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IER - Digital Opportunities In Latin America And The Caribbean Can Be Further Harnessed, Says UNCTAD

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The contents of this press release and the related Report must not be quoted or summarized in the print, broadcast or electronic media before
02 October 2017, 19:00
Geneva Time

UNCTAD/PRESS/IN/2017/020
Geneva, Switzerland, (02 October 2017)

​The digital economy is evolving fast but at very different speeds. Many economies in Latin America and the Caribbean have seen expanded use of the Internet and other digital technologies in recent years, but this evolution can be better harnessed in most countries of the region.
 
In its Information Economy Report 2017: Digitalization, Trade and Development, UNCTAD notes that Brazil is now the fourth largest economy by number of Internet users and Mexico is the ninth largest, and more than a third of these users came online in the period 2012-2015. However, in many countries in the region, the propensity of Internet users to shop online is still low. For example, in Colombia, Mexico and Paraguay, less than 10%of Internet users shop online, while much higher shares of Internet users are participating in social networks (figure 1).

Figure 1. Proportion of Internet users purchasing online and participating in social networks, selected countries, 2015 (%)
 IN17020f1_en.gif

Source: Information provided by the ITU.


Worldwide e-commerce sales in 2015 reached US$25.3 trillion, 90%of which were in the form of business-to-business e-commerce and 10%, business-to-consumer (B2C) sales.

“New UNCTAD data show that cross-border B2C e-commerce was worth about US$189 billion in 2015, or 7% of total B2C e-commerce”, says Ms. Shamika Sirimanne, Director of the Division on Technology and Logistics at UNCTAD.

The report notes that Mexico is one of few developing countries that provide data on the number of Internet users shopping from overseas websites.  In 2015, over 2.5 million Mexicans purchased a product from an overseas website, including almost 1 million who purchased only from abroad.

The footprint of Latin America and the Caribbean in the digital economy remains relatively limited. For example, together with Africa, this region accounts for only 4%of all 3D printers used in the world. Moreover, the same two regions account for less than 2%of the world’s digital economy companies with a market capitalization of more than US$1 billion (figure 2).

Figure 2 - Geographical concentration of headquarters of “digital MNEs” with a market capitalization of more than US$1 billion, by region, 2016

IN17020f2_en.gif

Source: Van Alstyne, 2016.

“To enhance trust online, countries in the region need to strengthen their legal and regulatory frameworks for digital transactions” according to Ms. Sirimanne.

For example, less than half of all countries in Latin America and the Caribbean have adopted data protection and privacy legislation, and less than a third of all Caribbean economies have consumer protection laws for online purchases.

Digital skills are also much needed. Among emerging economies, skills gaps are particularly significant in Latin America. Firms in that region were three times more likely than firms in South Asia, and 13 times more likely than those in the Asia-Pacific region, to experience operational problems due to a shortage of human capital.

At the same time, digital solutions are being leveraged in various ways in the region. For example:

• In Toluca, Mexico, the USB drive manufacturer, Urmex, invested less than US$10 in online advertising to reach customers in Mexico City. Realizing an immediate return on investment, it invested in further online campaigns across Mexico and later in other parts of Latin America using Google AdWords, YouTube and Twitter. It also started selling on Mercado Libre and Alibaba. As a result, by 2012, 60%of Urmex’s profits were being generated by exports to Latin America.
• Online labour platforms are being used to source for cloud or micro workers in Latin America. In Argentina, for example, Workana enables 400,000 Latin American freelancers to connect with SMEs looking for part-time remote staff.
Various policy initiatives have been taken in Latin America and the Caribbean to improve the readiness to engage in and benefit from the digital economy:

• In Guatemala, Programa Valentina was founded in 2014 to help change perceptions and expand the pool of qualified talent in the country. It aims at training disadvantaged young Guatemalans for employment in the technology sector (box 1).

• Mexico has a network of “digital inclusion centres” that offer digital literacy programmes. Mexico’s export promotion agency, Proméxico, has created a B2B platform for SMEs selling to overseas markets. It offers consulting services to help them develop digital marketing strategies, online stores, online payment systems and social media engagement.
• In Costa Rica, Procomer has launched a service that brings together B2C and B2B sales channels and customers of global e-commerce platforms.
• The Exporta Fácil programme, first implemented by Brazil in 2002 has helped to reduce costs from 16%to 1%of the value of exported goods, and helped boost exports from US$12 million during the first year of the project, to more than US$230 million in 2016. It has simplified customs clearance for SMEs for shipments typically weighing less than 30 kilograms and with a value of less than US$5,000.

Box 1. Programa Valentina
In Guatemala, an expanding technology sector is generating new employment opportunities. More than 30,000 tech jobs have been created since 2005, and another 100,000 are expected to emerge in the coming years. However, tech companies are struggling to find sufficient qualified talent to fill vacancies. At the same time, many young and vulnerable people are unaware of the growing technology industry and the employment opportunities it offers. Thus appropriate training and placement programmes have become very important.

Programa Valentina of the Sergio Pauz Andrade Foundation, FUNSEPA, (funsepa.org/programa-valentina) was founded in 2014 to help change perceptions and expand the pool of qualified talent in the country.  It aims at training disadvantaged young Guatemalans for employment in the technology sector. It has secured funds to start five new training programmes in rural regions, allowing trainees to be placed in formal jobs with monthly salaries of US$730−US$1,100, representing two to three times the minimum wage in Guatemala.

The main goal of the programme is to increase the employability of participants. It has been developed with employers’ needs in mind, and seeks to emulate the experience of working in technology companies. It defines employability in terms of five characteristics that it seeks to develop in participants: correct, cooperative, proactive, prepared and “techie”. In addition, participants have learnt how to use digital tools and widely used business software. All certified participants would be well-equipped for entry level jobs as, for example, junior designers, data processors or content creators.

Programa Valentina’s goal is to become the leading open-source training-and-placement programme for the tech industry in Latin America by 2025.

Source: UNCTAD, based on information provided by FUNSEPA



For more information, please contact:
UNCTAD Communications and Information Unit, Catherine Huissoud
T: +41 22 917 5549
T: +41 79 502 43 11
E: unctadpress@unctad.org ou catherine.huissoud@unctad.org
Web: unctad.org/press
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