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ICT and development in Latin America

Hector R. Alonso Issue: 2010
Article no.: 3
Topic: ICT and development in Latin America
Author: Hector R. Alonso
Title: Managing Director
Organisation: Global Crossing Latin America
PDF size: 137KB

About author

Hector R. Alonso is the Managing Director for Global Crossing Latin America; he brings nearly 30 years of international experience to this role. Mr Alonso was named to this post after Global Crossing’s acquisition of Impsat Fiber Networks where he previously served as chief financial officer.

Hector R. Alonso holds a Master’s degree in International Business from the Universidad Argentina de la Empresa, in Buenos Aires.

 

Article abstract

To compete on an even footing in global markets, Latin America needs to overcome many barriers and reach the levels of ICT penetration seen in developed economies. Governments in Latin America need to invest in their regulatory infrastructures and the facilitate efforts to meet growing demand. It won’t be easy; Governments will have to carefully balance their expenditures so they can meet the demand for expanded ICT infrastructure and the equally urgent demands for basic services, infrastructure and socioeconomic inclusion.

 

Full Article

What does the donation of a few computers, an antenna and a network connection do for the future of schoolchildren in a rural town in Argentina? It brings them closer to the ever-changing world they find themselves isolated from. So far away from a world almost inaccessible to them due to poor transportation and lack of telephone or Internet service, that the impact virtual connectivity can have on a child can be significant and even life changing. It provides the opportunity for those schoolchildren to become computer literate and to connect with others outside their small town, affording them the possibility to dream and explore educational and future career options they otherwise would not have and which generations before them certainly did not. Thanks to the private sector, this is a scenario that has become a reality for many children throughout the region.
ICT in Latin America

In order to discuss the impact Information and Communication Technology (ICT) has on development in Latin America, it is important to first note its importance in the region. As illustrated in the case of the rural school in Argentina or anywhere in the region, ICT offers greater access to information, education and employment opportunities, increased earning and purchasing power, as well as long-term economic gains, making it an indispensable catalyst for real progress.

In the globalization era, ICT represents rapid economic growth, and improvement of production processes for small-scale farmers and agro-enterprises, as well as businesses of all sizes. It is safe to say that globalization is expected to continue increasing and its effects are going to be felt more and more, even in the remotest of areas. To survive in this rapidly globalizing world, it is imperative that ICT become a policy priority for Governments in the region, so their people and respective countries can compete in the global economy.

The private sector too has a role to fulfil. It has been an important player in the expansion of ICT, but like Government, it needs to become more of a driving force if it wants to expand into other markets to sell its goods and services. The Internet and emerging technologies have become the key in today’s society for the efficient transportation of goods, dissemination of information and provision of services; hence of utmost importance in helping bring down economic barriers and providing access to the latest advancements in all areas of life.

All the United Nations member states and more than 20 international organisations approved eight international development goals, to be achieved by the year 2015. To achieve these Millennium Development Goals (MDGs), as they are called, a number of target activities and indicators were defined. One critical target states: “In co-operation with the private sector, make available the benefits of new technologies, especially information and communications.” This target focuses especially upon disadvantaged communities, in an effort to help reduce extreme poverty by 2015.


Government role in ICT expansion

When examining the impact of ICT in Latin America, the benefits are many, but the challenges are also plentiful. Many times ICT expansion or the lack thereof is attributed to a need for Government deregulation, which has only recently been making some limited strides throughout the region. Although deregulation is a major factor in helping foster competition, the lack of quality telecommunication services at reasonable and affordable rates no matter where the location, be it an urban or rural area, is another barrier to ICT expansion.

Although some countries consider ICT investment as a priority and the private sector has shown interest in its expansion, many countries in the region still fall behind other developing nations, specifically in the area of broadband penetration outside of the major cities. If ICT development is to take place, broadband services in the region need to expand. The International Telecommunication Union reported in 2008 that the average monthly fixed broadband connection price was ten times greater in developing countries than the prices in developed countries; this suggests that lack of broadband penetration in these regions is due, in good part, to unaffordable prices. This is a sensitive issue; there is a great need for an equitable balance between competition, the conditions needed for a sustainable industry and consumer protection.

