Digital Divide: The Burden in Latin American Economic Growth

The concept of Digital Divide refers to any type of unequal distribution in the access, use, or appropriation of Information and Communication Technologies (ICT) among social groups. It is not only a matter of technologies, but also of social aspects that have an impact on multiple dimensions of human life and, in the particular case of economics, become a burden for its growth.

Why do Digital Divides Affect Economic Growth?

By: Gabriel E. Levy B. – @galevy

When it comes to the concept of the Digital Divide, it is important to address multiple dimensions, both academic and technical, since we are not referring to a particular phenomenon, but to the sum of consequences and asymmetries derived from the processes of technological implementation, in communities and social groups.

According to Benjamin M. Compaine, author of the book The Digital Divide, the concept of the “digital divide” refers to the perceived division “between those who have access to contemporary information and communication technologies and those who do not”[1], which is why those who do not have this access end up being at a clear economic and social disadvantage compared to others.

In practical terms, at the current historical moment, “lack of access to the Internet” is socially recognized as a determining factor in measuring the digital divide, either because of the absence of connectivity, the poor quality of it, or because of ignorance in its use[2], these types of divides being possibly the most studied and analyzed so far.

To understand the impact and dimensions, it is very useful the recently published 2020 report of Datareportal in association with Statistas, Globalwebindex: GSMA, “We Are Social” and “Hootsuite“, which showed that 4,500 million people have access to Internet globally, which constitutes 59% of world population, with a proportion factor equivalent to “59/41” [3], that is, about 3,200 million people do not have access to Internet in the world.

The same study states that the best indicators are taken by Europe as a whole with a ratio of 90/10, although if we reduce the sample exclusively to Western Europe the figure rises to 93/7. In the case of North America, the ratio is 87/13[4].

In South America, about 120 million people do not have access to the Internet in the region and about 302 million do. With 70% access and a proportion equivalent to 70/30[5]. The figure for Central America and the Caribbean is similar, with a ratio of 67/33.

Although at first glance the figures for Latin America do not seem to be as discouraging as those for Africa (27/73) [6], there are other decisive variables that are not taken into account in many of the reports and statistics: broadband [7] which in simple terms means connection speed [8].

Digital Transformation and Interruption

Although connectivity plays a preponderant role when analyzing the phenomenon of the Digital Divide, a later and perhaps much more complex factor to intervene is the uses and appropriations, a layer of greater complexity.

For Andréas Kaplan, in the text Digital Transformation and Disruption [9], he states that digital transformation is the change referring to the application and practical implementation of digital technologies in all aspects of human society, being the third phase of the digitalization of information and communication technologies, that is, the third level of implementation of digitalization. From the social perspective, as has happened since the emergence of the computer to the present day, digitalization has systematically, even redundantly and in a few cases linearly, experienced a cycle that consists of three elements: digital competence, digital use, and transformation.

The first element refers to the process of digital literacy, i.e. the acquisition of sufficient skills by citizens to understand and dimension digital resources. It is a process that, although supported in some way by formal education systems, occurred organically, marked by novelty and the need to adapt emerging technologies, thus developing a clear culture of self-learning.

The second element, digital use, as its name indicates, refers to the application of knowledge for the use of the available digital resources, which impacted even more clearly to multiple sectors, revealing the technology as a “facilitator” both of the daily life and of the educational, productive, governmental, and administrative sectors, among others. This element, despite becoming ubiquitous and definitively influencing many aspects of life, continued to appear as something “complementary”.

The third element is Digital Transformation, which generates new uses through innovation and creativity, obtaining better and new results, with respect to traditional schemes of use of digital technologies [10]. The digital technologies and uses are no longer complementary and become the backbone of countless processes, and are even the process itself.

Digital Gap and Economic Gap

The recent World Bank report Viral Effect: COVID-19 and the Accelerated Transformation of Employment in Latin America and the Caribbean[11] places particular emphasis on the importance of dramatically expanding Internet access and smart phone penetration in workplaces, regardless of whether they are rural or urban, making it clear that this is a determining factor for economic growth at the global level, highlighting that the significant digital divide in Latin America, instead of promoting equality, tends to exacerbate inequities and therefore becomes a drag on economic development [12].

“Closing that divide, promoting the creation of human capital and opening opportunities in the labor market of the future for the enormous mass of workers that today make up the informal economy, which has been hit hard by the pandemic, are challenges that cannot be postponed to guarantee development and economic growth in the whole region” [13].

Carlos Felipe Jaramillo, who is the vice president of the World Bank for the Latin American and Caribbean region, in an article recently published in the Spanish newspaper El País[14], stated that the economic policies of the region must be accompanied not only by fiscal, labor and monetary incentives, but also by a determined investment by governments in the field of digital inclusion:

“In order to take advantage of the growth opportunities that exist in many sectors of the economy, it will be necessary to promote innovation, improve productivity and, above all, give a strong boost to digital inclusion. Sales through e-commerce platforms, online services and the survival of thousands and thousands of small and medium enterprises during the period of social distancing were possible thanks to Internet access in millions of homes”. Carlos Felipe Jaramillo [15]

For this reason, narrowing the digital divide is not a matter for governments alone, but should be a shared, multi-sectoral responsibility that incorporates the will and commitment of multilateral organizations, private enterprise and, of course, governments.

In conclusion, the phenomenon of the digital divide is not only a very significant social problem throughout the world, but also has an impact on the economy, becoming a burden that does not allow economic growth in Latin America, which is why a decisive economic investment is required from governments, not only in terms of networks and infrastructure, but also in training and education.

Links and sources that support this article

[1] Book: The Digital Divide Facing a Crisis or Creating a Myth?

[2] Book: What is the Digital Divide? An Introduction to the New Face of Inequality

[3] Datareportal Digital Report with Hootsuite

[4] Comparative number of Internet users in the world by region – Statista Portal

[5] Datareportal Digital Report with Hootsuite

[6] Datareportal Digital Report with Hootsuite

[7] Verizon Article: What is Broadband?

[8] Official FCC Broadband Information

[9] Academic text: Digital transformation and disruption: On big data, blockchain, artificial intelligence and other things

[10] Book: Digital Transformation by Mark Baker – ISBN 1500469998, 9781500469993

[11] World Bank Report

[12] World Bank Report

[13] World Bank Report

[14] Article in El País from Spain by Carlos Felipe Jaramillo on Digital Inclusion

[15] Article in El País from Spain by Carlos Felipe Jaramillo on Digital Inclusion

Disclaimer: The published articles correspond to contextual reviews or analyses on digital transformation in the information society, duly supported by reliable and verified academic and/or journalistic sources.  The publications are NOT opinion articles and therefore the information they contain does not necessarily represent Andinalink’s position, nor that of their authors or the entities with which they are formally linked, regarding the topics, persons, entities or organizations mentioned in the text.