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South America's upcoming technology showdown

DIGITALIZATION / The authorities in Argentina, Brazil, Chile, Colombia, Costa Rica and Mexico are now investing in start-ups, incubators and training programs. But at the same time, Colombia can confiscate protesters' phones; in Ecuador, the authorities block the same access to servers; and in Nicaragua and Venezuela, governments have routinely restricted access to Instagram, Facebook, Twitter and YouTube. The United States and China are on aggressive courtship trips to countries throughout the region.


Digitization has reached South America, with all the pros and cons of this transformation:

Investments in digital infrastructure, cloud storage and e-services can be a driving force for transparency, innovation and economic development, but it can also exacerbate digital inequalities, distort policy and expose governments, businesses and the civilian population to Internet-related threats.

Across the South American region, it is primarily in affluent cities and households that we find information and communication technology (ICT) and broadband, and excessive regulation is stifling competition in telecommunications. Cybercrime has skyrocketed, but the threat is being neglected. At the same time, South America ends up in the middle of the firing line when the United States and China fight a geopolitical battle for the future of 5G. How the leaders of the region cope with these challenges in the future will have a lot to say for future generations.

Long live the digital revolution

South America's digital population has long had significant influence. In 2019, more than 450 million of the region's 626 million inhabitants lived nice. A similar number were in possession of a mobile phone and thus able to get involved politically, have access to digital services and start businesses. South American People is also among the world's most avid users of Social Media – especially Facebook, YouTube and WhatsApp. And they do more than post music videos – through these networks they get access to work in the formal and informal economy.

Photo: pixabay
photo: pixabay

Global investors have followed the hour. Last year, SoftBank launched a technology fund for South America worth 5 billion dollars. Although the region cannot compete with power centers such as China, India or the United States, the technology scene is flourishing in cities such as Buenos Aires, Bogotá, Mexico City and Santiago. São Paulo boasts the world's eighth most developed digital ecosystem, and Brazil huser more than 10 technology start-ups. In the region, at least 000 billion dollars were invested in financial technology, telemedicine, educational technology and "smart city" companies in 2. And between 2017 and 2017, South America produced more than a dozen so-called "unicorns" (private startups valued at $2019 billion or more). Inspired by public and private incubator programmes, lots of talent and little competition, an increasing number of technology companies of local origin operate in the region.

Automation and digitization

Against this backdrop, South American leaders are optimistic about digitization. The authorities in Argentina, Brazil, Chile, Colombia, Costa Rica and Mexico are investing in start-ups, incubators and training programs. Colombia, for example, has issued ("orange") bonds in cultural development to finance everything from IT companies to fiber-optic cables.

If implemented with inclusion in mind, new technologies can promote growth and improve productivity in South America's sluggish economies. In the public sector, e-services could accelerate the process of registering new businesses, and expand access to goods and services, especially for the most vulnerable. Automation and digitization in production can increase efficiency and create jobs in the knowledge economy, especially for young people. And new technologies are already enabling more entrepreneurs to take advantage of larger markets and tailor their products to meet demand.

South America is already the continent with the greatest inequality in terms of prosperity, income, health and education.

If, on the other hand, the new technologies are poorly implemented, they will exacerbate digital inequality. South America is already the continent with the greatest inequality in terms of prosperity, income, health and education. Despite the relatively high level of telecommunications, far too many people and places still have only limited access to the internet.

Internet access and differences

There is a clear connection between internet access and inequality. In Colombia, for example, over three quarters of the richest part of households have internet access in the home, compared to only 11% of the poorest part. And in Brazil Fewer than two percent of students say they have access to the Internet at school – in contrast to 56% in OECD countries. In South America, as everywhere else, the poor, elderly and more rural population remains disconnected, mainly due to the persistently high cost of digital services and the limited distribution of broadband.

