The transformation of Latin America’s economy towards knowledge and technology dependence begs American businesses to engage more in the region than ever before. The “pink tide” of economic orthodoxy and integration in Latin America has led to an unprecedented boom in innovation and entrepreneurship. More importantly, these orthodox economic policies have lifted millions of people out of poverty and into the middle class.
Critical to the success of these policies is a technological revolution which places consumers and businesses at the forefront of progress and prosperity. Despite the hesitancy by the current U.S. administration towards investment in Latin America, the U.S. private sector must lead the charge in the hemisphere’s changing economy. Failure to do so can result in missed economic opportunities and geopolitical concessions to America’s competitors.
Across the globe, the “Uberization” of economies is empowering people and small businesses to create growth using little more than their mobile phones. Mobilizing underutilized capital in the region has created tremendous growth opportunities in the Latin American cyber economy, the most important of which is people. According to the Inter-American Development Bank (IDB), only 43.5% of Mexicans are internet users and only 30.7% of Mexican households have access to the internet. However, this number is rapidly growing.
The increasing number of connected consumers in Latin America presents a unique opportunity for small and medium sized companies to sell direct to consumers. Retail sales through online sales channels, for instance, are expected to grow to $85 billion in the next two years. Given these trends, large U.S. companies such as Walmart and Amazon are already seizing the opportunity to expand and invest in their online sales. Incredibly, the growth in Latin America’s e-commerce industry is occurring while more than half of the region’s largest economies still don’t have access to the internet.