Digital Transformation Can Produce 15 Million Jobs in Latin America and the Caribbean


Digital Transformation Can Produce 15 Million Jobs in Latin America and the Caribbean

Latin America and the Caribbean could dramatically increase employment and kickstart sustainable economic growth if it closed its digital connectivity gap with members of the Organization for Economic Cooperation and Development, according to a new study by the Inter-American Development Bank (IDB).

Closing the gap with OECD countries would create over 15 million direct jobs, boost regional economic growth (GDP) by 7.7 percent, and increase productivity by 6.3 percent, according to the study.

The study, entitled Digital Gap in Latin America and the Caribbean: Annual Broadband Development Index Report (Spanish only), evaluates the state of broadband penetration in 26 countries in the region and estimates the size of the gap vis-à-vis Organization for Economic Cooperation and Development (OECD) nations.

“Delays in improving connectivity and digitalization in Latin American and Caribbean countries have dramatically exacerbated the economic and social impact of COVID-19. But this reality also offers a historic opportunity to reduce inequality, and create jobs and sustainable economic growth,” said IDB President Mauricio Claver-Carone.

“The IDB is taking steps to drive a digital ecosystem that will help the region attain these investments, design national broadband plans, and create the public-private partnerships needed to expand coverage for all citizens, especially those who are most vulnerable,” Claver-Carone said.

To close the gap, countries in the region would need $68.5 billion, according to the IDB. Of the total, 59 percent should go to improving connectivity in urban areas, something which is mostly handled by the private sector. In contrast, 41 percent would go to rural areas, where public investment is typically the main source of funding. According to the study, more public-private partnerships are needed to close the gap with OECD countries.

The study shows the evolution of broadband penetration in each country based on four pillars: public policies and strategic vision; strategic regulation; infrastructure; and applications and training. The report, first launched in 2011, aims to help countries understand the main gaps in development as well as investment opportunities.

The report shows the region still has major broadband penetration and 4G technology coverage gaps compared with OECD countries. In terms of affordability, average citizens spend more than 20 percent of their income to access broadband services, a level way above the 3 percent recommended by the International Telecommunication Union to make it affordable.

According to the global ranking of the index, which includes 65 countries, the most salient points for Latin America and the Caribbean were:

  • Barbados, Uruguay, and Argentina were the countries that advanced the most in the ranking, climbing 11, 9, and 6 positions, respectively, from 2018. In the case of Barbados, the reason for the hike was a dramatic improvement in the public policies and strategic vision pillar; in Uruguay, in the Infrastructure pillar; and in Argentina, in the strategic regulation pillar.
  • The best-placed regional country in the 2020 ranking was Barbados, in position 31, followed by
  • Chile, Costa Rica, Brazil, Argentina, Uruguay, and The Bahamas, in positions 33, 38, 39, 40, 42, and 43, respectively.
  • With regard to the index’s pillars, Latin America and the Caribbean reduced the strategic regulation gap in 2020 compared with 2018, whereas the gap grew dramatically in the public policies and strategic vision, and the Applications and Training pillars (see chart below). These gaps are caused by delays in the implementation of public policies and the development of digital abilities to help take advantage of the new technologies in the region.

Based on the index’s results, the report has made the following recommendations for Latin America and the Caribbean:

  • Central American countries: invest in infrastructure and develop pedagogical applications and programs on the use of technology.
  • Caribbean countries: invest in infrastructure and in normative and regulative frameworks updating.
  • Southern cone countries: modernize infrastructure and develop new production models based on digital technologies.
  • Andean countries: invest in infrastructure and develop public policies that enable the implementation of public-private partnerships to reach out to their countries’ remotest areas.