Latin American should turn its infrastructure investment focus toward digital technologies and away from physical infrastructure to stimulate its economic recovery after the coronavirus pandemic, the Inter-American Development Bank (IADB) said on Thursday.
Increasing digitalization of public services like water, electricity and internet could lead to gross domestic product growth of 5.7 percent over 10 years in the region, equivalent to $325 billion in additional income during that time, the IADB report said.
Latin America, where economic growth has already been slowing in recent years, is expected to see an economic contraction of 8% to 10% this year as a result of the coronavirus and associated quarantine measures, IADB President Luis Alberto Moreno told Reuters this week.
Drones and satellite technology, among others, could contribute to improvements in the planning and engineering stages of construction projects and land acquisitions, the report said.
"For too long we've focused on bricks, pipes and other hard assets," said Agustin Aguerre, head of the IADB's infrastructure department. "Digital technology allows us to better understand how people use our roads, consume electricity and water."
Data will also help predict maintenance needs and generate additional savings, the report said. If efficiency increases and prices drop, poorer sectors could see their average income increase 28% more than more wealthy sectors over 10 years.
Latin America is behind in internet access and download speeds are some 10 times slower than in countries belonging to the Organization for Economic Co-operation and Development, the report said.
Countries should update their regulatory frameworks to make sure that digitalization can be translated into tangible benefits for consumers, it added.