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Regional Digital Market. Strategic Aspects

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Regional Digital Market. Strategic Aspects Regional digital market Strategic aspects Project Documents Regional digital market Strategic aspects Economic Commission for Latin America and the Caribbean This document was prepared by Jorge Alejandro Patiño and Edwin Fernando Rojas of the Production Productivity and Management Division of the Economic Commission for Latin America and the Caribbean (ECLAC), and Mauricio Agudelo of the Development Bank of Latin American (CAF). The support of Tanía García-Millán, Valeria Jordán, Wilson Peres, Laura Poveda and Sebastián Rovira of ECLAC is gratefully acknowledged. ECLAC is also grateful for the support provided under the project "Innovations for sustainable structural change" of the programme “Structural Change for Sustainable and Inclusive Development in Latin America and the Caribbean” of ECLAC and the German Agency for International Cooperation (GIZ). The opinions expressed in this document, which is an unofficial translation that has not undergone formal editorial review, are the exclusive responsibility of the authors and may not necessarily coincide with those of the Organization. Publication of the United Nations LC/TS.2018/30 Distribution: Limited Original: Spanish Copyright © United Nations, June 2018. All rights reserved Printed at United Nations, Santiago. S.18-00569 Applications for authorization to reproduce this work in whole or in part should be sent to the Economic Commission for Latin America and the Caribbean (ECLAC), Publications and Web Services Division, [email protected]. Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and to inform ECLAC of such reproduction. ECLAC Regional digital market… Contents Introduction.................................................................................................................................................... 5 I. Connectivity in the countries of the region ............................................................................................ 7 II. Infrastructure for the Internet of Things ............................................................................................... 11 III. Regional electronic commerce ............................................................................................................ 17 A. Cross-border paperless trade ...................................................................................................... 20 B. Postal performance ...................................................................................................................... 23 C. Online Consumer Protection........................................................................................................ 25 D. Digital financial inclusion and means of online payment ............................................................. 27 IV. Cybersecurity ......................................................................................................................................... 33 V. The digital economy in regional economic integration agreements ....................................................... 35 A. The Trans-Pacific Agreement ...................................................................................................... 37 B. The Asia-Pacific Economic Cooperation Forum .......................................................................... 38 C. The Mesoamerica Project and the Central American Integration System .................................. 39 D. The Caribbean Community .......................................................................................................... 40 E. The Pacific Alliance ..................................................................................................................... 41 F. The Common Market of the South .............................................................................................. 42 VI. Conclusions ........................................................................................................................................... 45 Bibliography ................................................................................................................................................ 47 Annex .......................................................................................................................................................... 51 Tables Table 1 Penetration of Internet and user gaps by regions and groups of countries, 2013-2016 .......... 7 Table 2 Penetration of fixed broadband and user gaps by regions and groups of countries, 2013-2016 ............................................................................................................ 8 Table 3 Integrated Index for Postal Development (2IPD), classification for Latin America and the Caribbean, 2016 ........................................................................................................ 24 Table 4 Integrated Index for Postal Development (2IPD) .................................................................... 25 3 ECLAC Regional digital market… Table 5 Review of international frameworks on consumer protection in the field of electronic commerce ............................................................................................. 27 Table 6 Customer segments and products of the 350 leading companies in FinTech, globally, 2015 ....................................................................................................... 27 Table 7 Latin America and the Caribbean: ranking in the global cybersecurity index (GCI) ............... 34 Table 8 Membership in selected regional and subregional entities .................................................... 36 Table 9 TPP provisions on telecommunications and electronic commerce ........................................ 37 Table 10 Telecommunications and broadcasting issues under the responsibility of SGT 1 ................. 43 Figures Figure 1 Cross-border global flows ......................................................................................................... 5 Figure 2 Coverage of 3G and 4G networks, first quarter of 2017 .......................................................... 9 Figure 3 B2C cross-border e-commerce, 2014-2020 ........................................................................... 17 Figure 4 E-commerce as a percentage of retail and online buyers penetration, by region, 2016 ........ 18 Figure 5 Main barriers to cross-border e-commerce worldwide ........................................................... 19 Figure 6 E-commerce index (B2C), by regions, 2017 .......................................................................... 19 Figure 7 Latin America and the Caribbean and the OECD (high-income members) ........................... 20 Figure 8 Number of countries in Latin America and the Caribbean in the different phases of implementation of the Electronic Single Window (ESW), 2017 ............................ 22 Figure 9 Levels of implementation of measures on cross border paperless trade in Latin America and the Caribbean, 2017 .................................................................... 23 Figure 10 Latin America and the Caribbean: percentage of credit and debit cards used in the last year, 2014 ............................................................................................ 28 Boxes Box 1 Summary of the EU Directive 2015/2366 on payment services ............................................. 29 Box 2 Principles for digital financial inclusion ................................................................................... 31 Diagram Diagram 1 Classification of mobile money business models ................................................................... 30 4 ECLAC Regional digital market… Introduction In recent decades, the world economy has undergone major transformations: the liberalization of markets for traditional goods, services, and capital flows, the emergence of global digital platforms and the rapid growth of digital flows. In the last decade, the world economy has experienced an intense digital globalization in which traditional flows lost dynamism while cross-border digital flows multiplied by 45 between 2005 and 2014 (ECLAC, 2016, MGI, 2016). Figure 1 Cross-border global flows (Index 2003 = 100 and Tbps) 7000 600 6000 500 5000 400 4000 300 3000 200 2000 100 1000 - 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Export of goods Exports of service FDI Other financial flows International broadband (right axis) Source: ECLAC based on data from IMF, WTO, McKinsey Global Institute and TeleGeography. Cloud computing, the Internet of Things (IoT), big data analytics, machine learning and artificial intelligence are transforming the supply and demand of goods and services, the global value chains, the 5 ECLAC Regional digital market… management of human and financial resources, and the capacities, functions, and productive processes. These advances not only generate new products and services, increase productivity, and incorporate billions of users, but also accentuate asymmetries between leading countries and peripheral economies, the polarization of the business world, the vulnerability of employment structures, the concentration of income, and regulatory challenges. The United States, Western Europe, and China lead the technological revolution as evidenced by the importance of its digital infrastructure and services, innovation ecosystems, global digital platforms,
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