and activities. They are specific
sources of value for companies and businesses that require a clear connection between business needs and the
impact of the solution and a clear vision of how to use the solution that is going to be incorporated. The potential of
these technologies is not common to all economic activities; it depends on each sector, its degree of sophistication
and linkage with other activities, the technology incorporated and the capabilities and skills of workers, as well as the
context in which companies and businesses operate. The adoption of new technologies entails a reconfiguration of
the entire production chain, involving new links, services and companies, which opens up opportunities for sectoral
diversification and skills development. Three sectoral cases of great transformative potential for the region in the
agro-industry, manufacturing and retail sectors and chains are presented below (see diagram III.2).
Diagram III.2
The dynamizing potential of digital technologies
Agriculture
Manufacturing
Retail
Advanced analytics and artificial intelligence
Internet of things
Advanced robotics
Cloud services and platforms
Blockchain
Autonomous and semi-autonomous navigation
3D printing
Virtual reality and augmented reality
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
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2. Agro-industry
The agro-industrial sector is one of the main drivers of exports in Latin America and the Caribbean and one of the
sectors with the largest share of employment in many economies of the region. With some exceptions, however,
its productivity is significantly lower than the regional average and than that of the most developed countries.
The digital revolution is an important opportunity to boost productivity and sophistication in the agricultural sector
(see diagrams III.3 and III.4). Digital technologies can help farmers produce more efficiently and develop sustainable
solutions to climate change. For example, incorporating sensors into conventional agricultural machinery such as
tractors, sprayers and harvesters can transform them into networks of smart devices with yield monitors, autopilot
or sensors for seed distribution and spraying. The use of advanced analytics would enable information produced by
sensors and satellites to be processed in order to optimize production processes and the use of Global Positioning
System (GPS)-enabled applications. The incorporation of autonomous or semi-autonomous vehicles would reduce
operating costs and energy consumption, as well as increasing safety and accuracy. Digital technologies have great
potential throughout the production chain, from the purchase of inputs to the marketing of goods.
Diagram III.3
The use of digital technologies in the agricultural chain
Supply of inputs
and equipment for
the whole process
Sowing, irrigation,
fertilizers and pest control
Collection, transportation
to plants and storage
of produce
Conversion into
final products
Logistics to destination
and marketing of products
• Digital commerce
platforms for procuring
inputs, tools, agricultural
machinery and
specialized vehicles
(e.g., Agrofy and Agroads)
• Smart irrigation management
using the Internet of things
• Crop monitoring platforms
to facilitate decision-making
through cloud-based geographical
information systems
• Autonomous robots for
automated inspection
(e.g., Mineral from Alphabet)
• Crop monitoring using drones
to build up maps of moisture,
pests, geolocation of items, etc.
• Use of sensors and advanced
analytics to automate
the choice of harvesting time
• Smart inventory and asset
management using technologies
such as radio-frequency
identification
• Use of advanced analytics
tools to optimize routes
and fleet management
• Use of industrial robots
to automate factory
production processes
• Use of sensors for predictive
maintenance of production
machinery and equipment
• Digital commerce platforms
to facilitate marketing
and sale of final products
• Digital marketing tools
to advertise and promote
products (e.g., Agroads)
• Use of sensors to monitor
cold chain
Collection
and transport
Processing DistributionPurchase Crop
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from McKinsey Global Institute.
Numerous digital platforms act as online geographical information systems that allow all information to
be held in the cloud and accessed from any device anywhere in the world at any time. For example, satellite
imagery can provide normalized difference vegetation index images. Platforms also make it possible to establish
monitoring routes that can be followed with the help of the mobile application, produce a report of what is
observed in the field and take georeferenced photographs illustrating the situation observed. The report and
photographs are kept available in the workspace, which is easily accessed online, so that information can be
managed in an accessible way and adjustments can be made as necessary to minimize losses and improve
efficiency in input use. Some of the platforms present in Latin America are Campo 360, the Taranis platform,
GeoAgro, Climate FieldView and Auravant. This last has a free tool for producers with up to 1,000 hectares
that offers basic functions for working with the platform: crop evolution, measurement of areas for monitoring,
notification of areas with potential problems and uploading of yield maps.
Another example is an autonomous robot developed by Alphabet (Mineral) which goes around crops and
inspects each plant. From these observations, it generates accurate information on the state of agricultural
production. This technology provides precise and reliable data from the field that help farmers to adopt more
targeted solutions, such as applying fertilizer or insecticide to a specific area. Using the robot can reduce waste
Chapter III
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in a 100-hectare soybean field by 10%. To use the potential of robotics in agricultural production, FarmWise is
developing an autonomous robot that cuts weeds affecting crops, covers large areas daily, and routinely and
efficiently improves the condition of fields.
For the growing phase, smart irrigation management is a digital solution to one of the most important
activities in agricultural production. A set of sensors is installed to detect soil moisture levels, and irrigation is
carried out automatically on the basis of these readings. The adoption of digital technologies also facilitates
smart crop harvesting management. Using analytical tools, data from sensors and external information (weather
forecasting or customer needs) are used to determine optimal harvesting times.
Another application of digital tools such as machine learning and the Internet of things is predictive equipment
maintenance. Using drones and sensors, the condition of machinery and equipment is constantly monitored
in order to anticipate breakdowns and optimize repair and maintenance times, helping to reduce costs.
On the logistics side, major transnational grain companies (Archer-Daniels-Midland (ADM) Company,
Bunge, Cargill, Louis Dreyfus Company (LDC) and COFCO) have formed a partnership to standardize data and
digitalize global agricultural shipping transactions using digital technologies such as blockchain and artificial
intelligence with the aim of increasing the transparency and efficiency of the chain worldwide.
Digital platforms also facilitate the relationship with customers and suppliers, fostering greater customer
trust and generating new services through digital relationships. Platforms function as an online marketplace
offering producers inputs, tools, agricultural machinery and specialized vehicles. In addition, these platforms
allow users to publish advertisements, publicize their brands and obtain statistics on these publications to
ascertain their reach, including not only the number of views received by each, but their geographical origin
and impact according to the category they belong to. In Latin America, Agrofy and Agroads offer their services
in Argentina and Brazil to those wishing to buy, sell and publish specialized products of interest to farmers.
Diagram III.4
Smart agriculture: the benefits of incorporating digital technologies into agriculture
Real-time information
on weather forecasts
and average
precipitation
Greater efficiency
thanks to detailed
information on soil
fertility and
crop yields
Optimization
of fertilizer use
and growing
and harvesting
times
Constant
crop monitoring
and smart
irrigation
Ability of consumers
to monitor
the whole
production chain
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
At the same time, digital technologies influence consumers’ preferences and decisions, mainly through
their interaction with information. Technology allows information to be collected, stored, analysed and shared
before, during and after food consumption. This information makes it easier for intermediaries to refine their
product offerings, improving the experience of consumers in line with their preferences. This can also have
major effects on the mode of production and its impact on the environment, as well-informed consumers
can express preferences for products that minimize the ecological damage of their nutrients (e.g., organic,
environmentally friendly products with the smallest possible carbon footprint). Seals and labels, supported
by the use of blockchain, can also incentivize good use of environmental resources.
Apart from the use made of these new technologies in individual businesses, their development entails a
reconfiguration of the entire chain. First, a growing role is being played by companies linked to the provision of
knowledge-based services applied to production processes in agriculture. Second, specific equipment (agro-parts)
for precision agriculture (e.g., yield monitors) is increasingly appearing. Lastly, the increased importance of new
technologies could result in market power being transferred to companies that provide these types of solutions.
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3. Manufacturing
The manufacturing sector plays an important role in many economies of the region, particularly Brazil, Mexico,
Argentina, Costa Rica and other Central American countries. As can be seen in figure III.5, in recent decades
the sector has been characterized by low dynamism, accompanied by stagnating productivity and a fall in the
manufacturing share of employment from 16% in 1980 to 12% in 2018.
Figure III.5
Latin America and the Caribbean and the United States: manufacturing sector productivity, 1980–2018
(Value added per worker in thousands of constant 2010 dollars and percentages)
0
10
20
30
40
50
60
70
80
90
0
20
40
60
80
100
120
140
1980
Percentages
Thousands of dollars
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Latin America and the Caribbean: manufacturing productivity
United States: manufacturing productivity
Productivity of Latin America and the Caribbean relative to the United States
Latin America and the Caribbean: percentage of employment in manufacturing
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Manufacturing is not only at the heart of the digital revolution, but has the greatest potential to catalyse
the use of new technologies, generating better jobs and synergies with other sectors of the economy.
Digital technologies can optimize the supply chain and production and accelerate time to market. In addition,
the increasing automation and digitalization of the sector may result in major reconfigurations of the chain,
e.g., the reversal of offshoring dynamics, leading to nearshoring and reshoring, and an increasing transfer of
value from production to design, research, development and innovation, and services.
Some of the main applications of new technologies in the manufacturing sector are in real-time order tracking
and supplier logistics, virtual development systems, machine-to-machine (M2M) communication, customer lifecycle
monitoring
1
and management, and business process automation supported by artificial intelligence (see diagram III.5).
There are many examples of the use and application of digital technologies in the manufacturing sector.
In the extractive industries, for example, and the oil industry in particular, sensors and machine learning
equipment can be applied to regulate and correct the pumping system in a well in order to increase production
and prevent malfunctions. The Argentine oil company YPF uses technology of this type provided by Schneider
Electric (through its EcoStruxure platform) in its extraction processes to optimize well operation in real time,
particularly in the Vaca Muerta oil field.
Augmented reality makes it possible to control factories from a tablet, with accurate and detailed data
from all areas of the plant. For example, a crane simulator with a virtual reality helmet can be used to train
staff to operate the controls accurately. The system generates statistics on the process and determines the
failure rate and energy consumption in each sector. One of the suppliers of this technology in the region is
Schneider Electric with its EcoStruxure platform, designed especially for production plants.
1
That is, the cycle of familiarization, consideration, exploration, purchasing and loyalty that customers may go through before the possible purchase of a product.
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Diagram III.5
The use of digital technologies in the manufacturing chain
Prototype design,
product development
and demand planning
Acquisition of production inputs,
equipment and packaging
Assembly of product parts
and necessary repairs
and maintenance
Storage, distribution
and packaging
• Use of 3D printing to develop
prototypes quickly
• Product design using virtual
reality or augmented reality
simulations
• Demand planning using
advanced analytics tools
that improve production
capacity in a way that reduces
storage and inventory costs
• Use of 3D printing to design
parts for production
• Virtual packaging using virtual
reality simulations
• Automation of orders using robotic
process automation
• Smart inventory management using
Internet of things systems that can
manage requests in real time
• Online commerce platforms
for input procurement
• Use of robotics to automate
production processes
• Use of sensors for predictive
equipment maintenance
• 3D printing of bespoke
components and spares
• Use of smart machine-to-machine
networks to automate and optimize
assembly operations
• Use of smart glasses to guide
workers through assembly and
minimize errors in the chain
• Virtual reality simulators
to train staff and minimize
production errors
• Autonomous trucks that
can optimize routes and
minimize accidents
• Smart fleet and route management
(e.g., monitoring of environmental
conditions, geolocation of cargo)
through Internet of things systems
Design, research,
development
and innovation
Procurement and inputs
Production
and operational
management
Distribution
and logistics
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Moreover, artificial intelligence and machine learning can contribute to cost reductions in sales and input
purchases by predicting the demand for and supply of goods and services. Other applications are sales-oriented;
for example, the introduction of virtual agents improves customer service at low cost; the increase in earnings
before interest and tax can be as high as 13%.
Autonomous navigation devices, which are used for both short- and long-distance transport and logistics
tasks, can reduce labour costs and capital expenditure by automating production vehicles, e.g., autonomous
heavy machinery in mines and quarries, or autonomous trucks for long-distance transport. Data from Argentina
indicate that the use of autonomous trucks would lead to a 45% reduction in logistics costs.
Virtual and augmented reality devices used in product design can reduce production and maintenance
costs through improvements in the design and composition of goods (e.g., with virtual testing of objects). One
application of this technology is the use of smart glasses to guide assembly, a detailed, virtual way of taking
workers through the assembly process, reducing human error on the assembly line. The use of smart glasses
is also a digital solution for equipment repair technicians, as remote assistance speeds up the repair process.
The Internet of things provides digital solutions associated with the distribution and logistics phases
whereby processes can be optimized and costs reduced. These include, in particular, geolocation of cargo and
fleets, route optimization, monitoring of environmental conditions and monitoring of the cold chain.
The complementarity between these technologies in the stages of a chain allows smart factories to be
developed. Brazil has the only two factories in Latin America and the Caribbean that are part of the World
Economic Forum, a global network of advanced factories serving as showcases for the adoption of new
technologies. The Groupe Renault plant in Curitiba has an approach centred on workers, accountability and
employee-to-employee connectivity. It has developed an interconnection platform right along the value chain
that includes suppliers, customers and workers. The results have enabled it to increase productivity by 18%
without major capital investment. The offshore facility of MODEC (a developer and operator of floating oil
platforms) in Rio de Janeiro uses a combination of advanced analytics for predictive maintenance, a digital
replica of its processing plant and a proprietary data platform to accelerate the development and exponential
scaling of algorithms on floating vessels. This has enabled it to reduce downtime by 65%.
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4. Retail
Retail is the region’s largest employer and one of the sectors that are least advanced in terms of digitalization
and the adoption of digital technologies, which is one of the reasons for its low productivity. Digitalization is an
opportunity to boost the sector by improving multi-channel supply chain management, automating warehousing
and logistics, optimizing in-store operations, acquiring customers digitally and moving towards nimble delivery
models with real-time tracking (see diagram III.6). Digital transformation is bringing major changes along the
entire chain. Intensifying economies of scope, changing consumer habits and the growth of e-commerce are
leading to an increasing role for digital platforms. It is estimated that in 2019, 1.92 billion people bought goods
and services online and e-commerce sales exceeded US$ 3.5 trillion worldwide. Leading digital commerce
platforms in the region include Mercado Libre, Amazon, AliExpress, Wish, eBay, Shopify and Tiendanube.
Diagram III.6
Use of digital technologies in the retail chain
Supply of inputs and purchase
and storage of products for sale
Customer acquisition, user experience,
sales and store management
Product distribution and delivery
management (business-to-business
and business-to-consumer)
• Demand planning using advanced
analytics tools to improve predictive
capacity and thereby reduce storage
and inventory costs
• Automation of storage processes
using smart networks that combine
sensors and robotics
(e.g., Amazon’s Kiva robot)
Business-to-business digital
platforms to facilitate purchases
of inputs and products
•
• Use of virtual agents (e.g., chatbots)
to automate and enhance service
• Digital marketing tools enhanced
by advanced analytics to increase
the conversion rate by better identifying
the target population and optimizing
the timing of advertisements
• Virtual reality devices to enable consumers
to interact with items in innovative ways
(e.g., try on different pieces of clothing)
• Use of QR rapid response codes to optimize
the payment mechanism
• Automated real-time replenishment
using sensors
•
•
Autonomous vehicles to optimize distribution
and reduce accidents
•
Delivery and logistics applications
and digital platforms to improve delivery
and reach
Drones to speed up delivery times to nearby
destinations (e.g., Amazon’s Prime Air pilot)
Procurement
and storage
Marketing, service
and sales
Distribution
and delivery
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Growing disruption in the chain is increasingly blurring the boundaries between the different links and
making the traditional distinctions between “retail”, “manufacturing” and “logistics” less and less relevant.
There is rising pressure for disintermediation and re-intermediation in increasingly modular chains. While
retailers were traditionally a link between industry and consumers, manufacturing is moving increasingly
towards business-to-consumer models.
In addition, new intermediate players operating between retailers and consumers have been emerging and
expanding. In the food chain, for example, there has been consolidation among home delivery companies such as
Rappi, Glovo, PedidosYa and Uber Eats. These growing players complement those in the sector while also posing
a risk to them, mainly in terms of capturing the customer relationship and transferring market power downstream.
Despite increasing pressure for further digitalization, physical shops still play an important role, particularly
in terms of interacting with goods and providing a distinctive experience. However, there is likely to be at least
a partial transformation of the role of physical spaces (e.g., as places for recommendations or socializing), as
well as greater integration between physical and digital experiences (e.g., customers ordering and paying for
in-store products by taking a picture on their phone).
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There are multiple applications of new technologies that can help transform operations and the customer
experience. For example, virtual reality and augmented reality devices provide substantial improvements in
customer service and are an innovative way for brands to advertise. This technology is used, for example, to
project clothing in stores, which is very attractive to customers. In Latin America and the Caribbean, Muvit has
developed and implemented motion sensors to create commercial applications such as 3D changing rooms
and avatars and a virtual rehabilitation platform.
Likewise, artificial intelligence algorithms can optimize prices and promotions in accordance with customer
characteristics and increase customer satisfaction. In Latin America and the Caribbean, companies such
as Jampp provide such solutions, which can increase revenue and sales. The platform helps advertisers to
promote their applications globally and to recover users who have installed the application but are inactive.
One of the benefits of the service is that it optimizes the purchasing of traffic on the basis of the level of user
activity in the application.
Meanwhile, the use of autonomous navigation devices can substantially reduce the labour costs and
capital expenditures associated with delivering packages to nearby destinations, as well as long-distance
transportation costs, through the use of autonomous trucks. For example, Alphabet, Google’s parent company,
has a drone delivery service in conjunction with FedEx and Walgreens, which delivers health and wellness
products. This service improves the speed of product delivery and reduces costs, as well as being fuel-efficient,
as the drones use an all-electric power system (Business Insider, 2020).
In Latin America and the Caribbean, the digital transformation of the sector is still in its early stages, with
a focus mainly on e-commerce. During the COVID-19 pandemic, companies have seen the opportunity offered
by an online presence as a way to reach consumers. This was demonstrated by the substantial increase in
the number of business websites in Brazil, Chile, Colombia and Mexico between March and August 2020
compared to the previous year. As early as April, the number of active business websites was up by 800% in
Colombia and Mexico and by around 360% in Brazil and Chile over the same month in 2019.
The largest increases in online presence have been recorded for transactional business sites (active
presence) and e-commerce platform sites. In Brazil and Mexico, the number of new e-commerce sites was
up by more than 450% in April 2020 compared to the same month in 2019. Meanwhile, sites with an active
presence in Colombia and Mexico increased by some 500% during the same period (CEPAL, 2020).
During the pandemic, retail and delivery platforms have come to play an unprecedentedly prominent
role for both consumers and those offering their products and services, as they have been able to keep their
premises running, generate revenue and retain their employees or delivery workers. The exponential increase
in the use of these platforms, which appears irreversible, opens up an opportunity for digitalizing the retail
chain and presents countries with the need to strengthen their payment systems (which are crucial for secure
and efficient remote interaction), their regulatory and policy frameworks and their competition policies to avoid
market concentration and overcharging for services.
C. The digital ecosystem and the main barriers
todigitalization of production
1. The digitalization of production processes in the region
Latin America and the Caribbean has made great strides with digitalization over the last decade. Progress with
connectivity has been remarkable. In June 2019, there were more than 450 million Internet users in the region,
as compared to only some 200 million in 2010. There are large differences by subregion. South America has
the highest Internet penetration rate (72% of the population). Internet penetration has grown sharply and at
a faster rate than income in all countries of the region.
Chapter III
Economic Commission for Latin America and the Caribbean (ECLAC)
62
Despite progress with connectivity, performance in terms of digital transformation has been moderate.
The region lags badly with the digitalization of production processes. The average growth of digital adoption
to change production methods has been lower than in other emerging countries and regions. In the region,
digital adoption in business grew by an average of 4.5% between 2014 and 2016, a figure that contrasts with
the great dynamism of South-East Asia (13.1%) or China (16.4%) (see figure III.6).
Figure III.6
Latin America and the Caribbean and selected regions and countries: cumulative change
in the Digital Adoption Index, 2014–2016
(Percentages)
16.4
13.1
7.0
5.9
5.2
5.0
4.5
3.9
2.3
1.2
0
2
4
6
8
10
12
14
16
18
China South-East
Asian
average
Mexico Chile Colombia Brazil Latin American
and Caribbean
average
Costa Rica Peru Argentina
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Bank, Digital Adoption Index [online database] http://wbgfiles.
worldbank.org/documents/dec/digital-adoption-index.html.
Digital transformation in the region is still in its early stages. Most businesses remain excluded from the
benefits of this transformation. There is a large divide in the level of digitalization between the countries of
Latin America and the Caribbean and those of the Organization for Economic Cooperation and Development
(OECD), mainly when it comes to the digitalization of production processes, digital industries and factors
of production, while levels of digitalization in supply chains are also low. According to data from the 2020
Network Readiness Index, countries in the region lag far behind in the adoption of information technologies in
business. Chile is the best-scoring country in the region for this subindicator of the index, ranking forty-fourth
out of a total of 134 countries surveyed. It is followed by Brazil (fifty-sixth), Peru (fifty-eighth) and Costa Rica
(fifty-ninth). Argentina and Mexico, two of the largest economies in the region, appear only in sixty-seventh
and eightieth positions, respectively. The Central American and Caribbean countries are among the lowest
ranked, with Trinidad and Tobago in a hundred and first place, followed by Honduras in a hundred and fourth
and El Salvador in a hundred and fifth.
Thus, although most firms have access to the Internet in Latin America (more than 90% coverage), a large
proportion of them do not use it for their supply chain and distribution channels (see figure III.7). According to
Mexico’s National Institute of Statistics and Geography (INEGI), only 19% of SMEs purchase inputs online in
the country. Much the same is true of the digitalization of distribution channels. The country where the largest
proportion of companies have e-commerce platforms is Colombia, but it is no more than 40% (ECLAC/CAF, 2020).
The limited progress made with digital transformation is associated with uneven adoption by businesses
and households. While some firms have managed to capture many of the benefits of digital technologies, there
is a long tail of digital laggards, consisting mainly of micro-, small and medium-sized enterprises (MSMEs) and
businesses in traditional and vulnerable activities, all of which are generally associated with lower productivity
and greater informality.
