ICTs in Latin American and Caribbean Firms: Stylized Facts, Programs and Policies
26 Pages Posted: 20 Dec 2015
Date Written: July 13, 2015
Adoption of information and communication technologies (ICTs) has been slow in Latin American and Caribbean (LAC) countries and is not widespread. There is a digital divide between and within countries, including a digital gap in firms’ adoption of ICTs. Large and medium-sized enterprises generally have access to the Internet, but adoption of advanced ICTs is low for all firms in these economies, and small and micro enterprises lag way behind. The backwardness in ICT adoption is exacerbated when only a small fraction of society has high connectivity broadband.
Thus the digital infrastructure remains weak despite regional governments’ promotion of a digital agenda. Bolder programs are needed. The success of public initiatives requires a competitive environment for internet and telecom service providers as well strong participation of the private sector and public-private partnerships. In particular, the engagement of large firms is necessary to increase ICTs’ diffusion in small and medium-sized enterprises (SMEs) that are part of their production chains. Additionally, coordination among different government agencies is critical for improving ICT policies’ design and implementation. The relevance of well-designed ICT policies is apparent in empirical and qualitative evidence from Chile, Colombia and Uruguay, where ICT investment indicates a positive impact on firm innovation and productivity.
As part of what some call the digital ecosystem, the IT industry plays an important role, but we observe large heterogeneity in the LAC region. Brazil and Mexico are two big players with relatively well-developed software and hardware industries oriented to the domestic market, while Costa Rica and Uruguay emerge as IT producers and exporters. In between, medium-sized countries like Argentina, Colombia, Peru and Ecuador are looking for a position in either their internal or external markets. To increase performance in the IT industry and complement the existing ecosystem, ICT policies must be accompanied by industrial programs that go beyond the usual horizontal industrial policies.
Keywords: ICT adoption, SMEs, ICT policies, IT industry, ICT ecosystems
JEL Classification: L96, O4
Suggested Citation: Suggested Citation