“Innovation is transforming Latin America. Can the region reap the rewards?”

Disruptive innovation is unequivocally a catalyst for inclusive growth. By making a product or service more accessible, disruptive innovation transforms markets and allows for a more equitable allocation of resources. While frequently displacing established competitors, this force has the power to alter our definition of industry participants, often integrating the informal economy, resulting in powerful social and economic changes.

Latin America is about to experience that market disruption. Consider the region’s young population, expanding middle class, fast adoption of technology and relatively weak market competition – conditions are ripe for change. If Latin America takes steps to encourage innovation, the region’s economies are likely to be the drivers rather than recipients of that disruption. Inclusive growth – and ultimately stronger economies – could be on the horizon.

The wheels are already turning

The Colombian cyclist Nairo Quintana is a podium finisher at the world’s most famous bike races, including the Tour de France and Giro d’Italia. But growing up in the Andes, he had to ride almost 20 miles round-trip on a second-hand bike to a school that was 3,000 feet below in elevation simply because his family could not afford to pay his bus fare.

Today, many Latin Americans still live in rural areas, but technology has enabled higher levels of societal inclusion. The internet continues to lower information barriers, and rapid technology adoption is connecting remote villages and leaving fewer people out of reach. Case in point: as of 2015, smartphone user penetration for the region was at 39% and projected to reach 57% by 2019, according to eMarketer. Drilling down further, Latin America has both the highest penetration rate for Facebook (89% of internet users) and WhatsApp (66% of mobile phone users), as Statista data shows.

CyLlO2Xtd8ZfiuQDYsudYGrl8A7iMjK8Mf0SZlkNQ9g

It’s nice that you can like your friend’s vacation pictures on Facebook or message your dad about Quintana’s stage win, but what’s next?

More financial inclusion. From the World Bank’s data, as of the end of 2014, about 50% of adults in Latin America didn’t have a bank account. While that is down from 61% in 2011, the fact remains that standard financial services are still inaccessible to too many people. Geography, transaction costs and perhaps most crucially, a lack of financial education, make banking and investing difficult, but several local tech companies have started tackling this problem. One such effort is to build out the infrastructure for mobile transactions, thereby providing anyone with a mobile device access to banking services, no matter the location.

nJNybVAuJyiyzDKsRO5HtU-ZwlJ3oYdU9pUGUFFd2dg

More competitive and productive. To different degrees, Latin American countries try to promote the growth of startups and small and medium-sized enterprises (SMEs), but more can be done to improve competitiveness and productivity. In a World Economic Forum competitiveness ranking, the five largest Latin American countries by gross domestic product – Brazil, Mexico, Argentina, Colombia, Peru – ranked between 57th and 106th, out of the 140 economies measured. As a region, only sub-Saharan Africa scored lower.

Why? For one, administrative burdens for businesses in the region remain high; think red tape, bureaucracy, paperwork. According to the World Bank, it still takes 83 days to start a business in Latin America’s largest economy, Brazil, compared to 29 in India and six in Italy, the countries that rank just in front of Brazil in nominal GDP. Likewise, regional bankcruptcy laws can be debilitating. Penalizing failure in this way inhibits entrepreneurs, a primary source of innovation.

Innovation enhances inclusion, inclusion encourages innovation

What has been making international headlines in the past few years? Slow growth, the commodities crash, and corruption, but these only tell part of the Latin American story. The region’s industries have taken numerous steps to foster meaningful inclusive growth but impediments remain. It is time to take control; Latin American economies have the option to encourage and embrace disruption from within, or risk being at the mercy of global forces.

Similar Articles

Ideas of the economic ben...
Gerald Miller GG Senior Partner Why will I spend money on your product or service, unless you can show me some idea of the
TRENDS THAT WILL AFFECT N...
What trends will affect the next generation of supply chains? That’s a question more and more SCM professionals are asking themselves. The 10 trends
Social Media in China: Th...
As Chinese consumers spend more time online, foreign companies should deepen their knowledge of domestic social media platforms. By Thomas Crampton Much has been
“International mark...
As we head into 2018 a full calendar of film festivals and content markets await. It can be both exhilarating and overwhelming; and the
Newsletter May 2016
GoGlobal World Wide Forum Miami 2016 GoGlobal World Wide Forum Miami 2016, was a success the first week of May in Miami with 38
The Real Impact of Digita...
Eleven Insights and Ten Recommendations for the 21st Century Derived from the 2016 global Digital Research Survey. By Liri Andersson, this fluid world and Ludo Van
“Innovation is tran...
“Disruptive innovation is unequivocally a catalyst for inclusive growth. By making a product or service more accessible, disruptive innovation transforms markets and allows for
FIHAV 2016 – Cuba &...
On Oct 31, opened in Havana, Cuba, the most important business event of the Island –  The 34th Havana International Fair (FIHAV 2016), that
6 Steps to creating a Bus...
There are plenty of reasons why businesses can initiate a Transformation Program for, and here are some. Regardless of the pains behind the need for
“REALIZING DIGITAL ...
“ “ Article by: Telenor Group Link: http://www.telenor.com/morethan/wp-content/uploads/2016/06/6.-REALIZING-DIGITAL-THAILAND.pdf

Leave a Reply

Your email address will not be published. Required fields are marked *