Chapter III
Digital technologies for a new future
63
Figure III.7
Latin America (8 countries): firms with digitalized supply and distribution chains, 2018
(Percentages)
0
10
20
30
40
50
60
70
80
90
100
Argentina Brazil Chile Colombia Ecuador Mexico Peru Uruguay
Internet connection Use of electronic banking Online procurement
Website Digital sales channel
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Economic Commission for Latin America and the Caribbean/Development
Bank of Latin America (ECLAC/CAF), Las oportunidades de la digitalización en América Latina frente al COVID-19, Santiago, 2020.
In the first place, there are large differences in digitalization between sectors. Financial services and the
information and communications technology (ICT) sector are the ones with the highest levels of digitalization in
the region, as they are globally. At the other extreme, there are digital laggards such as agriculture, real estate
services and education. Within manufacturing, there is great heterogeneity (see table III.2). In Argentina, for
example, there are high levels of digitalization in the biopharmaceutical and automotive sectors, while lower
levels of digitalization prevail in the agricultural machinery, food and textile sectors (Basco and others, 2019).
Table III.2
Latin America (3 countries) and other selected countries: level of digitalization
by sector, 2015 or latest year available
Sector
Digitalization by sector
BrazilColombia Israel Poland Czechia
Financial services
Mining
Retail
Manufacturing
Logistics services
ICT services
Other services
Health care
Agro-industry
Education
United
States
Very high
Argentina
High Medium LowLevel of digitalization
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of McKinsey Global Institute.
Note: The colours depict digitalization quartiles relative to the global frontier, namely the United States ICT sector.
Chapter III
Economic Commission for Latin America and the Caribbean (ECLAC)
64
Besides variability between sectors, large differences persist at the firm level. ECLAC estimates that only
59% of firms in the region’s largest economies have a website, compared to 77% in the OECD countries. But
there are even greater differences within countries. In Colombia, for example, large firms are eight times as
likely to have a website as microenterprises. Similarly, large firms are six times as likely as microenterprises
to place orders over the Internet.
The digital divide extends beyond the issue of connectivity, especially when the more sophisticated
tools and uses are considered. For example, the gap between firms in Argentina, Brazil and Chile relative to
OECDeconomies in the use of enterprise resource planning software is three times as large for medium-sized
firms as for large firms (OECD, 2019).
Digital technologies bring with them the risk of a widening digital divide. While the vast majority are of
general utility, many of the more advanced ones are cumulative in character and need well-developed digital
ecosystems to be used most efficiently. For example, there is a strong correlation between a sector’s degree
of digitalization and the level of adoption of artificial intelligence (Bughin and others, 2017).
In some areas of the region, there are signs of convergence at certain levels. In Colombia, the DigitalEconomy
Observatory of the Ministry of Information and Communications Technologies indicates that the digitalization
gap between large firms and microenterprises narrowed from 340% (a 70.7% digitalization rate for large
companies versus 21.0% for microenterprises) in 2015 to only 46% in 2017, mainly owing to the great progress
made by small companies (76.0% digitalization in large companies versus 52.0% for microenterprises). The
downside of this dynamic is growing divergence in the most advanced technologies. It would seem to be a
matter not so much of bridging the digital divide as of trying to solve a problem that is constantly shifting.
2. Factors that enable and constrain the digitalization
ofproduction
In the Latin American context of sectors operating at different speeds and with little linkage between them,
the factors enabling digital transformation are particularly important. While the need to incorporate innovative
digital-based production tools is increasingly recognized, there is still a long way to go.
Small businesses and traditional activities face barriers to adopting digital technologies productively and at
scale, including a lack of financial resources, adequate infrastructure and equipment, and digital skills. However,
there are other constraints on digital transformation that vary significantly in importance depending on the
stage of digitalization a firm has reached. To drive productive transformation, it is necessary to identify both
the obstacles faced by firms and the enabling factors needed to move forward at each stage of digitalization.
Diagram III.7 presents the four main enablers of productive transformation:
• Knowledge and consideration: the first priority is to recognize the importance of digital transformation.
In a large percentage of companies, this recognition is lacking, particularly when it comes to the need to
adopt digital technologies at a sufficiently granular and precise level. The least advanced companies do not
have access to information and knowledge about digital tools and their benefits, or about their relevance to
their business. In Argentina, unfamiliarity with technologies is one of the major obstacles to greater adoption
among less digitalized firms. In Colombia, by contrast, 12% of firms consider the lack of information about
available technologies to be a major obstacle to innovation, while 41% believe it is of medium importance,
according to data from the National Administrative Department of Statistics (DANE, 2018).
• Access and adoption: once the potential of digitalization is recognised, companies must have adequate
resources and access to these solutions. This includes financing to be able to acquire the solutions
and access to suppliers with affordable solutions, as well as a policy and regulatory framework that
facilitates these types of transactions. Lack of resources is the main obstacle to innovation in Colombia,
with 42.6% of companies attaching high importance to this factor, according to data from DANE (2018).
Difficulty in accessing finance is the second-largest obstacle, with 32.1% of firms considering this to be
of high importance. Lack of access to finance is also one of the main obstacles to the adoption of digital
technologies by industries in Argentina.
Chapter III
Digital technologies for a new future
65
•
Application and use: access to a solution is not sufficient for value creation. In addition, it is necessary
to have the capabilities to apply the technologies appropriately. This means having basic equipment, skills
to implement the solution, a minimum set of digitalized data and an organizational culture conducive
to their adoption and use.
• Transformation at scale: Although many companies have embarked on the path to digitalization, very
few “digital disruptors” manage to capture its full potential. A digital transformation at scale requires a
set of internal and external conditions, typically seen in firms that are digital natives or in incumbents
that manage to quickly design and integrate an appropriate digital strategy. The key differentiators
allowing firms to reach this point include having state-of-the-art infrastructure and equipment; talent
that can not only implement basic tools, but also design and adapt solutions to local needs; an agile
digital culture that permeates the organization; access to big data; the development of cyber-resilience
to safeguard information and prevent and mitigate cyber-attacks; and the existence and identification
of demand that values and promotes this type of innovation.
Diagram III.7
Factors enabling digital transformation
Knowledge and
consideration
Access and
adoption
Application
and use
Information on:
The existence
of tools
Benefits and
relevant use cases
Financing
to obtain
the solution
Suppliers with
affordable prices
Appropriate
regulation
Basic digital
infrastructure
Talent to apply
solutions
Basic data
Culture of using
solutions
Transformation
at scale
Advanced
technologies
Talent for
development
Nimble organization
Sophisticated
demand
Data at scale
Cyber-resilience
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Another problem for Latin America as it seeks to join the fourth industrial revolution is the education of
its people. The low quality of education is a brake on the adoption of new technologies. In particular, systems
for managing the transition in the face of technological change are poorly developed. Although coverage and
access to basic, secondary and technical or vocational education has increased in most countries, positive
results in terms of quality are not being seen (see figure III.8).
Having educational systems with the connectivity, devices and teaching skills to develop logical thinking
and problem-solving skills alongside socio-emotional and collaborative working skills is vital if new technologies
are to be assimilated and exploited.
The region’s PISA test scores in mathematics, reading and science are lower than the average for
OECDmember countries. This should be a cause for concern and action. Only a small percentage of young
people complete their studies on time. Less than 20% of students aged between 24 and 35 have completed
tertiary or university studies in Argentina and Brazil, in contrast to almost 50% in the OECD countries. At the
same time, most students continue to choose traditional courses (law, social sciences or humanities) and few opt
for technical or science, technology, engineering and mathematics (STEM) courses, even though these are the
subjects most in demand by companies whose growth potential is based on innovation and new technologies.
Chapter III
Economic Commission for Latin America and the Caribbean (ECLAC)
66
Figure III.8
Latin America (7 countries) and OECD countries: results of the 2018 PISA test in mathematics,
science and reading, and categorization of people aged 24 to 35
(Per capita GDP in thousands of dollars at 2010 prices and percentages)
0
5
10
15
20
25
30
35
40
45
350 370 390 410 430 450 470 490 510 530
Average PISA results for mathematics,
science and reading
Per capita GDP
18
17
30
28
22
44
16
17
20
23
27
24
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Argentina Brazil Chile Colombia Mexico OECD
People aged 24 to 35
Complete tertiary education
(percentage of total
undergraduates)
STEM graduates
(percentage of total
graduates)
OECD
average
Chile
Uruguay
Colombia
Mexico
Argentina
Brazil
Peru
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Organization for Economic Cooperation and Development (OECD),
Programme for International Student Assessment (PISA), Paris, 2018; A. Basco and others, América Latina en movimiento: competencias y habilidades en la
Cuarta Revolución Industrial, Washington, D.C., Inter-American Development Bank, 2020; and national account data from World Bank and Organization for
Economic Cooperation and Development (OECD).
The labour market amplifies these gaps, as demand is greater and wages are higher for workers with
better digital skills, who are mainly attracted to more productive sectors and larger, digitalized firms. Going by
estimates for developed economies, demand for activities involving digital skills and technologies is expected
to increase by 55% by 2030, while demand for activities that are more intensive in physical and manual skills
or basic cognitive skills is likely to drop by some 15%.
While the Latin American and Caribbean economies are making major strides in their digital transformation,
great efforts are still needed to generate value inclusively and at scale. The dynamics of digitalization in the
region reflect patterns of marked inequality in productivity and income. This digital divide has become even
more marked and negative in the context of the COVID-19 pandemic.
D. Digital policies for recovery and the transformation
ofproduction methods
The COVID-19 crisis has posed unprecedented challenges for the preservation of health, economic growth,
social welfare and political stability in the region. In this context, bridging digital divides and advancing with
digital transformation is critical for rapid recovery and progressive structural change. To achieve these objectives,
the countries of the region have pursued a variety of approaches. Some have focused on specific technologies
(e.g., the national plan for the Internet of things in Brazil), others have followed a sectoral (vertical) approach
associated with local competitive advantages (cross-border trade in Panama), and others again have opted for
general plans with a focus on institutions and cooperation between actors (Colombia). In this framework, some
countries are implementing actions to boost the adoption of new technologies such as sensors, robotics or
advanced analytics. Despite this progress, there are still problems, particularly in the digitalization of MSMEs
and traditional sectors, which must be solved in order to generate large-scale change that accelerates sectoral
dynamics and transforms the production structure.
Chapter III
Digital technologies for a new future
67
To facilitate economic transformation, it is necessary to meet the needs of the productive sector, implement
policies and incentives for the incorporation of technology, update regulatory frameworks and generate digital
capabilities and skills (see diagram III.8).
Diagram III.8
Main areas of action for productive digital transformation policies
Diagrama 8 ( en el archivo de referencia dice Gráfico III.7)
Investment
and innovation
Investment
in technology
Digital research,
development
and innovation
Financing for
businesses
Skills
University
and research
Technical
education
Creation of
capabilities
in businesses
Infrastructure
Broadband
5G networks,
Internet of things
Broadband
for businesses
Payment
markets
Regulation
Standards
Competition
Labour
markets
Other
instruments
Technology
centres
Measures
to attract
investment
Digital value
chains
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
To support investment and financing for innovation:
•
Immediate action is needed to increase the incorporation of digital technologies in production processes
and to overcome the low levels of investment in innovation.
