Remarks by Angel Gurría,
24 May 2019 - Paris, France
(As prepared for delivery)
Distinguished guests, Ladies and Gentlemen,
I am delighted to join this year’s EMnet meeting focusing on one of the most relevant and topical themes of our time “Leveraging the impact of new technologies”. In other words, can technology unleash growth, boost productivity and create better jobs in Latin America and the Caribbean?
The LAC region: impressive progress amidst persistent challenges
The region has made impressive economic and social progress in recent decades. Since the 1990s, per-capita income has increased by around 50%. Most countries have moved from low-income to upper middle-income, while some grew from middle to high income. Chile’s health indicators are now in line with the OECD average, with life expectancy at almost 80 years, and infant mortality rate at 6.3 per 1000 live births. Uruguay doubled its GDP per capita between 1990 and 2017, becoming one of the wealthiest economies in LAC and the best regional performer in fighting poverty.
Despite these important advances however, uncertainty remains on the horizon in two major ways:
First, escalating trade tensions, financial volatility and policy uncertainty are affecting economies around the world and this is having an impact on the region. In LAC specifically, 40% of the people are at risk of falling back into poverty. While regional GDP recorded a modest recovery in 2018, it is expected to grow below the global average.
Second, the trust citizens have in their institutions is very low as social and economic disparities remain evident. In fact, 64% of Latin Americans express no confidence in their own governments (55% in OECD countries), while almost 75% believe their institutions are corrupt. (54% in OECD countries).
Third, environmental issues remain pressing and diverse, including high rates of deforestation, reduced water availability and pollution. Catastrophic events related to climate change are more frequent, particularly in the Caribbean states. Overall, the economic cost of climate change was recently estimated at between 1,5% and 5% of the region’s GDP by 2050. USD 100 billion.
Transforming new technologies into sources of jobs, innovation and growth
A host of new technologies are proliferating with the digital transformation; the rise of the Internet of Things, big data analytics, artificial intelligence (AI) and blockchain, to name just a few, are changing our daily lives and are generating countless benefits in many sectors. For example, our smartphone can use AI to detect possible health issues; camera-carrying robots can inspect the interior of oil pipelines, looking for fissures and averting environmental damage ; and blockchain is helping governments improve the transparency, accountability and efficiency of public services.
Moreover, the digital transformation is opening up significant opportunities for the private sector. For example, adopting the Internet of Things can potentially reduce production costs by over 25%. Firms, in turn, can help realise the benefits of new technologies by building digital infrastructure, supporting public institutions in designing efficient e-government services and, perhaps most importantly, creating jobs in value-added sectors. In fact, four in ten jobs in OECD countries were created in highly digital-intensive sectors in the past decade.
LAC can take advantage of many of these benefits, but for this to happen, policy reforms are necessary.
First, governments need to enhance access to reliable digital technologies. In 2017, 38% of Latin Americans, or some 237 million people, did not have access to the Internet. Fixed broadband speeds are often lower in the region – 7 megabits per second in Argentina, Brazil, Colombia and Peru, compared to the OECD average of 15 megabits per second.
Second, governments need to equip citizens with digital skills. 40% of Latin American firms say they have difficulties finding workers with the right skills. This is alarming, considering that nearly half the current labour force risks becoming automated in the near future.
And third, LAC needs to foster an enabling environment to encourage more FDI in new technologies. Investment in LAC fell to 23% of GDP in 2018, a drop of 1.4 percentage points from 2014. To increase these numbers, it will be paramount to strengthen regulatory systems and invest both in policy frameworks and the rule of law.
The OECD can help leverage the impact of new technologies
The OECD has been hard at work to leverage the benefits of the digital transition. At our Going Digital Summit last March, we launched the Going Digital Integrated Policy Framework and the online Going Digital Toolkit. Both help governments better assess their state of digital development and understand the core policy issues behind it. Overall, this work draws on the collective experience of more than 14 policy communities at the OECD, resulting in a coherent policy strategy for the digital transformation.
And we recently launched the Future of Work Initiative, to analyse how technological progress, demographic change and globalisation are affecting labour markets and social policies. These initiatives will require a close collaboration with the private sector to generate impact and results.
In addition, the OECD Development Centre will continue its great work alongside LAC governments, with 14 members now from the region, following the recent accession of Guatemala, Ecuador and El Salvador. And the Centre’s EMnet remains an excellent instrument for engaging you – the private sector – in ongoing policy discussions. Recently, the Network launched a thematic working group on the role of the private sector in achieving the SDGs, which complements very well the Centre’s efforts to find policy solutions to promote sustainable growth, reduce poverty and inequalities, and improve people’s lives.
Ladies and Gentlemen:
New technologies can bring unparalleled benefits to the economies and societies of the Latin America and Caribbean region. As you forge ahead and explore new and innovative ways to invest in technologies and to foster more sustainable development, the OECD stands ready to work with and for LAC in designing, developing and delivering better digital policies for better lives. Thank you.
OECD work by the Development Centre