LatAm dances with dominance
There’s something stirring south of the Rio Grande.
Sometimes one must lay down the gauntlet. Latin America has been an underperforming world region in tech for too long. Its revealed preference was to be an importer of innovation rather than a pioneer. That’s why, in 2014, I issued a call to arms. It was time for LatAm to “lead the world, not follow it”, I said. Rather than merely trying to catch up with India, I told a reporter at the time, it should try to leapfrog my native nation. In 3D printing, artificial intelligence and robotics, there was real opportunity for countries south of the Rio Grande, if only they would take it. So how is it going? Eight years on, it’s time for an assessment.
Challenge 1 The future can look good for Latin America, if Latin America gets out of its own way
Progress 5/10 Latin American politicians continue to swathe tech in red tape. There is a large body of thought in the region that innovation is best overseen by active government action. There is little global evidence for this. Governments would be better acting as facilitators for a new generation of entrepreneur.
Challenge 2 More seed money is required for startups and entrepreneurs
Progress 8/10 Remarkably, LatAm tech startups raised more cash in the first six months of 2021 than in all of 2020 – a cool US$9.3bn. There is enhanced interest from investors – Softbank, for example, created a US$5bn LatAm fund in 2019, committing an additional US$3bn in 2021. The result is a new breed of LatAm unicorns growing up in a much healthier venture capital environment.
Challenge 3 Technology education will allow the region to move forward
Progress 6/10 The pandemic choked off an otherwise encouraging trend. By September 2021, Covid-19 had contributed to a region-wide crisis in school attendance, with two-thirds of LatAm children still outside the classroom. Outside schools, the situation is rather better. Technology educational programmes are emerging across the region. The private sector is leading the way. US tech giant Oracle, for example, has launched a skills development programme which aims to train some 40,000 people in IT by the summer of this year.
Challenge 4 Maximize opportunities in neobanking
Progress 7/10 The most heart-warming development in the region is its progressive outlook on reimagining money. Part of this stems from context: stifling regulation in many LatAm nations renders it inordinately difficult for people to get a bank account, creating chronic financial exclusion region-wide. Neobanks have stepped into the vacuum. The likes of Nubank, Uala and Oyster have expanded banking services to demographics that were previously unbanked.
On the downside, El Salvador has unwisely become a global crypto pioneer: in 2021 it became the first country in the world to adopt bitcoin as legal tender. This is economic suicide: in the long-term, bets on Ponzi schemes are likely to fail.
Challenge 5 Increase supply of outsourced services
Progress 8/10 A perfect storm of global skills shortages, Covid-19 and geopolitical tensions between the US and China has opened a huge door to LatAm tech outsourcing. The region has been impressively effective in taking advantage. Suppliers of outsourcing tech services have continued to expand region-wide.
LatAm is now the dominant region in outsourcing: the Americas have ranked as the world’s largest outsourcing market since 2018. Can it now exploit its stranglehold on the market and become, as I demanded in 2014, the US’s automation workshop, R&D centre and exponential technologies back office?
It has a real chance, provided that micromanaging governments set it free to succeed.
Vivek Wadhwa is author of The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent.