Readiness for Shared Digital Futures in Central America

For demonstrating the utility of index-based assessments of future readiness in action, Central America emerges as an ideal yet challenging case study. Central America hosts economies of varying income levels, from high-income countries like Panama to lower-middle income countries like Honduras. As a region, Central America faces many similar obstacles to its constituent governments, societies and economies, from issues of internal and international displacement to endemic political violence and corruption.

However, Central America is also a region of immense opportunity, with emerging best-practices and exciting track records in network readiness becoming more and more apparent. While its levels of economic development, technology competitiveness and citizen wellbeing vary significantly per country, analyzing the region as a whole draws attention to shared strengths, shared problems and potentially shared solutions.

Included in the 2020 Network Readiness Index (NRI) are five Central American economies: Costa Rica, Panama, El Salvador, Honduras and Guatemala. Central America’s regional leader in the NRI is Costa Rica, ranking in 54th place globally. The poorest performance in the Central American region comes from Guatemala (106th place).

 

The NRI’s central approach is rooted in the recognition that – with the increasing pervasiveness of digital technologies – a tech-centric approach to competitiveness, development and wellbeing is insufficient. In Central America, just focusing on technological development (measured across Access to ICTs, Content and Future Technologies) is not enough: analysis must consider the effects of indicators relating to people, governance and impact for network readiness, too.

This holistic, data-driven analysis draws attention to the region’s shared struggles, which seem to be rooted in three main problem areas: poor connectivity, societal inequalities, and lack of government readiness for the digital future.

The NRI suggests that all five economies perform poorly in indicators relating to connectivity. Indeed, national and regional connectivity initiatives have won global plaudits in recent years: Costa Rica’s Digital Transformation Strategy and Connected Homes initiative come to mind, as do the regional connectivity working groups hosted by entities like the GSM Association and the Inter-American Telecommunications Union. Despite this, all five economies still have a long way to go: for the most part, their overall NRI performance lags behind connectivity-related indicators, such as 4G mobile network coverage, internet access and active mobile broadband subscriptions. OECD research points to regional connectivity barriers, such as lack of digital skills and ICT infrastructure, resulting in a growing digital divide.

The Portulans’ and UNESCO panel on Digital Transformation in Latin America concluded that conversations about connectivity and technological development are “inseparable from conversations about inequalities”. Among the Central American economies surveyed, income inequality is among the lowest-ranked indicators, as are rural and socioeconomic gaps in the use of digital payments. Costa Rica, Panama and Honduras rank in 98th, 116th and 113th place respectively for rural gaps in the use of digital payments, while El Salvador ranks 108th place for its socioeconomic gaps. The Covid-19 pandemic has only exacerbated inequalities, particularly for marginalized groups like women and minorities, constructing further barriers to fostering network-ready individuals and communities.

A final shared challenge is the lack of government readiness for the digital future. As commented by Diego Molano, Colombia’s former ICT Minister, “the social contract is not working”. The NRI ‘Governments’ sub-pillar – which includes indicators relating to a government’s online services, open data, emerging tech and R&D expenditure – is consistently lower than the economies’ total NRI scores, suggesting a common problem. While all five surveyed economies have digital strategies, mistrust in governments and political exclusion in governments remains endemic, preventing higher levels of regional digital progress.

On the flip side, for the referenced economies, the NRI ‘Impact’ pillar is their strongest, significantly out-ranking their performance in other areas of network readiness. ‘Impact’ contains indicators designed to gauge economic development, the quality of life and a country’s contribution to the UN Sustainable Development Goals (SDGs).

Among the cluster, El Salvador’s contribution to SDGs (45th place) and Quality of Life (47th place)) are particularly impressive, given its overall ranking in 95th place globally. Panama, Guatemala and Honduras have similarly optimistic rankings for SDG contributions. Further, Costa Rica is one of Latin America’s best-performing countries for achieving the SDGs, ranking in 49th place in the NRI and winning global praise for its track record in digitizing aspects of governance, like healthcare.

Central America’s track record in the ‘Impact’ pillar, particularly the SDG-related aspects, is significant: its performance suggests emerging strengths in high-impact areas (including good health and wellbeing, quality education, gender equality and affordable and clean energy) that may have a knock-on effect for improving confidence in well-functioning governments, tackling inequality and improving regional connectivity.

Track Latin America’s progress on the UN SDGs.

While it is counter-productive to make simplified generalizations about the Central American region as a whole, it is no coincidence that the region has several shared shortcomings. Indeed, systemic inequalities, sub-par connectivity and ruptured “social contracts” are national problems with regional linkages. However, the region also benefits from shared strengths that may offer common solutions to common problems. By using index-based assessments like the NRI and advocating for data-driven policymaking, the region as a whole may improve its trajectory of citizen wellbeing, economic development and competitiveness.

Learn more: A deep-dive analysis of Mexico’s network readiness, challenges and opportunities.


This blog is part of the ‘NRI Regional Spotlight’ series: a series in which Portulans staff use the Network Readiness Index data and findings to produce targeted analysis and commentary (in addition to insights from the Global Innovation Index and the Global Talent Competitiveness Index). Interested in a deep-dive into your country’s tech competitiveness, innovation readiness and global talent? Email info@portulansinstitute.org.