• Governments should implement depreciation mechanisms for fixed capital investments to promote
investment in equipment and machinery and in new technologies and plants.
• Apart from immediate needs, supporting access to finance is critical for the adoption of productive
technologies, particularly in MSMEs. Governments should implement programmes to increase the
creditworthiness of businesses, e.g., through collateral support, and promote new financial solutions.
• In situations where correcting market failures requires a greater public role, direct interventions such
as the introduction of financing facilities at affordable rates and support schemes focused on the
adoption of new technologies should be considered.
• Markets for venture capital (beyond seed capital) need to be deepened to reduce the gap between
traditional venture capital investors such as SoftBank or Kaszek Ventures and accelerators such as
NXTP Labs or Start-Up Chile. Public development banks should provide venture capital through
investments with the private sector, especially pension funds.
To support the digital start-up ecosystem:
•
The development of software, digital platforms and financial and agricultural technologies (fintech and
agritech) needs to be encouraged to strengthen the ecosystem for technology start-ups of all sizes.
• Governments can create a suitable environment for attracting and developing investment through
promotion and attraction schemes (involving tax exemptions, for example) and through capacity-building
at promotion agencies.
• It is desirable to promote the use of digital platforms and strengthen meeting spaces in the digital
ecosystem (such as the Centre for the Fourth Industrial Revolution in Medellín) and to foster coordination
and cooperation within the ecosystem and between this and the rest of the economy.
Chapter III
Economic Commission for Latin America and the Caribbean (ECLAC)
68
•
Cluster and zone development needs to be encouraged with appropriate regulatory and tax environments
and access to infrastructure and skills.
To support connectivity and access to digital payments:
• The public and private sectors must work together to facilitate the deployment of the connectivity
network and encourage sustainable adoption of it. Facilitating the deployment of and access to 5G
networks and services should be a priority.
• Logistics needs to be strengthened by increasing efficiency in customs processes, solving problems
in last mile delivery and reducing transport costs.
• Access to digital payments should be universalized and records of them used to reduce uncertainty
about creditworthiness, which would mitigate risk for financial institutions, reduce costs and facilitate
access to credit. Governments should continue to fund digital tools for transfer mechanisms and
encourage the growth of transactions and user bases.
•
Apart from infrastructure, it is important to develop a regulatory framework that balances the interests
of investors and businesses and protects consumers against fraud and cyber risks.
To help MSMEs:
• A comprehensive approach is required in the design of productive digitalization policies targeted at
MSMEs. This is related to the consideration of enabling environment and technology factors and
those specific to the sector and business.
•
Business chambers need to be actively worked with. The impact and scope of these programmes will
depend on the ability to relate to the production fabric and on collaboration with business associations.
•
There is also a need to strengthen the results monitoring aspects of digitalization and SME programmes.
It is critical to have evaluation systems in place to measure results, but also to correct programmes
and projects.
• In addition to connectivity, an approach should be implemented that provides clear and effective
information about the benefits of digitalization and that enables MSMEs to learn about the important
uses of digital technologies and develop the skills necessary to implement them.
• Creating regional and national spaces that act as meeting points (one-stop shops) would help to
identify important use cases and connect businesses with specialized suppliers and advisors, as is
done in the Productivity Factories programme in Colombia or in the Technology Clinic programme of
the government of the Province of Buenos Aires.
To create the activities and skills of the future:
• Coping with disruption in labour markets requires a continuous, granular and long-term approach to
help workers adapt. Governments should facilitate these transitions through unemployment insurance
programmes, hiring incentives and support in matching labour supply and demand.
• The public sector must work with the private sector (including digital platforms) to close the skills
gap in activities where there is demand for labour.
• Vocational training programmes need to pay attention to the specific skills and aptitudes sought by
firms. Hybrid models of learning, which combine traditional education with on-the-job training, are
effective in balancing the need for increased learning time with the need to maintain earnings streams.
• Digital education services that help identify skills gaps and design customized programmes based
on market needs should be strengthened.
• Online talent platforms that help connect individuals more effectively to employment opportunities
and create new, more flexible ways of working need to be promoted. In addition to these functions,
they can use search and screening algorithms to speed up recruitment and reduce search times.
Chapter III
Digital technologies for a new future
69
To adapt regulation with a view to creating and embracing digital opportunities:
• Competition policies need to adapt to changing environments with increasing concentration and
blurring sectoral boundaries.
• Rules should be put in place to make digital platforms more transparent and accountable for their
decisions and information handling. Attention needs to be paid to business-to-business services,
whose increasing role (e.g., in home food delivery) may raise prices in a way that makes it difficult
for MSMEs to participate.
• Regulation must adapt to changing employment dynamics. Regulators have to balance the creation
of employment opportunities with the protection of workers’ interests.
•
The institutional fabric needs to be strengthened to foster coordination and cooperation across sectors.
This must involve creating spaces that promote the generation of shared value between businesses,
individuals and government. These efforts must be complemented by continuous improvement in
institutional quality focused on boosting productivity and strengthening institutional cooperation.
In summary, a wide range of actions can and should be taken. National and local governments have to
decide which to prioritize depending on their situation and focus on a limited set to ensure an adequate level
of implementation, which is still the great weakness of production policies in the region, including digital ones.
For this reason, the next chapter will analyse in detail the governmental framework within which actions have
to be prioritized and implemented, including not only the governance of the digital universe at the national
level, but also the need to strengthen the actions of the regional cooperation agenda.
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Chapter IV
Digital technologies for a new future
71
Digital governance, institutions
and agendas
A. Digital agendas: empowerment and cross-sectoral policies
B. Competition,privacyanddatasecurityattheheartofdigitalagendas
C. Fifteen years on from the first regional digital agenda:
strengthening competition
D. The regional digital market at the heart of subregional
integration mechanisms
Bibliography
Annex IV.A1
CHAPTER
IV
Chapter IV
Digital technologies for a new future
73
A. Digital agendas: empowerment
and cross-sectoral policies
The pandemic has once again highlighted the importance of the State and its institutions in protecting
citizens’ rights and ensuring that basic educational, health-care and employment needs are met. The Internet
and associated technologies have also become essential tools for the continuation of economic and social
activities during the crisis. In this situation, digital policies have taken on renewed urgency and importance,
given their potential both to maximize the opportunities that arise and to reduce the adverse effects of the
crisis. Thus, digital agendas must be at the heart of plans and strategies for economic reactivation and recovery.
The time is now ripe for a digital policy shift, with a move away from policies for the information society
towards development agendas based on digital transformation. In other words, it is time to move towards a
new era of digital agendas (see diagram IV.1). In 2003 and 2005, the World Summit on the Information Society
called for the adoption of information and communications technologies (ICTs) as development tools. This
prompted countries to begin developing information society agendas, focused mainly on narrowing the digital
divide and boosting e-government and on raising awareness of the possibilities offered by ICTs, particularly
in the areas of health and education. The enthusiasm of the early years resulted in institutional adjustments
aimed at implementation; over time, however, these agendas lost priority in policy debates and actions.
Diagram IV.1
Towards a new era of digital agendas
Information society era
Proliferation of ICTs, broadband and smartphones. Increased production
of digital content and multimedia and provision of public and private
services and electronic commerce.
2000
2010 20202005 2015
2025
Basic internet access
and personal computers
in schools
Focus on basic infrastructure.
From the information technology
room to computers in the classroom.
Broadband plans
Laying of fibre optic backbones, major public
investment and efforts to improve the quality
of connectivity, greater proliferation
of smartphones.
COVID-19
Disruption and exponentiality of digital needs
for teleworking, tele-health, electronic government, etc.
Need to transform skills.
National digital development plans
The new technologies of the fourth industrial revolution
are creating the conditions for a cross-cutting
transformation that needs to be coordinated and
planned to remove asymmetries and maximize impact.
Digital agendas and government
as a platform
Design of general digitalization indicators,
applications for citizens.
Open data policies.
Electronic government
Provision of State services.
Government portals and
regulation of privacy.
2030
Era of digital transformation and industry 4.0
4G and 5G networks and the Internet of things, big data and artificial
intelligence drive the new data-based economies, platformization
based on network effects.
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
The multipurpose nature of digital technologies means that their effects cut across activities and sectors.
Moreover, several levels of government have responsibilities related to these technologies and their economic
and social effects and to the protection of rights. It is no longer just up to the sectoral body specializing in
telecommunications to determine the regulatory approach. Regulatory bodies dealing with data protection,
consumer protection and competition also have responsibilities. Digital innovation and investment policies
are essential for productivity and economic growth. Meanwhile, local governments are also developing digital
technology projects, and their actions need to be coordinated with national policy. Managing this complex
web of relationships requires a holistic view of digital policy at the national level and coordination between
different actors and levels of government (see diagram IV.2).
Chapter IV
Economic Commission for Latin America and the Caribbean (ECLAC)
74
Diagram IV.2
Scope of digital policies by area of government
Agriculture
Na�onal digital agenda
• Telecommunications
and Internet licensing
• Allocation and use
of radioelectric
spectrum
• Network coverage,
infrastructure sharing,
service quality
• Wholesale prices
• Universal service
funds and use
of backbones
• Open standards
and interoperability,
technological neutrality
• Network neutrality,
zero rating
Local government
Telecommu-
nica�ons
regulator
Consumer
protec�on
• Strengthened privacy
and security policies
• Rules on big data and
artificial intelligence,
encryption and
anonymization
• Encrypted private
networks
• Security application
and monitoring
• Access to backbones
• Use or sharing of local
infrastructure and ducts and
access to public infrastructure
• Positive silence policies,
special small cell regime,
transparency, permission
for end-to-end fibre
• Investment in sensors or
meters, adoption of open,
scalable solutions
• Incentives for local SMEs
and over-the-top media services
• Training
• Local content promotion
• Tax incentives, subsidies,
innovation funds
• Air traffic and drone
control, licensing
• Occupational training
programmes, coordination
of curricula, development
of officials’ capabilities
• Incentives to create SMEs,
access to venture capital
• Use of posts, ducts
and meters
• Promotion of electronic
commerce and payments
• Cloud services, patient
records. Use of big data
for health care
Health care
Educa�on
Finance
Industry
Energy
Scope of public policies
Area of
government
Cybersecurity
Data
protec�on
An�trust
Innova�on
Investment
• Facilitation of infrastructure
roll-out or shared use
and oversight
• Monitoring of concentration
• Abuse of dominant position
• Restrictive agreements
• Monitoring of mergers
• Provision of data
centres, permits
• Tax exemptions
• Open data access
• One-stop shop
• Reduction of
bureaucracy
• Government
innovation
• Funds for research
and development,
promotion of
artificial
intelligence,
training
• Sanctions and fines
• Service quality, experience,
social mood
• Fair use and fair trade,
zero rating
• Business-to-business and
business-to-consumer
complaints, dispute resolution
• Consumer education
• Data breaches
• Cyberattack protection
and monitoring
• Incident response.
