The key to boosting economic recovery in Latin America

Countries in Latin America and the Caribbean (LAC) are facing the most serious socio-economic crisis since World War II, experiencing widening inequality and development gaps due to the COVID-19 pandemic.

Transportation has been key to supplying basic necessities, medical equipment and vaccines through the crisis, making it a potential pillar for post-pandemic recovery as it can provide access to markets, jobs, healthcare and education.

There are still some major obstacles to realizing the potential of the sector. Increasing levels of urban congestion and pollutant emissions, a public transport financial crisis, high logistics costs and risks related to climate or pandemic shock all risk stifling recovery.

Through digital transformation, however, including through the Internet of Things, artificial intelligence, 5G, automation and electrification, the transport sector can:

The Inter-American Development Bank, the World Economic Forum, Microsoft and Intel are launching a report entitled "Driving the Digital Transformation of Transportation in Latin America and the Carribean." It will present the first analysis from surveys, interviews and feedback from more than 220 organizations, 96 high-level private and public sector representatives and four working groups within the air, logistics and urban mobility sub-sectors.

Some of its key findings include:

Countries from other regions with the highest rate of digital transformation show that it is important to have adequate public policies. These should focus on five key areas:

1. Make digital transformation a priority in sector planning.

In their planning instruments, the leading countries place digital transformation among primary objectives in the sector as a vector for greater efficiency, sustainability and social inclusion. There are digital transformation plans at the subsector level and for the development of digital technologies. A large number of agencies from the public and private sectors, academia and civil society participate in the preparation of these plans. Roadmaps are included to advance implementation.

2. Balance progress with risk mitigation.

They have regulatory and policy instruments that, while stimulating digital transformation in transportation, allow for the mitigation of risks. This includes cybersecurity strategies, data protection and prospective studies, public consultations and regulatory sandboxes.

3. Use a variety of instruments.

Tax and financial incentives are used to facilitate the adoption of new technologies. These have been used to create technology centres for technology testing and knowledge dissemination and training programmes to develop workforce skills required for new technologies.

4. Foster public sector digital transformation in transport.

Progress has been seen in the reengineering and digitization of procedures, promotion of digital culture, data-based decision making and technological management of infrastructure assets and transportation services. To this end, internal digital transformation strategies and specialized teams with budgeted resources are deployed to carry out projects, incorporate technology-related profiles and with considered training for personnel in general.

5. Create alliances.

Countries with good digital transformation records use different mechanisms to form alliances with other public agencies, the private sector and academia, such as:

Climate-related and socio-economic threats could continue to undermine LAC’s development. However, if governments leverage the tools for the digital transformation in transport, this can be a catalyst for sustainable and inclusive recovery, underpinned by the novel technologies that characterize the Fourth Industrial Revolution.