Latam 2050: The fastest growing global region in three decades?

Today’s Soapbox opinion was written by Gonzalo Simons, Chief Strategy Officer at uSound,

Contxto – To reach this strategic target, it is essential to contextualize ourselves within the four industrial revolutions:

1st Industrial Revolution (1786-1850)

• Lever for growth: Steam Engine.
• Impacted industry: Transportation/manufacture
• Impact: It was possible to increase human productivity 8X

2nd Industrial Revolution (1850-1920)

• Lever for growth: Electricity
• Impacted industry: All
• Impact: Specialization in production systems (automotive model)

3rd Industrial Revolution (1920-1980)

• Lever for growth: Information and Communication Technologies (ICTs)
• Impacted Industry: Transportation/Media
• Impact: Automation of production processes

4th Industrial Revolution (1980-Present)

• Lever for growth: Cyber-Physical Systems (the marriage between human and machine capabilities)
• Impacted Industry: All
• Impact: 16 trillion dollars in value by 2030 (The equivalent of China’s GDP or 80% of the US’s GDP in 2017)

The strategic framework for the evolution of each revolution is based on three fundamental elements:

1. Core countries in each revolution (early adopters)

While the first industrial revolution took place within Great Britain, the second managed to reach Europe, the United States, and Japan.

The third was led by the United States and was quickly incorporated globally by strategic leaders.

The fourth industrial revolution is truly global, with the distinction that it will evolve differently according to a few guidelines we will analyze at the end of this piece.

However, the United States and China will make up 70 percent of this stage’s momentum.

2. Technology transfer between geographies

The geographical transfer was being increasingly accelerated with the coming and going of the different waves of technological disruption.

At this point, the difference between developed and developing countries comes into play. This is where the latter try to incorporate products and services from the former after a period of growth.

I would like to illustrate this with the case of mobile connectivity:

The technology transfer of 4G technologies between Japan and the US took three to five years. The jump from Japan to Latin America it was five to seven years. And, between Japan and Africa it took seven to 10 years.

Considering that these mobile technologies have a 10-year life cycle between each technological jump (2G-3G-4G-5G), it is interesting to understand the investment and the expected return of each one, which in turn justifies accelerated adoption.

But what if we could jump straight into the technologies we need? We would avoid the cost of facing outdated technology and take advantage of the upside caused by the new R&D process.

This is called technological leapfrogging and it has really come to the fore from the third revolution onwards.

The quality and cost of technology transfers been exponentially optimized, allowing for geography to no longer be a barrier, but rather an opportunity to enhance and create value with technology as the new strategic core and human creativity as the lever for growth.

3. The micro-macro economic conditions between regions

Latin America specifically has three important points in its favor in becoming a high growth region:

1. An average salary of around US$500—There is a gap versus developed countries and thus an opportunity for rapid incorporation into the IT sector and areas of technological development.
   
   This specialization of the emerging workforce would allow feedback on human productivity in the region while generating economies of scale in technological industries.
   
   If the fourth industrial revolution is to be based on the automation of daily activities, it is essential to adapt to optimization tasks from the automation processes: Software, Software, Software.
   
2. The low barrier of entry for the training of the workforce—One can study at the best universities in the world with a few dollars and from home (Coursera), and also do internships and gain experience anywhere in the world. (Try googling job portals for IT positions).
   
3. The creation of predictability in governance—Latin America is like any startup or medium-sized SME. Each worker is like a country: if their interests aren’t aligned, each pulls their way and benefits are marginal. If you work as a team, organize and complement each other strengths, emergent synergies are on sight. 
   
   It requires tools (institutions), clear ground rules (laws and public policy), and the motivation to make it happen. 

Latin America 2050

Lastly, I would like to reflect on the regional distribution of the next 30 years and how Latam can capture the maximum value of this growth we all expect from the region.

Note to the reader: The analyzes below are part of thinking ahead by doing futurism, take it ever so lightly.

Regions by 2050 with:

• The highest growth potential (%): Latin America, India, and Africa
• The highest volume of income ($): China and USA
• Greater institutional stability: Europe (¿Brexit?), Japan, and South Korea

The global ecosystem will have:

Emerging Technologies: Cyber-Physical Systems (15 Trillion USD by 2030)

Population 2050: 9.7 billion people

Gonzalo Simons is a Strategy & Operations Executive (Telecom & Healthcare) | Chief Strategy Officer at uSound | WEF Global Shaper | Digital Innovation at Stanford | The future is now