Resilience rules
• Critical infrastructure
protection
Legislature
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Out of 27 countries in Latin America and the Caribbean, 16 have current digital agendas that are
being implemented, while 11 require reform or renewal in this area. In particular, the great majority of the
English-speaking Caribbean countries have digital agendas whose original deadlines have passed and which
need revising (see table IV.1). In some countries, the agendas are integrated into national development plans.
Although these plans have paid attention to digital policies, the relationship between the two instruments is
not always clear and varies between countries. The agendas relate mainly to productivity policies and less to
social, institutional and environmental issues (OECD and others, 2020).
Table IV.1
Latin America and the Caribbean (27 countries): state of national digital agendas, 2020
Country National digital agenda
Argentina I
Barbados N
Bolivia (Plurinational State of) I
Brazil I
Chile I
Colombia I
Costa Rica I
Cuba I
Dominican Republic I
Ecuador N
El Salvador N
Grenada N
Guatemala I
Haiti N
Honduras N
Jamaica I
Mexico N
Nicaragua N
Panama I
Paraguay I
Peru I
Saint Kitts y Nevis N
Saint Lucia N
Saint Vincent and the Grenadines I
Trinidad and Tobago I
Uruguay I
Venezuela (Bolivarian Republic of) N
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Note: I: currently being implemented; N: in need of reform or updating.
Chapter IV
Digital technologies for a new future
75
The success of digital agendas depends on institutional and organizational factors, especially those
associated with the formulation of cross-sectoral policies, the establishment of strategic priorities, multisectoral
coordination, financing, the application of incentives, the adaptation of regulatory and legislative frameworks
and the application of measuring and monitoring instruments. Figure IV.1 details the presence of some of these
factors in the digital agendas of 14 countries in the region. The most widespread features are the creation of
intergovernmental coordination committees or commissions and the establishment of targets and indicators.
In contrast, public consultations on strategy design and the creation of multisectoral coordination mechanisms
and explicit budgeting documents in agendas are less common. Although many of the features referred to
are mentioned in digital agendas, these elements are not clearly consolidated or, in many cases, have been
consolidated only recently. For example, while there are countries with inter-agency coordination mechanisms
for following up on their digital agendas, in very few cases have they been consolidated. Likewise, there are
few instances of public consultation mechanisms for the design of digital agendas.
Figure IV.1
Latin America and the Caribbean (14 countries):
a
institutional characteristics of national digital agendas, 2020
(Percentages of countries)
0 10 20 30 40 50 60 70 80 90 100
Budgeting in the plan
Multisectoral coordination for follow-up
Public consultation to prepare the agenda
Targets or follow-up indicators
Intergovernmental coordinating
committee or commission
Implemented Recently created Not implemented
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Organization for Economic Cooperation and Development (OECD) and
others, Latin American Economic Outlook 2020: Digital Transformation for Building Back Better, Paris, 2020.
a
Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Honduras, Mexico, Panama, Paraguay, Peru, Plurinational State of Bolivia and Uruguay.
While the hierarchical level and capacity for institutional coordination of the agency in charge of advancing
the digital agenda are crucial to its success, it is also necessary to consider the characteristics of regulations
dealing with telecommunications, antitrust issues and consumer and data protection. The scope of regulation,
the legal framework, independence, resources and linkages with other State bodies are critical elements of
digital policy.
The characteristics of the institution with responsibility for implementing the digital agenda is another
determinant of success. Several countries in the region have sectoral ministries specializing in information and
communications technologies, telecommunications or science, allowing an appropriate hierarchical level to be
assigned to the design and implementation of digital policies (see figure IV.2). In other countries, second-tier
entities or bodies have been created to lead these strategies, generally linked to the office of the president,
which also ensures that they are highly placed in the hierarchy and have the capacity for coordination. There are
also countries with collegiate bodies bringing together the institutions involved in this policy or with sectoral
ministries in the areas of economic affairs, trade, industry or public administration heading the agenda (as in
the Caribbean countries). In one case, lastly, a regulatory body has been put in charge.
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Figure IV.2
Latin America and the Caribbean (19 countries):
a
institution heading the country’s digital agenda
(Numbers of countries)
0 1 2 3 4 5 6 7
Sectoral regulatory authority
Sectoral ministry (economic affairs,
public administration, etc.
Multisectoral committee or commission
Digital government agency or secretariat
Specialized ministry
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
a
Argentina, Barbados, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, Grenada, Jamaica, Panama, Paraguay, Peru, Plurinational State of Bolivia,
Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago and Uruguay.
As regards the thematic content of digital agendas, the largest number of policy measures are in the
areas of infrastructure, access and broadband, enabling environment (regulatory reforms), digital government
and digital education (see figure IV.3). Actions linked to digital skills development, digitalization of small and
medium-sized enterprises (SMEs) and cybersecurity are included in almost all the countries. Less frequent
are policies for the ICT industry, coordination with local governments and health care. Even less consideration
is given to issues related to gender, local content, the environment and the development of 5G networks.
Figure IV.3
Latin America and the Caribbean (13 countries):
a
policy measures by theme on digital agendas
(Numbers of countries)
Infrastructure and access
Enabling environment
Digital government
Digital education
Digital skills
Digitalization of SMEs
Cybersecurity
Support for ICT industry
Local governments and smart cities
Digital health care
Gender
Local content
Environment
5G networks
13
13
13
13
12
12
12
11
10
9
8
7
5
4
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
a
Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Honduras, Mexico, Panama, Paraguay, Peru, Plurinational State of Bolivia and Uruguay.
Institutional arrangements for connectivity policies also vary from country to country (see table IV.2). For
example, Brazil, Colombia and Ecuador have specialized ministries for ICTs. In other countries, digital and
sectoral issues are included in broader ministerial agendas, which means a loss of focus and priority. Where
Chapter IV
Digital technologies for a new future
77
sectoral regulation is concerned, while most of the countries separate the regulator from the executive branch,
there are limits to this independence, such as budgetary dependence or the ability of the government to
appoint the agency’s authorities. National broadband plans tend to be very general. In some countries they
include coverage targets, and most countries set demand targets for providing the service in schools, libraries
or public offices (e.g., in Argentina, Chile, Colombia, Ecuador and Peru). Although most of the countries have
universal access and service funds financed by private contributions (fixed, mobile and broadband services),
not all use them for connectivity. Expenditure is usually less than revenue (56% in Argentina and 75% in
Colombia and Peru, for example). In Brazil and Ecuador, these funds tend to be captured by the treasury to
reduce the fiscal deficit. In other cases, as in Guatemala, their use is limited to telephony projects.
Table IV.2
Latin America (9 countries): national connectivity policies
Yes No
Ministry of telecommunications or ICTs
Independent regulator
Centralized national broadband plan
Demand programmes
Coverage goals
Active universal service funds
State telecommunications operator
Public investment in national fibre network
Level of local barriers to roll-out
Argentina
Brazil
Chile
Colombia
Ecuador
Guatemala
Mexico
Peru
Uruguay
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Note: The darker the colour, the more highly developed the aspect concerned is.
Local regulations can create bottlenecks for infrastructure roll-out. The problem is caused by overlapping
regulations at the subnational level and the restrictions that municipalities often place on infrastructure roll-out.
In general, municipal autonomy makes it difficult to establish uniform regulations of national scope. Some
countries have made efforts to reverse this situation. Costa Rica, for example, encourages municipalities to
repeal their regulations and adopt a core set of regulations promoted by the National Institute of Housing
and Urban Affairs (INVU). Colombia has introduced national regulations that respect municipal autonomy. The
Communications Regulation Commission (CRC) accredits municipalities that are “barrier-free” for infrastructure
roll-outs. Those with such accreditation are put on the list of municipalities prioritized to receive funding for
connectivity projects.
Similarly, sectoral bodies play a central role in the development of digital policies in areas such as
education, health care and security. The design and coordination of these sectoral agendas and programmes
varies between sectors and countries. For example, Brazil has a specific agenda in agriculture that is in line
with the national plan and is constituted as a national secretariat. In industry, Colombia has iNNpulsa, which
implements entrepreneurship, innovation and business productivity programmes. In education, there is
greater institutionalization and coordination with national plans. Most of the countries have programmes to
provide computers and increase digital access. In health care, Brazil, Chile, Ecuador and Uruguay have special
agencies dedicated to the coordination of information and communications technologies, in line with their
national digital agendas.
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Table IV.3
Latin America (8 countries): sectoral characteristics of digital policy
Yes No
Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Uruguay
Specific agenda in agriculture
In line with the national plan
Specific agenda in industry
In line with the national plan
Specific agenda in education
In line with the national plan
Specific agenda in health care
In line with the national plan
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Note: The darker the colour, the more highly developed the aspect concerned is.
Many digital technology development initiatives are carried out by local governments in mobility, security
and innovation projects as part of smart city strategies. There are also initiatives led by sectoral ministries in
education, health care and government. The regulatory framework is likewise fragmented and falls under the
responsibility of different authorities. Consequently, greater coordination of agendas and plans in accordance with
the eight key considerations outlined in diagram IV.3 is required to take advantage of the digital transformation.
Diagram IV.3
Key considerations for a national digital agenda
Data & explanation
1
National digital
agenda aligned
with local efforts
2
3
4
5
6
7
8
Who is in charge of
digital transformation?
Prioritize and avoid
overlapping initiatives
Precise diagnosis of supply
and its incentives and needs,
and investment determinants
Prospective analysis of demand with
a focus on aggregation to create
new markets and value chains
Foment digital trust and lower transaction costs.
Ensure privacy and have cybersecurity policies
Institutional design: aligned innovation and
digital government offices and capacity
to apply discipline across the board
Continuous measurement and reporting
of progress. Open data for informed
citizens and production needs
How can initiatives be given
continuity beyond individual
terms of government?
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
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B. Competition, privacy and data security at the heart
ofdigital agendas
The role of digital technologies in the economy began to expand significantly more quickly in the first quarter
of 2020, when the effects of the pandemic started to be felt. The pandemic has added a new aspect to
the discussion on Internet governance, as dealing with it has required full and coordinated deployment of
information technologies. This deployment has been generating large amounts of data as a result of the actions
of the authorities, medical and research centres, and the population. Substantial incursions have been made
into privacy owing to the vast amounts of personal information collected from digital platforms. During the
emergency, social networks have been very active in collecting personal information from their users, and
the number of active accounts in the world has multiplied as a result of lockdowns.
The security threat from the massive use of sensitive data during the pandemic has prompted various
public and private efforts to formulate national strategies that can help address this threat in a coordinated
manner.
1
Data protection regulations have evolved significantly in Latin America and the Caribbean in recent
months, partly under the influence of the European Union’s General Data Protection Regulation (GDPR), and
regulatory and institutional frameworks for data protection are being updated. Thus, Brazil and Colombia have
amended their regulations to create the post of data protection officer and a data protection performance
evaluation system, as provided for in the GDPR framework (OECD and others, 2020).
Cybersecurity regulations in the region focus on data protection, mainly to prevent theft and tampering,
interference with the operation of computer systems and attempts to erase, delete or block access to data.
2
However, cybersecurity standards do not provide for the protection of critical infrastructure, where there may
be threats to the supply of public services (water, electricity, telecommunications, transport, logistics chains
and port systems, among others).
