A new report from the Organisation for Economic Co-operation and Development (OECD) shows digital transformation is the key to quicker recovery from the COVID-19 crisis for Latin America and the Caribbean.
Produced jointly with the United Nations Economic Commission for Latin America and the Caribbean (UN ECLAC), the Development Bank of Latin America (CAF), and the European Union (EU), the report details the harsh impact of the pandemic on marginalized populations.
Titled Latin American Economic Outlook (LEO) 2020: Digital Transformation for Building Back Better, the report found that microenterprises were hit especially hard — 2.7 million are likely to close, at a loss of 8.5 million jobs.
“The socioeconomic crisis makes a new development model more urgent than ever,” said Alicia Bárcena, Executive Secretary of ECLAC. “Digitalisation could be a powerful tool to overcome the structural challenges of the region, only if it is considered as a comprehensive way to foster progressive structural change, through policies for the generation of new sectors, quality jobs, the development of capacities and innovation.”
According to Ángel Gurría, Secretary General of the OECD, “the crisis has created the momentum for long-overdue reforms that can help spread the benefits of digital transformation to achieve inclusive and resilient growth.”
“It also highlights the urgent need to bridge the digital divides between territories, families, students, workers, and firms.”
The role of DX
How can digital transformation help Latin American and Caribbean communities?
“By stimulating business innovation and new consumption models, transforming production systems and value chains, re-organising economic sectors, and introducing new conditions of competitiveness,” the report found.
3⃣ challenges #digitization can help #LatinAmerica overcome:
🔄Productivity
✅Inclusivity
🗃️Governance @AgendaCAF @cepal_onu @europeaid @EU_Commission @eclac_un#EconomicOutlook ➡️https://t.co/5adVArgLSt pic.twitter.com/XEjsp7L6g9— OECD_Centre (@OECD_Centre) September 25, 2020
One way digital tools can help is providing support for better access to services, such as healthcare and education, in addition to putting the people at the center of policymaking.
Digital tools can support access to better services (including health & education) & can address citizens’ demands & rising social discontent in #LatinAmerica & the #Caribbean.
How? By facilitating⬆️credible, effective, inclusive & innovative institutions https://t.co/5adVArynh3 pic.twitter.com/fnsR3sAMg1
— OECD_Centre (@OECD_Centre) September 27, 2020
As Luis Carranza, Executive President of CAF added, “digital transformation offers a unique opportunity to boost productivity and to provide better public services in Latin America and the Caribbean. With Covid-19, the region has accelerated its digital processes, but there is still a long way to close the gap with advanced economies.”
“A rough road ahead”
There are certainly challenges in the way of advanced digital transformation acceleration.
Take internet access. In 2018, 68% of the population in LAC used it regularly, behind the OECD average of 84%. Inequality is also evident here. 75% of the richest population in Latin America use the internet compared to only 37% of the poorest population.
In terms of digital transformation, over 20% of jobs in some countries are likely to be automated in some fashion. As a result, investment in education and training in digital skills is crucial.
In order for the digital transformation agenda of the region to be successful, the report details recommendations for better coordination of efforts, and how these need to align with National Development Plans. There’s also an emphasis on the importance of international partnerships to the success of DX efforts.
