Latin America scores badly in Internet ranking

April 17, 2008 - Miami


Latin America's biggest problem may not be Venezuela's narcissist-Leninist leader Hugo Chávez nor other populists who are grabbing the headlines, but the region's stagnation in the global race for greater Internet connectivity and knowledge-based economic growth.

Indeed, a new world ranking released by the World Economic Forum shows that Mexico, Brazil, Argentina and several other Latin American countries are gradually losing ground in Internet ''network readiness.'' Meantime, Middle Eastern, Asian and Eastern European nations are modernizing much more rapidly, it says.

Why should anybody interested in Latin America's future lose sleep over this? Authors of the study, entitled Global Information Technology Report, say that Internet readiness is the key to long-term growth. Just like countries in the past needed roads and bridges to ship their exports abroad, today they also need good Internet infrastructure to be more competitive in the global economy, they say.

''Information technology is today's general-purpose technology,'' Irene Mia, co-author of the report, told me in a telephone interview. "It's the infrastructure for all other industries.''

The report, a massive study of 127 countries, not only measures nations' Internet access but also the government regulations, bureaucracy and the business climate that allow them to be technologically competitive.

Denmark, Sweden, Switzerland, the United States and Singapore, in that order, topped the ranking. Denmark and Sweden were at the head of the list last year, while Switzerland and the United States have moved up several places over the past year.


Most Latin American countries, by comparison, have lost ground in the past year:

  • Chile, the top-ranked country in the region, fell from the 31st place last year to the 34th this year.
  • Mexico went down from the 49th to 58th.
  • Brazil dropped from 53rd to 59th place.
  • Argentina suffered one of the region's biggest falls, going from the 63rd to 77th.
  • Colombia fell from 64th to 69th.
  • Peru fell from the 78th to 84th.
  • Venezuela dropped from 83rd to 86th.

What is causing Latin America's decline?

The report's authors said it's not so much that the region has stopped investing in Internet infrastructure, education and innovation, but that other regions are doing it much faster.

South Korea, for instance, is already ranked ninth in the world, and Estonia (20th), Slovenia (30th), Qatar (32nd) and Lithuania (33rd) are all ranked above Chile and the rest of Latin America.

Soumitra Dutta, co-author of the report, told me in a separate interview that Latin American countries may pay a high cost if they don't modernize their information technology sector, especially regarding the government bureaucracy and business hurdles that keep the sector from growing faster.

'Five years ago, when I used to come to Brazil and Mexico to talk about Indian information technology success stories, people said, 'interesting, but not relevant,' '' Dutta said. "Today, Indian information technology companies are taking business away from local players in Latin America.''

India's Tata Consulting firm, for instance, recently won major government contracts in Mexico City, Brazil and Chile. Latin American companies will continue losing contracts at home and abroad if they don't become more competitive, he said.


My opinion: Latin America's failure to move up in the ranking may be partly due to the region's commodity export bonanza, which has led many countries to complacency. There is a tacit assumption in parts of the region that the current record world prices of oil, soybeans and other raw materials will last forever. They won't.

And even if they do, raw material exports will not save Latin America. It may be no coincidence that Singapore, South Korea, Taiwan, Israel, Luxembourg and several other countries at the top of the information technology index have no raw materials and yet have much higher standards of living than natural resources-rich Latin American nations.

The real threat to Latin America's future -- much more than Chávez and his fellow demagogues in Ecuador, Bolivia, and Nicaragua -- is its own failure to invest in education, science and technology. We're living in a knowledge-based economy, yet many countries in the region have not yet noticed.