3
The digital economy could treat data protection as a dimension of the welfare State (Costa-Cabral and
Lynskey, 2017),
4
which implies that the quality of data protection should be regarded as a competitive asset
for companies that needs to be part of competition analyses. Data are a highly coveted asset, as innovation,
dominant positions and even market capitalizations are data-driven (Da Silva, De Furquim and Núñez, 2020).
The accumulation of data and the advantages that firms derive from their use also give rise to incentives for
misuse (e.g., excessive mining) and concerns about data privacy and protection. Data-opolies therefore give
cause for concern about data protection, privacy and competition.
Since data are the main factor of production in the digital economy and are therefore competitive assets,
regulation must ensure that they are not used or held in an anti-competitive way, so that actors are given
fair access to them. Traditional antitrust policies have not been linked to privacy regulation. The dominance
of digital platforms blurs the boundary between antitrust and privacy regulations (Economides and Lianos,
2020). In a context of digitalization, determining data ownership is a critical issue for regulation. Generally, a
competition law analyses market failures and their impact on consumer welfare. In contrast, data protection
and privacy regulations adopt a fundamental rights perspective, which means that dominance on digital
platforms is examined from other angles.
The development of production structures based on smart connected systems is driving the ongoing merger
between the digital economy and the real or traditional economy, as discussed in chapter I. Companies are
pursuing two strategies to cope with this transformation. First, they are developing digital capabilities of their
1
The larger a digital platform is, the more prone it will be to cyberattacks. The Internet of things brings additional challenges for the security of personal information
collected through machine-to-machine interactions (Bustillo, 2021).
2
Between June 2019 and June 2020, ransomware attacks grew by 108% year on year and attacks on networks in the Internet of things grew by 833% year on year
(Check Point Software Technologies, 2020).
3
For example, attacks on companies in logistics and transport chains grew by 78% year on year during 2019, placing the sector third behind financial services and
retail with 10% of all attacks worldwide. The region’s countries rank in the top quarter of the world’s most targeted countries (Díaz, 2020).
4
However, this has been countered with the argument that the standard of consumer welfare is governed by economic principles and that competition authorities
lack the legal powers and technical expertise to incorporate non-economic concerns into their sphere of competence (Costa-Cabral and Lynskey, 2017).
Chapter IV
Economic Commission for Latin America and the Caribbean (ECLAC)
80
own and may even transform themselves into digital service providers. Second, they are using mergers and
acquisitions and strategic partnerships with global platforms or digital natives to acquire capabilities that are
enabling them to adapt their offerings to the new kinds of demand. Thus, the boundaries between traditional
industries are blurring, giving rise to new industrial and sectoral structures (e.g., a fintech can be classified
within the technology services or financial services category). This convergence is shifting the boundaries of
markets and industries, altering the ground rules, affecting competition and challenging regulatory models.
In the post-pandemic world, where the role of digital technologies and platforms will have been
strengthened, it will be essential to create regulatory and institutional frameworks to prevent the abuse of
market power arising from concentration and incentivize competition. The regulatory model will depend on the
type of platforms involved: (i) those using general search engines to provide access to information or content,
(ii)those providing access to personal data and other “private” content, (iii) those providing access to goods
or services offered by third parties or by “collaborative economy” platforms, (iv) those providing access to
labour or particular skills based on expertise and (v) those providing access to capital, such as crowdfunding,
payment systems or cryptocurrency sites (ECLAC, 2020a).
While accessing databases is difficult, building them is even more challenging because of network effects.
Data are a driver of takeovers and the reason for many monopoly positions. They are thus a strategic asset
that poses risks to competition. Data-driven and predatory acquisitions are an important part of technology
firms’ strategies (see figure IV.4).
Figure IV.4
Firms leading acquisitions globally, 2020
(Numbers of acquisitions)
371
300
241
231
224
190
183
173
172
157
154
153
141
130
129
120
118
116
114
113
0
50
100
150
200
250
300
350
400
Gallagher
HUB
International
Google
Microsoft
Cisco
Assured
Partners
IBM
Accenture
EQT
SGS
Bunzl plc
CVS
Group plc
Oracle
H.I.G
Capital
The Carlyle
Group
Yahoo
IK
Investments
Apple
Securitas
Kohlberg
K. R.
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Crunchbase [online database] https://www.crunchbase.com/; E. Da Silva,
J. De Furquim and G. Núñez, “La libre concurrencia en la economía digital: las mipymes en América Latina y el impacto del COVID-19”, Santiago, Economic
Commission for Latin America and the Caribbean (ECLAC), 2020, unpublished.
Restrictions on data access can prevent companies from offering goods and services at competitive
levels. This affects their survival in data-driven markets and can weaken competition (Annual Conference of
Executives (CADE), 2019). In strategic terms, data can become barriers to entry for new competition, as they
can facilitate collusive agreements (algorithms that automate pricing agreements) and affect third markets
(data collected by a company in one sector can be used to learn about and cater to consumers in another
sector) (Da Silva, De Furquim and Núñez, 2020).
Figure IV.5 shows the trend in the market capitalization of the world’s and the region’s leading platforms.
During the pandemic, the centrality of digital services increased the market value of firms in the digital sector,
particularly platforms. This contrasts with the situation of many firms in the analogue economy that were
adversely affected by the suspension of economic activities and the disruption of value chains.
Chapter IV
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81
Figure IV.5
Latin America and the Caribbean and the rest of the world: market capitalization of leading platforms,
December 2019 to October 2020
(Percentages)
-60
-40
-20
0
20
40
60
80
100
120
140
January February March April M ay June July August September Octob er November
Amazon
Alibaba
MercadoLibre
Ebay
Micro soft
Apple
Facebook
PagSeguro
Netflix
Aggregate
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Macrotrends [online] https://www.macrotrends.net/.
The conclusions of the above analysis highlight the need to develop strategies and policies tending towards
the integration of antitrust and data protection measures to ensure market access without jeopardizing
the security of the parties involved. There is a need to reduce distortions to competition and innovation
(predatory practices) that favour technology giants, but without hindering national or regional innovation and
entrepreneurship (start-ups). While the protection of intellectual property rights can incentivize innovation,
it can also restrict access to data derived from research.
1
Restrictions on the flow of research data increase
costs. One alternative that has been put forward is the centralization of data by government entities to secure
inputs for innovation. Policymakers need to strike a balance between data-supported innovations, cross-border
data transfer and the safeguarding of consumer privacy.
To improve the competitive position of micro, small and medium-sized enterprises (MSMEs) in the digital
economy, governments must guarantee the free flow of data (e.g., through a fee-based data marketplace) and
an adequate level of data protection. They must ensure that data are not used or held in an anti-competitive
way and that actors have fair access to them. In the recovery from the pandemic, alternatives that could be
explored include the creation of data cooperatives allowing small and medium-sized enterprises to aggregate
their databases in order to attain a significant volume with which they can use big data techniques (Da Silva,
De Furquim and Núñez, 2020).
The intensive use of data requires effective monitoring by market regulators. Thus, data risk, as an
intangible asset, should be at the centre of investment analysis. In general, the level of risk associated with
intangibles is higher than that associated with physical or financial assets. This translates into higher risks for
companies that accumulate data and for investors in these companies’ shares. The State can play a role as
a market maker: its actions could reduce uncertainties and information asymmetries and thus facilitate price
allocation (De Carvalho, 1992).
In the absence of markets for data or intangibles, it is difficult to assign a monetary value to platform-based
business models. The lack of such markets can also increase risks, which poses a twofold problem: the
valuation of such assets and the implementation of regulations. First, lack of liquidity and restricted risk-sharing
opportunities increase the risk associated with investments in intangible assets. Second, regulators can
improve the allocation of resources and make information about such assets more transparent to reduce
1
According to OECD and others (2020), data access and sharing generate social and economic benefits worth between 0.1% and 1.5% of GDP for public sector
data and between 1% and 2.5% of GDP (up to 4% in some studies) when private sector data are included.
Chapter IV
Economic Commission for Latin America and the Caribbean (ECLAC)
82
market failures (information asymmetry and uncertainty constraining the calculation of the risk associated
with the asset) and thus foster competition. The formalization of intangibles markets can be an incentive for
firms, mainly smaller ones, to enter these markets. This points to the need to coordinate data protection,
security, market access and competition.
C. Fifteen years on from the first regional digital agenda:
strengthening competition
The High-level Panel on Digital Cooperation, convened by the Secretary-General of the United Nations, concluded
its work in June 2019 with the presentation of the report The Age of Digital Interdependence (seetable IV.4).
1
This
showcases a set of recommendations on how the international community could strengthen the use of digital
technologies and mitigate their risks, turning on five areas: (i) building an inclusive digital economy and society;
(ii) building human and institutional capacity; (iii) protecting human rights and human agency; (iv) promoting digital
trust, security and stability; and (v) fostering global digital cooperation. On this last point, the report notes that
the current digital cooperation architecture has become highly complex and fragmented, and that it is particularly
difficult for the voices of developing countries, small and medium-sized enterprises, marginalized groups and
other stakeholders with limited budgets and expertise to gain a hearing in it (United Nations, 2020b).
Table IV.4
Actions recommended to improve digital cooperation in the report The Age of Digital Interdependence
by the Secretary-General of the United Nations
Recommendations Connectivity Digital public goods Digital inclusion
1. Build an inclusive digital economy
and society
Achieve universal connectivity by 2030:
everyone should have secure and
affordable Internet access.
Promote digital public goods for a more
equitable world: public and open-source
software should be adopted
andsupported.
Ensure digital inclusion for all,
including the most vulnerable:
underserved groups need equal
access to digital tools.
2. Create human and
institutionalcapacity
Creation of digital capacity
Strengthen the creation of digital
capacity: the development
and formation of skills are
necessaryeverywhere.
3. Protect human rights and
humanagency
Digital human rights Artificial intelligence
Ensure the protection of human rights in
the digital age: human rights apply both
online and offline.
Support global cooperation on artificial
intelligence that is reliable, human
rights-based, secure and sustainable
and that promotes peace.
4. Promote digital trust, security
andstability
Digital trust and security
Foster digital trust and security: call
for a global dialogue to promote the
Sustainable Development Goals.
5. Foster global digital cooperation Global digital cooperation
Build a more effective digital
cooperation architecture: make
digital governance a priority using the
UnitedNations approach.
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of United Nations, The Age of Digital Interdependence, New York, 2020.
1
The purpose of the report was to advance proposals for strengthening cooperation in the digital space among governments, the private sector, civil society,
international organizations, the technical and academic communities and all other relevant stakeholders.
Chapter IV
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83
The United Nations would become a platform for multi-stakeholder policy dialogue on emerging technologies
(United Nations, 2020a). In this context, three components are suggested to strengthen a new model of
international cooperation: (i) nationally driven development processes by strengthening institutional capacities,
(ii) inclusive multilateral governance platforms to facilitate exchange on an equal footing and (iii) inclusion of
new tools and actors within instruments to coordinate policies at the international level (OECD and others,
2020). These recommendations should be applied in the digital sector and in the institutional and cooperation
arrangements of the regional digital agenda, taking advantage of its multisectoral and multilevel character.
