- Latin American and Caribbean economies are projected to shrink by more than 8% in 2020 due to COVID-19, with widespread social and political reverberations to be felt for years to come. With the right policy frameworks, the region’s economies can become ideal launching pads for future innovation. Google has created a framework for harnessing the digital transformation into sustainable, inclusive growth that could ultimately have tremendous ramifications on the global economic balance of power. The concept of ‘Digital Sprinters’ recognizes that—with the right strategies—emerging markets (EMs) have tremendous potential to leapfrog more established markets. It’s not a question of ‘if’ but rather where, when, and which markets.
- Using a third-party consulting firm, Google measured the economic impact of digitization in EMs and empirically determined that a digital framework can have a significant impact over the next decade, resulting in $3.4 trillion of growth (or 22% of the expected GDP). The study further identified priority sectors for each market to support opportunity identification and priority setting.
“[For Google, it’s] central to work with emerging markets, in particular the Americas,” Dr. Guy Ben-Ishai
- Panelists agreed that, in the case of Latin America, digital innovation opens opportunities to create dynamic, inclusive, and sustainable economies. However, there are a number of variables that must be considered and addressed when applying the framework to the region:
- Equalizing Human Capital: The region represents a great digital divide, spanning geography, income, gender, and age. According to H.E. Laura Chinchilla, one-third of Latin America is unable to connect to the internet; for those living in the countryside, that number balloons to 75%. 46% of 5-12 year olds are not able to access e-learning, falling behind in their studies, and 80% of working people are performing jobs that cannot be incorporated into the digital space. By closing the digital divide and prioritizing inclusion and diversity in skills development, panelists saw digital development as a vehicle to improve social equality and offer digital-based upskilling and job creation.
- The Role of Coalitions: Coalitions and public policy alliances play a particularly important role in policy formulation and implementation for the region. Engagement of multilaterals, the NGO sector, and academia will be key to accelerating a digital transformation, particularly at the regional level.
- The Role of Governments: Popular will in the region currently favors limited government. Felipe Matos stated governments should “stay back and not create challenges” and “only work on those aspects where business and society cannot,” and Victor Muñoz called for “smart regulation” where innovation and entrepreneurship can thrive in a supportive, but not an overly regulated, ecosystem. The tension between overregulation and creating an enabling environment that supports industry standards for things like IP, data privacy protection, and e-payments was clear.
- The Role of the Private Sector: The goal in the region should be to create digital solutions for workers, according to César Buenadicha. In practice, this includes the informal economy leveraging digital technology to formalize and flourish, as is being seen with companies like Rappi, Uber, and Cabify, and MSMEs creating business models that are adaptable to technology.
- While policies—hundreds, according to Raúl Echeberria—are being created to regulate and manage the complexities brought forth by this rapid shift, there was a call for alignment and consistency to ensure short-term-focused measures would not impede long-term digital transformation goals, and concern that inadequate attention was being paid to idiosyncrasies—a costly oversight.
“Digital access alone will not solve economic and productive growth in emerging markets,” Marcelo Lacerda.
- For the Digital Sprinters framework to achieve a positive impact in the region, political leadership, a communication plan that contextualizes digital strategy to real-world/public needs (like unemployment and school attrition), and support of the private sector will be essential.