While some countries shine, and others lag, the region as a whole has the potential to foster strong digital economies.
The telltales of digital growth — high consumer demand, rising internet penetration, favorable demographics, and a large urban population – abound in the Latin America and Caribbean region (LAC). Its bustling megacities, awash with smartphone-toting citizens, are emerging consumption hubs of all things digital. The region has strong digital momentum, and that momentum is the key to future digital evolution.
The findings from the DEI LAC show that most countries in the region are steadily advancing in their digital evolution; some are moving rapidly; only a few are lagging. In short, the region is at a digital inflection point.
What are the factors boosting LAC’s digital prospects? For starters, the region’s economic size: LAC’s 33 countries, taken together as a group, would create the world’s third-largest economy with a combined 2015 GDP of US$5.294 trillion and a population of over 633 million.
The distribution density of its population and commonalities in culture and language are also contributing factors. Eighty percent of LAC’s total population lives in four countries – Argentina, Brazil, Colombia, and Mexico. Of this, nearly four-fifths reside in urban agglomerations. The region speaks variants of two languages – Spanish and Portuguese – as compared to dozens of languages spoken by regions of similar size such as Europe and Southeast Asia.
Urban agglomerations lend themselves well to the provision of digital products and services by businesses and governments given the relatively lower investment needed to reach a large population of consumers.
With growing connectivity coverage, affordability of services, and the availability of relevant content and technologies, consumers are rapidly adopting new digital technologies. Smartphone usage is widespread; 3G and 4G telecom infrastructure coverage is expanding. In 22 out of the 24 DEI LAC countries, more than three-fourths of the population are covered by 3G/4G networks. The percentage of mobile connections with internet in those 24 markets more than doubled from 29.4% in 2013 to 64.2% in 2017.
Digital consumption and engagement, too, are on the rise among the connected. Internet retailing per capita in the four biggest LAC economies by GDP — Argentina, Brazil, Colombia, and Mexico — has grown from almost US$51 in 2013 to US$75 per capita in 2017.
A largely medium-momentum region
While LAC has significant potential for digital growth, it is in the middle band of digitalization globally, meaning a lot more must be done to advance to the state and pace of digital exemplars such as Estonia, Israel, New Zealand and the UK, particularly in terms of improving digital infrastructure, fostering innovation, expanding digital and financial inclusion, and promoting digital economy friendly policies.
There is significant headroom for improvement in digital and financial inclusion. While access conditions have improved over the years, a large number of people in the region remain unconnected or under-connected, unbanked or under-banked. While the percentage online has doubled since 2008, over two-fifths of the region are yet to be connected to the internet. While, on average, 54.7% of LAC had some sort of financial account in 2017, the numbers are lower for certain groups. On average across the region, 51.6% of women have an account, but individual countries have far to go. In high-momentum Costa Rica, there is a 14.6% difference between men (75.5%) and women (60.9%) having an account. The divides continue whether it is looking at young adults (40.7% have an account) and the poorest 40% (42.3%), leading to significant questions about the readiness for future growth.
 ITU World Telecommunication/ICT Indicators (WTI) database 2018
 World Bank https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
 Euromonitor, Internet Retailing 2017. UN Population Division
 ITU World Telecommunication/ICT Indicators (WTI) database 2018; UN Population Division
 Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar, and Jake Hess. 2018. The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank: Washington, DC.
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