At the same time, digital technology is also helping to intensify political protests and create new methods of electoral manipulation. Mass demonstrations against corruption and inequality wandered from social media to the streets in Brazil in 2013, and in 2019 in Bolivia, Chile, Colombia, Ecuador and Mexico. In some cases, governments have taken up the fight. In Colombia, the government launched its own campaign on social media to prevent mass mobilization, before confiscating protesters' phones. In Ecuador, the authorities blocked access to the servers to which the social networks were connected. And in Nicaragua and Venezuela, governments have routinely restricted access to Instagram, Facebook, Twitter and YouTube.

photo: pixabay


Over-regulated telecommunications sectors are not competitive. South American countries need more robust and independent institutions, as well as new incentives so that broadband providers expand to rural areas and low-income areas. Although the governments of Brazil, Chile, Colombia and Ecuador have experimented with tax cuts to improve coverage and lower prices, the biggest obstacle is a lack of physical telecommunications infrastructure. The region needs investments of at least $ 160 billion by 2025 if it is to reduce current digital inequality.

Organized crime, espionage and hacking are very common.

South America's position as global hot spot for cybercrime and digital fraud further aggravates the situation. The Inter-American Development Bank estimates that the region lost at least $ 90 billion to cybercrime in 2016 alone. The economic loss is likely to be significantly greater today. Organized crime, espionage and hacking very common.

Part of the problem is that South America has very few national online security strategies; in 2016, four out of five countries lacked a comprehensive plan. Most countries began to develop "computer crisis preparedness" and "computer security preparedness" only a couple of years ago. There is also little public attention to the problem, and the private and public sectors disagree on how to deal with it.

Today, the digital economies in, for example, Argentina, Brazil, Chile, Colombia, Ecuador, Panama and Mexico ranked among the most vulnerable to digital attacks. In particular, Brazil tops the global rankings for cybercrime – in terms of bank fraud and financially harmful software. The country's most important infrastructure shows acute weaknesses. In Mexico, cyber fraud is out of control, so much so that an estimated 80% of companies are affected by cyber attacks every year.

The technology scene is flourishing in cities like Buenos Aires, Bogotá, Mexico City and Santiago.

Rights groups, for their part, are concerned that some South American governments are violating civil rights in their attempts to tackle crime online (and offline). Certain intelligence and police services have required ISPs to assist them with information about suspects (including in some cases political opponents). In Brazil, Facebook and WhatsApp were on several occasions temporarily suspended for failing to provide data to local criminal investigation. Recently, a Brazilian court fined Facebook $ 1,6 million for sharing information to 443 users through various political campaigns. And after spreading misinformation during the 000 presidential election, Brazil's electoral authorities set up an advisory board to investigate potential online offenses.

On the positive side, there have been improvements in digital freedom and data security. Even before the EU Privacy Regulation came into force in 2018, South American governments took similar steps. In 2013/2014, Brazilian lawmakers, in shock at Edward Snowden's revelations, hastily passed an amendment to the law called Civil Law for the Internet. The country is now expected to launch a privacy agency during 2020. Argentina, Chile and Mexico have also introduced measures to improve data security and safeguard the privacy of their citizens.

5G a priority

In the time ahead, the race to introduce 5G will be a priority for South America – as for most of the world. The rollout of these networks, which starts this year, is likely to raise regional GDPs by hundreds of billions of dollars over the next decade. As a result of 5G, the mobile network will increase in speed and scope, which could change entire national economies, especially in the agricultural, service and production sectors.

Financial technology, telemedicine, educational technology and "smart city" companies.

As part of its rivalry, both the United States and China are on aggressive courtship to countries throughout the region, with Brazil being the most important battleground. Although Brazil's president Jair Bolsonaro is actively seeking stronger ties with his US counterpart, China is Brazil's largest trading partner. Huawei, the Chinese 5G giant, has invested heavily in Brazil, and recently announced the opening of a new factory in São Paulo for $ 800 million, in addition to one that already employs 2000 people. Brazil's national bidding round for # 5G has been postponed several times and will not take place until 2021. But when it does, Brazilian officials and their South American counterparts are likely to choose the most cost-effective option – which currently appears to be Huawei.

South America's technology showdown is approaching. Increasing evidence that social media platforms are being misused to influence elections and polarize voters is leading governments in the region to investigate and punish formerly invulnerable giants such as Facebook and its subsidiaries. Fighters for digital rights have called for greater net neutrality and better data security. Some governments are busy introducing privacy laws, while trying to fight "algorithm propaganda". And both public and private actors are eager to comply with the Privacy Ordinance and to strengthen network security.

While the debates about everything from digital inequality to 5G are getting higher, South America is facing a technological crossroads.

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