At the same time, recent surveys of experts and opinion leaders in the region have found that 78%
agree that Internet-related cross-border legal challenges will become more acute in the next three years
(see figure IV.6). At the same time, 73% agree or strongly agree that there is a demand for coordination to
address cross-border legal challenges, and 61% believe that the region has the right institutions to address
these challenges.
Figure IV.6
Will Internet-related cross-border legal challenges become increasingly acute in the next three years?
(Percentages of all respondents)
3
0
19
51
27
0 10 20 30 40 50 60
Strongly disagree
Disagree
Neither agree nor disagree
Agree
Strongly agree
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Key findings of the Internet & Jurisdiction and ECLAC: Regional Status Report 2020
(LC/TS.2020/68), Santiago, 2020.
The digital agenda follow-up mechanism can be strengthened in different dimensions so that it can play
a more active role in capacity-building and in the design of agendas and policies in the countries, as well
as in facilitating coordination with the digital actions being carried out in the region’s various trade blocs
(seetableIV.5). The digital agenda could facilitate the identification of common projects and challenges in which
it is advisable to act jointly as a region, e.g., digital identity, cybersecurity, education and migration issues. It
could also generate joint actions by the actors participating in the mechanism, strengthening their coordination
with other spaces for debate such as the regional Internet Governance Forum (IGF). There is likewise scope
to design new instruments to strengthen cooperation between countries and technology transfer.
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84
Table IV.5
Role of the Digital Agenda for Latin America and the Caribbean (eLAC2020)
in strengthening digital cooperation in the region
Dimension Description Application to digital cooperation
Possible areas of cooperation in the
framework of the region’s digital agenda
Building
domestic
capacities
Strengthening countries’ capacities to design,
implement and evaluate development policy
priorities and plans, encouraging alignment
between domestic and international priorities
and ensuring integrated approaches to more
complex and interlinked challenges.
Encouraging initiatives that build Latin American
and Caribbean countries’ capacities to overcome
several of the developmenttraps.
Building a regional digital market to tap
into Latin America and the Caribbean’s
digital potential.
Fostering cooperation at the multilateral level
on issues such as digital taxation.
Generating support mechanisms for the design
of the digital agenda and digital policies.
Providing technical support for the design of
regional digital market strategies and their
coordination between the different integration
blocs (Pacific Alliance, Southern Common
Market (MERCOSUR), Mesoamerica Project).
Working
inclusively
Engaging countries at all levels of
development on an equal footing in building
and participating in multilateral and
multi-stakeholder partnerships to tackle shared
multidimensional development challenges
with multidimensional responses.
Engaging in partnerships that promote
a human-centred and multidimensional
approach to Latin America and the
Caribbean’sdigitaldevelopment.
Articulating all levels of digital development
and involving multiple stakeholders such as
the private sector and civil society within the
regional digital market.
Strengthening the involvement of
LatinAmerican and Caribbean countries
on an equal footing in multilateral and
multi-stakeholder initiatives on issues such
as digital taxation.
Generating joint work agendas with different
private actors, civil society and the technical
community on priority issues.
Engaging other public sector bodies besides
those directly involved in ICT fields in a joint
work agenda.
Strengthening cooperation with other spaces
(e.g., the Regional Preparatory Meeting for the
Internet Governance Forum).
Operating with
more tools
andactors
Expanding instruments for greater international
cooperation (e.g., knowledge sharing, policy
dialogues, capacity-building, technology
transfers) and including more actors (e.g., public
actors) in a whole-of-government approach.
Promoting technical assistance and technology
transfers through bilateral, multilateral,
interregional, triangular and South-South
cooperation for the development of Latin
America and the Caribbean’s digital capacities.
Establishing policy dialogues and encouraging
knowledge sharing and capacity-building
between Latin American and Caribbean
countries within a regional digital market.
Fostering new multilateral cooperation
initiatives on key global digital issues.
Designing instruments (appropriate technology
programmes, technology transfer, etc.) to
strengthen cooperation between countries.
Maintaining a continuous dialogue on digital
policies and identifying important issues.
Source: Organization for Economic Cooperation and Development (OECD) and others, Latin American Economic Outlook 2020: Digital Transformation for Building Back
Better, Paris, 2020.
At the seventh Ministerial Conference on the Information Society in Latin America and the Caribbean, the
countries of the region agreed on a regional digital agenda running up to 2022. It includes eight areas of action:
(i) digital infrastructure, (ii) digital transformation and the digital economy, (iii) digital government, (iv)inclusion
and digital skills and other competencies, (v) emerging technologies for sustainable development, (vi) trust
and digital security, (vii) the regional digital market and (viii) digital regional cooperation. In addition, it includes
a specific section on combating the COVID-19 pandemic and on the role of digital technologies for economic
recovery and reactivation, identifying 39 specific goals for implementation (see annex).
D. The regional digital market at the heart of subregional
integration mechanisms
On the basis of the agreements adopted at the Ministerial Conferences on the Information Society in
LatinAmerica and the Caribbean held in 2015 and 2018, and with the support of ECLAC, the countries of
LatinAmerica and the Caribbean initiated a debate on the opportunity presented by the creation of a regional
digital market. They also discussed the measures needed to achieve this goal, which requires the establishment
of a regional strategy to increase trade, expand the digital economy and strengthen competitiveness through
regulatory consistency, infrastructure integration, the development of digital platforms, ease of cross-border
data flows and trade facilitation measures. Among these points, the advisability of working on regulatory
harmonization stands out as an important aspect where much remains to be done in some trade blocs, such
as the PacificAlliance and the countries of the Mesoamerica Project.
Chapter IV
Digital technologies for a new future
85
Fragmentation into different markets for the development of telecommunications infrastructure can
be a barrier to exploiting economies of scale and to developing operators in integrated digital markets
(CullenInternational, 2016). This can be seen when large economic blocs with few operators and economies
of scale (the UnitedStates and China have single markets of 330 million and 1.4 billion customers, respectively,
served by four or five large operators) are compared with the European Union, where there are hundreds of
operators serving a market of 510 million customers.
While fragmentation may not be a drawback in the countries of the region, insofar as the same
telecommunications operators are present, there is consensus on the need to work on the harmonization
of regulatory environments to promote the digital economy. This is particularly necessary in areas such as
consumer protection, personal data protection, identity, digital payments and securities, transport and logistics
standards, and tax regimes (ECLAC, 2020c). Progress thus needs to be made with regulatory harmonization
to take advantage of economies of scale.
On this premise, several blocs in the region have initiated efforts to design or revise their digital integration
strategies. In particular, the Pacific Alliance has proposed the design of a regional digital market strategy that
would create the conditions for greater market scale, better coordination of resources and lower transaction
costs. A larger scale would allow for further-reaching development of digital services and products, with a
view to creating a platform and content industry that would allow Pacific Alliance countries to compete in
this segment on a global scale. The regional digital market could also be an instrument for the coordination
of technological research and development and innovation resources. Lastly, regulatory harmonization could
reduce transaction costs, as companies would be operating in a more homogeneous and unfragmented
regulatory environment.
The economic impact of such initiatives can be observed in other regions and blocs. For example, since
the formation of the digital single market strategy in the European Union, its degree of digitalization has grown
by more than that of other OECD countries that are not part of this zone.
1
The implementation of a regional
digital market among the Pacific Alliance countries could increase the annual impact of digitalization on GDP
from US$ 9.62 billion to US$ 13.886 billion, taking into account only the spillovers from the creation of this
market (see figure IV.7).
Figure IV.7
Increase in GDP produced by the spillovers from a regional digital market among the Pacific Alliance countries
(Billions of dollars)
Annual contribution of digitalization
to the economy
Spillovers from regional
digital market
Total
16
14
12
10
8
6
4
2
0
9 620
4 266
13 886
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
1
The index of digitalization in the European Union has grown at a compound annual rate that is on average 1.12 times as high as in OECD countries outside the Union.
Chapter IV
Economic Commission for Latin America and the Caribbean (ECLAC)
86
Another integration initiative is the Mesoamerican Digital Agenda, which coordinates the efforts of the
member countries of the Mesoamerica Project.
1
One of its initiatives is to develop telecommunications and
digital economy infrastructure in the subregion, the two being closely linked. The implementation of the Agenda
could generate additional value of US$ 3.305 billion over five years. For its part, the Caribbean Community
(CARICOM) has a strategy which is the digital component of the CARICOM single market, aimed at creating
a borderless ICT space that fosters economic, social and cultural integration. The initiative encompasses
ICTpolicies, legislation, regulations, technical standards, best practices, networks and services to harmonize them
regionally (OECD and others, 2020). Another initiative is that of the Southern Common Market (MERCOSUR),
which established the Digital Agenda Group (GAD) in 2017 with the objective of “promoting the development
of a digital MERCOSUR” (MERCOSUR, 2020). The GAD negotiated its first Action Plan (2018-2020) in 2018,
with commitments on digital infrastructure and connectivity; security and trust in the digital environment;
the digital economy; digital skills; digital government, open government and public innovation; technical and
regulatory aspects; and coordination in international forums (MERCOSUR, 2020).
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1
Comprising Belize, Colombia, Costa Rica, the Dominican Republic, El Salvador, Honduras, Guatemala, Mexico, Nicaragua and Panama.
Chapter IV
Digital technologies for a new future
87
Annex IV.A1
Digital Agenda for Latin America and the Caribbean (eLAC2020)
A. Background
1. The 2030 Agenda for Sustainable Development marks the entry of a new era and a time of opportunity
when the dissemination and adoption of new technologies and global interconnection, and in which information
and communications technology (ICT), offer enormous potential for accelerating human progress, facilitating
access to information and developing knowledge societies. The 2030 Agenda also acknowledges the critical
nature of scientific and technological innovation in areas that are vital to development such as health and energy.
Both the Sustainable Development Goals (SDGs) of the 2030Agenda and the Agenda itself expressly include
ICT as an essential tool for improving the quality of education, promoting women’s empowerment, driving
inclusive and sustainable industry and promoting innovation, as well as part of the means of implementation
of the Agenda.
1
2. In 2020, it will be 15 years since the Plan of Action for the Information Society in Latin America and the
Caribbean (eLAC2007) was adopted in Rio de Janeiro (Brazil) in June 2005. This cooperation mechanism has
been renewed over the years, and was last updated during the sixth Ministerial Conference on the Information
Society in Latin America and the Caribbean, held in Cartagena de Indias (Colombia) in April 2018, where the
Digital Agenda for Latin America and the Caribbean (eLAC2020) was adopted and it was agreed to hold the
seventh Ministerial Conference in 2020.
3.
The present situation caused by the coronavirus disease (COVID-19) pandemic forms a new and complex
global panorama, characterized by an economic and social collapse of unforeseen magnitude. In this new
reality, digital technologies have proven to be essential tools to facilitate physical distancing and mitigate the
economic and social effects of the crisis. Adoption of these technologies has also accelerated considerably
during this period, providing solutions for trade, labour, education and health. However, the coverage and use
of digital technologies are still determined by structural and socioeconomic factors. In the medium and long
terms, social welfare will clearly not be possible without access to and use of digital technologies in all areas
of economic and social life.
4.
