Above: Illustration by nmedia/DepositPhotos

Recent studies have found that digital infrastructure gaps and the challenges for small and medium sized enterprises to adopt latest digital technologies are seen as the top barriers to growing the digital economy, industry experts said at the Digital Innovation Day 2021 on Wednesday.

The findings draw extensively from insights of studies by Huawei and researches by industry watchers and analysts such as Boston Consulting Group (BCG) and others.

Talent is one of the top barriers to growing the innovation economy driven the explosively transformative digital technologies, according to the results of a BCG survey covering 1,775 managers and executives in the ICT sector.

“Based on the research, the extent and quality of a country’s digital talent pool appears to be the key factor to enhancing the growth of a country’s innovation ecosystem. Moreover a proactive government and an effective private sector are also essential for the roadmap for the development of the digital economy,” Andrew Williamson, Vice President of Public Affairs at Huawei, says.

The data show that the digital economy has been growing consistently faster than the traditional economy for a number of years now. The COVID-19 pandemic has only greatly accelerated this digital transition. For many small and medium sized businesses, it has been “go digital or go dark”.

Infrastructure such as fixed broadband, mobile broadband and cloud computing have become crucial to economic performance. By 2030, it is expected that 5G will contribute between 2 to 5 percent of global GDP, AI will contribute about 15 percent, while IoT will contribute between 12 to 15 percent. Blockchain is expected to contribute about 4 percent.

“The convergence of technologies such as networks, AI and Cloud will produce explosive growth in the digital sector, and we also see such technologies join forces with technological breakthroughs in the renewable energy sector,” Cesar Funes, vice president of public affairs, Huawei Latin America and the Caribbean, said.

Some governments are putting digital at the core of their economic growth recovery programs and as boosters for national long-term productivity growth. The European Union, China and South Korea are all planning to provide substantial fiscal support to investment in digital infrastructure and new economic sectors such as the algorithmic economy, new energy and digital health care. Williamson also highlights how countries like South Africa, Brazil and Thailand put in place supportive policies and regulations during the pandemic to facilitate digital connectivity to those that needed it most during the pandemic.

The research framework is based on BCG’s extensive observations that digital adoption leads to digital innovation which forms a virtuous upward cycle of digital economic expansion. This has to be supported however by a vibrant private sector, and a conducive business environment. But based on the digital success stories recorded in the research, the market cannot solve on its own. A proactive government supporting and engaging in all of the above was also seen to have been of paramount importance.

“The three challenge areas of inadequate digital infrastructure, lagging SME adoption and talent gaps were by far the most commonly identified as problem areas across all the countries in the study. By extension, they are likely to be the same problems across all national digital journeys. For any government stretched as they are for resources and competing priorities, we suggest that focusing on these three areas first can go a long way to boosting further beneficial innovation supported by enlightened governance,” Williamson said.

Policymakers, industry executives and analysts at the Latin America and Caribbean edition of the Huawei Digital Innovation Day 2021, called for joint efforts by formulating proactive national digital strategies and offering support for the industries to adopt digital technologies and grow the local talent pools.

“If we are to see the rosy vision come true in terms of the digital transformation and innovative growth, we need to act in terms of policy, infrastructure as well as on talent. In some of these areas, we need joint efforts by both the public and the private sector. They both play important roles,” Michael Chen, director of corporate communications, Huawei Latin America and the Caribbean, said.