The phenomenon of convergence between the telecommunications and information technology sectors increased during the last decade and is generating a significant impact in our society today. It is often difficult to differentiate between the two sectors because many innovative services reside and are accessed in a decentralized manner. As a result, it is now essential to improve integration and storage of the applications content in order to distribute it appropriately. This convergence has posed a challenge for regulators and at the same time created greater demand for connectivity among consumers. Convergence is an important factor driving demand for ICT access, but the demand cannot be met without a proper, expanded, infrastructure.

Private sector’s role in ICT expansion

The barriers to ICT expansion include a lack of adequate infrastructure, low enrolment in institutions of higher learning, and an insufficient number of technology specialists. The private sector in partnership with universities should take responsibility, as part of their role in society is to encourage and induce students to take up the study of the technologies upon which the future of our civilization rests.

Without human capital and local innovation, development is impeded. There is a risk that the few technologists at the top of their field might be recruited to more technologically advanced nations; this phenomenon is often referred to as human capital flight or ‘brain drain’. It is also of utmost importance that the private sector support ICT expansion and innovation by investing to create greater demand and pressure for competitive prices. Overall, the private sector has the role of bolstering ICT by effectively supporting higher education, by demanding competitive pricing and by fostering fair competition among providers. The private sector can also contribute to the development of a dependable ICT infrastructure as a sustainable platform for continuing economic development.

Latin American case studies

There are a few countries in the region leading the charge in technological advancement. The Latin Technology Index for 2010, carried out by the Latin Business Chronicle, ranks Uruguay as the country with the highest technological level in the entire region, with Panama as second and Chile as third. With Internet penetration at 55.2 per cent, Uruguay rates as Latin America’s top country in this area and also has the highest rankings in all the other categories of the index: broadband Internet, personal computers, wireless subscribers and fixed telephone lines. Part of Uruguay’s success is explained by the Government’s public school CEIBAL programme, which provides free computers to schoolchildren across the country. Thanks in part to an increase in exports due to their rapidly growing information software industry, Uruguay has shown signs of a speedy recovery from the economic and financial crisis they experienced at the beginning of the decade.

Chile too is among the most advanced countries in the region in terms of broadband penetration. According to the annual Economist Intelligence Unit study, Chile is the country best positioned in the region with regards to digital economy. In Chile, the Government has made ICT a priority with public policies in place such as subsidies for broadband expansion and the deregulation of the technology sector. The private sector has also made it a priority by joining with Government in creating the ‘Digital Agenda’, which aims to increase information technology development as a driving force in Chile’s progress, thus making it the only Latin American country among the top 30 countries in the 2010 World Competitiveness Yearbook. Published by the Institute for Management Development (IMD), the Yearbook ranks countries based on economic performance, infrastructure, Government and business efficiency.

Future of ICT in Latin America

Given the impact of global ICT expansion, how can Latin America overcome the many hurdles it faces and reach the levels of ICT penetration seen in the US, Europe and parts of Asia and compete on an even footing with the rest of the world? With the global economy picking up, the demand for mobile and broadband services will increase strongly. Companies previously unable or uncommitted to increasing their investments in the industry will do so as the economic upswing kicks in. We will see Governments in Latin America compelled to invest in their regulatory infrastructures to facilitate efforts to meet the growing demand - something they were unable to do prior to the economic downturn. Governments will have to carefully balance their expenditures so that they can both meet the demand for ICT infrastructure and the equally urgent demands for socioeconomic inclusion. Most Latin American countries need long-term plans that earmark funds for investment in ICT so they can compete in the 21st-century global economy and drive the socioeconomic development of their people. Governments and the private sector will have to join forces to guarantee the development of the region’s ICT capabilities and its place in the world’s markets.

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