The Digital Agenda for Latin America and the Caribbean is intended as a catalyst for regional cooperation
on digital matters and a mechanism to promote policy design, capacity-building and political dialogue on the
challenges and opportunities that the digital transformation creates for society and the economy. Technological
progress, coupled with the challenges of the crisis, calls for renewed cooperation that facilitates the expansion
of the digital economy to all segments of the population but also promotes trust and security in the use of
digital technologies.
5.
A cooperation agenda is needed to address the short-, medium- and long-term challenges associated with
digital inclusion. To respond to the challenges the region faces in this area, the Digital Agenda for LatinAmerica
and the Caribbean (eLAC2022), presented below, includes 8 areas of action —in addition to a section on the
fight against the pandemic and economic recovery and reactivation— and identifies 39specific goals for
implementation. This Agenda was formulated based on a survey of eLAC2020 focal points and observers,
consultation with working groups and a review of documents. The Agenda aims to follow on from previous
agreements and provide inputs for political dialogue at the seventh Ministerial Conference on the Information
Society in Latin America and the Caribbean.
1
General Assembly resolution 70/1 of 25 September 2015.
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B. Areas of action and goals
1. Digital infrastructure
Goal 1: Adopt policies, digital agendas and plans with specific targets relating to affordable universal
access, which encourage deployment of broadband connections and resilient high-capacity
networks, through an appropriate balance of public investment and the promotion of competition
within an investment-friendly environment.
Goal 2: Promote broadband access and connectivity that is meaningfully affordable and of sufficient
quality in remote, rural and semi-urban areas, fostering the development of alternative connectivity
providers such as community networks, rural operators and cost-efficient technologies, through
alternative and sustainable investment models.
Goal 3: Foster policies and incentives for the deployment, sharing and operation of the enabling infrastructure
and technologies needed for the development of the Internet, especially by promoting the
establishment and strengthening of Internet exchange points (IXPs) and adoption of Internet
Protocol version 6 (IPv6) protocols, through multi-stakeholder approaches.
Goal 4: Formulate plans and strategies that facilitate the efficient and effective provision, management and
use of radioelectric spectrum in accordance with international standards and recommendations,
to promote the harmonized deployment of fifth-generation mobile technology (5G) in all countries
of the region, taking into account the need for appropriate metrics to measure the efficient use
of the spectrum.
Goal 5: Promote the strengthening or creation of specialized digital and connectivity infrastructure to
boost education, science and technology in the region as fundamental pillars of economic and
social development and to accelerate processes of digital transformation.
2. Digital transformation and the digital economy
Goal 6: Promote digital presence and effective adoption, dissemination and use of advanced digital
tools related to Industry 4.0 to foster business productivity and competitiveness, as well as
entrepreneurship and structural change, with a focus on small and medium-sized enterprises
(SMEs) and women-led initiatives.
Goal 7: Incentivize entrepreneurial ecosystems and public and private collaboration to promote production
linkages and innovation, and to accelerate technology-based enterprises, through incubators,
accelerators, business networks and digital ecosystem observatories.
Goal 8: Stimulate the diversification of financing options for technology-based enterprises, including
alternative sources of financing supported by systems such as targeted trusts, person-to-person
loans and financial services through digital and other platforms and use digital technologies to
reduce information asymmetries and barriers to access to capital markets, in accordance with
domestic legislation and based on an appropriate regulatory framework that balances innovation,
stability and security.
Goal 9: Address the emerging challenges of the digital economy by updating rules and regulations on
taxation, labour, competition and international trade, within a framework that safeguards rights
and promotes sustainable development, taking into account the differences between countries
that could hinder progress.
Goal 10: Strengthen the political and regulatory frameworks to facilitate digital transformation processes
and their linkages with national education, research and innovation systems.
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3. Digital government
Goal 11: Promote open standards, based on the principle of technological neutrality, that facilitate and
expedite government services and promote multichannel and multidevice services, fostering an
interoperable regional environment through data exchange and the development of infrastructure,
platforms, architectures, standards, integrated systems and computer interfaces that ensure
digital transformation.
Goal 12: Foster the adoption of a regional strategy of standards and agreements for digital identity
interoperability, digital signature, e-apostille and electronic medical records that support innovations
in the public and private sectors, safeguarding data privacy, enabling public consultation, ensuring
transparency and non-discrimination and strengthening security and trust in online services.
Goal 13: Promote the use of digital tools for government procurement and contracts for public services and
works, to ensure transparency, services for citizens, civic oversight and effective accountability.
4. Inclusion and digital skills and other competencies
Goal 14: Promote the development and incorporation of digital skills and competencies in science, technology,
engineering and mathematics into teaching and learning by updating curricular content, digital
educational resources and teaching standards according to the skills that will be demanded by
the activities of the future.
Goal 15: Strengthen advanced digital, technical and professional skills and competencies and establish
incentives for companies and governments to provide opportunities for continuous learning to
workers, based on individual and local needs and labour market requirements.
Goal 16: Promote a digital culture that incentivizes appropriation of technology and development of digital
skills and competencies, for the innovative, ethical, safe and responsible use of ICT to promote
digital inclusion.
Goal 17: Promote accessibility of digital technologies as a necessary resource for the inclusion of persons
with visual, auditory, mobility, motor and cognitive disabilities, among others, in work, education,
health, culture, access to justice, public services and smart cities.
Goal 18: Establish a comprehensive and non-discriminatory perspective in public policies for digital inclusion,
guaranteeing full access and use of ICT and emerging digital technologies for women, girls and
older persons and promoting their online participation and safety, as well as women’s leadership
in public and private decision-making spaces.
Goal 19: Promote telework in the region, updating labour policies to ensure adequate social protection,
social dialogue, decent work and participation of workers in the digital economy, above all in the
case of vulnerable groups and women.
5. Emerging technologies for sustainable development
Goal 20: Promote technological development and digital and data innovation through incentives for
development of new products and services, provision of public and private financing, a flexible
regulatory environment and consolidation of a digital ecosystem.
Goal 21: Encourage open access to data and its reuse in the public and private sectors, to drive innovation,
co-creation of value, new products and services, and evidence-based policymaking.
Goal 22: Consider the use of emerging technologies, especially artificial intelligence and 5G technology, in
a convergent and interoperable manner, taking into account factors relating to ethics, impartiality,
transparency, accountability, security, privacy and non-discrimination.
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Goal 23: Promote the use of digital technologies to prevent, mitigate and adapt to the effects of climate
change and natural disasters, reduce greenhouse gas emissions and promote sustainable
development.
6. Trust and digital security
Goal 24: Combat digital crime by formulating public policies and cybersecurity strategies for critical
infrastructure protection, by developing or establishing regulatory frameworks aligned with
international human rights instruments, building capacities, strengthening secure systems based
on best practices, and by coordinating at the local, regional and international levels among cyber
incident response teams and among stakeholders.
Goal 25: Coordinate multi-stakeholder actions aimed at ensuring privacy and personal data protection, the
protection of consumers and their rights on online platforms, access to public information and
freedom of expression in the digital environment, restricting improper and unauthorized use of data
and strengthening mechanisms of collaboration between the competent authorities in the region.
Goal 26: Promote civil society participation in assessment, mediation, transparency, capacity-building and
consumer protection.
7. Regional digital market
Goal 27: Promote a regional digital market strategy, including in the framework of regional and subregional
integration mechanisms, that facilitates cross-border e-commerce and digital trade through
integration of digital infrastructure, regulatory harmonization, free flow of data with trust, in
accordance with domestic legislation; trade facilitation; improved postal and logistics services;
and regulatory frameworks that encourage innovation in digital payment services.
Goal 28: Facilitate greater regional coordination through a digital integration plan that establishes a
common vision and goals, with mechanisms for dialogue and coordination with existing regional
and subregional organizations.
8. Digital regional cooperation
Goal 29: Promote strengthened regional digital cooperation in Internet governance processes by reinforcing
national, regional and subregional multi-stakeholder dialogue mechanisms.
Goal 30: Strengthen the institutional structure of the entities responsible for designing, implementing and
following up on digital agendas. Formalize and coordinate multi-stakeholder participation in the
development of such policies.
Goal 31: Promote digital regulatory coherence at the regional level, especially on data protection, cross-border
data flows, cybersecurity, e-commerce and digital trade, consumer protection and rights on
online platforms, and interoperability between digital signatures and digital identity systems in
the region, in line with domestic policy and regulatory frameworks.
Goal 32: Improve the measurement of digital transformation and the digital economy by strengthening
data collection, analysis and review for official statistics, use of new methods and advanced
technologies such as big data analytics, strengthening and harmonization of common frameworks
of indicators and their monitoring and evaluation through regional observatories.
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9. Combatting the pandemic and facilitating economic recovery
and reactivation
Goal 33: Design strategies for economic recovery and reactivation based on productive digital transformation
and the use of ICTs and which encourage inclusive innovation and changes in management,
production and business models, with a special focus on SMEs.
Goal 34: Promote comprehensive policies on information management in the different key government areas
to address the pandemic and enable coordination of testing, dissemination channels, communication,
services, epidemiological forecasting and limitation of physical contact between people.
Goal 35: Implement specific measures to promote and expand access and continuity of access to
quality Internet services and digital platforms, preserving in particular the open architecture and
interoperability of the Internet, and addressing the affordability of connectivity and devices.
Goal 36: Strengthen the institutional and regulatory frameworks for data protection and privacy, providing
a guarantee to citizens that the exceptional access to personal data required to deal with a crisis,
such as the COVID-19 pandemic, entails adequate custody of the data, and that their privacy will
be safeguarded.
Goal 37: Strengthen distance education programmes in national education systems, considering the use
of digital tools specifically designed for low-connectivity settings, in addition to supporting the
training and digital literacy of teachers and the development of digital educational content.
Goal 38: Promote strategies and programmes in the field of digital health, considering aspects such as
training of health professionals, promotion of telemedicine services, interoperability of health
information and records systems, regulations to protect patient privacy and validation of the use
of emerging technologies, and new means of delivering health services.
Goal 39: Accelerate the creation of affordable services and online government solutions that allow citizens to
be served remotely, to facilitate physical distancing, through the use of digital identification systems.
Fifteen years after the adoption of the rst Digital Agenda for
LatinAmerica and the Caribbean, the region is facing a new world.
Some of the expectations of that time have been fullled, but others
have not. Growth in digital technologies has been exponential and
they are now used worldwide, but this has been accompanied by
negative social repercussions. The region has yet to strike the right
balance between the benets and costs of digitization in a more
adverse global situation, exacerbated by the coronavirus disease
(COVID-19) pandemic.
This document contributes to discussion on the use and deployment
of digital technologies for more inclusive and sustainable
development and to related actions. It is divided into four chapters
that analyse the potential eects of digital disruption, the impact
on well-being and equality, the costs of universalizing Internet
access, the relationship between digitization and productivity, the
impact of digitization on various production chains, and the need
for specic policies to recover from the eects of the pandemic
with a transformation of production. The report also examines the
state of digital agendas in the region, particularly in terms of data
management, and concludes with some recommendations for
strengthening regional cooperation and a process leading to the
formation of a regional digital market.
LC/TS.2021/43
