(February 15, 2023) The Economic Commission for Latin America and the Caribbean (ECLAC) today announced its Digital Development Observatory (ODD), a new tool aimed at producing, collecting and analyzing relevant data and information to identify trends identify, assess progress and support the formulation and implementation of digital transformation policies in the region.
The ODD website (https://desarrollodigital.cepal.org) contains more than 100 indicators and qualitative information in 12 thematic areas considered key to the digital transformation of countries: connectivity and digital inclusion, enterprise and productive digital transformation, electronic and digital commerce services, digital skills, digital government, artificial intelligence and others.
“The launch of the Digital Development Observatory marks a significant milestone in ECLAC’s efforts to understand and promote digital transformation in our region. Its objective is clear: to produce indicators and information that improve the formulation of evidence-based policies in the areas of digital transformation in order to promote more productive, inclusive and sustainable development in our countries,” emphasized José Manuel Salazar-Xirinachs, Executive Secretary of the regional body of the United Nations, during the virtual presentation.
According to ODD data, more than 60% of Latin American and Caribbean companies that use the Internet have a passive presence, that is, they do not use this tool to carry out transactions, for example. The situation is even more worrying in the case of micro, small and medium-sized enterprises (MSMEs), which represent more than 98% of businesses in many countries, as 70% of them do not even have an online presence.
But it is not just the gaps in the adoption of mature technologies such as the Internet in Latin America and the Caribbean that are a cause for concern, warns the Commission. The scenario becomes even more alarming when analyzing new digital technologies such as artificial intelligence (AI). For example, in terms of private investment, between 2010 and 2021, the combined investment in AI of all Latin American countries did not exceed 1.7% of the investment amount of the United States or 5% of China. Likewise, AI companies in the region represented less than 3% of all AI companies worldwide as of September 2023 (the United States and Europe represent 37% and 30%, respectively).
The limited use of digital technologies in production limits and requires the improvement of productivity and competitiveness in the region, emphasized José Manuel Salazar-Xirinachs. “Deepening and scaling efforts in the field of digital technological expansion will be crucial for the future of the region,” said the highest authority of ECLAC, who expressed gratitude for the support of the European Union (EU) for the construction of the ODD.
In his opening speech, Félix Fernández-Shaw, Director for Latin America and the Caribbean in the European Commission's (EC) Directorate-General for International Partnerships (DG INTPA), described the Observatory as “another example of what they can do with the EU. “ and Latin America and the Caribbean, as well as the EC and ECLAC together.” The representative called for a fair and inclusive digital transformation, working together on issues such as cybersecurity, artificial intelligence, digital government and constant monitoring of the state of digital transformation for decision-making to tackle.
According to the Observatory's data, despite advances in recent decades, fixed broadband penetration in the region remains below 20% of the population, compared to the 40% observed in Europe. In terms of connection quality, the region is also below the world average for both fixed-line and mobile broadband.
According to ODD, the digital divide persists even according to household income levels. In 2022, internet penetration in higher-income households in some countries was almost twice as high as in lower-income households. Likewise, 77% of urban households in Latin America and the Caribbean are connected, while in rural areas this percentage is only 38%.
The observatory launched today by ECLAC also compiles information on national digital agendas and the Digital Agenda for Latin America and the Caribbean (eLAC).
Digital agendas can play a key role in driving the transformations the region urgently needs, says ECLAC, but some weakening of these tools has been evident in recent years. Although they exist in most countries, they lack concrete roadmaps, operational managers, budget allocation and evaluation mechanisms, reveals the ODD.
Digitalization can be an effective tool to address structural problems in the region on various dimensions, such as education, health, security, justice, institutional weakness and productive transformation, to name a few. However, to achieve this, it must be considered as a fundamental element of the national development agendas and the productive development policies of countries and their territories, concluded José Manuel Salazar-Xirinachs.