CHATTANOOGA, Tennessee — The recent introduction of 5G in Latin America creates opportunities for economic growth in the region across multiple industries. Latin America is incredibly geographically and culturally diverse, so economic growth opportunities are not homogenous across the region. However, there are promising possibilities for economic growth in Latin America brought about by 5G.
5G is the newest wireless network technology. It offers increased downloading speeds and can connect to more devices at once without hindering service. 5G also drastically reduces the time it takes for data to be transmitted between devices, cloud platforms and networks.
The COVID-19 pandemic accelerated the shift toward an economy that depends more on technology and internet connectivity. Digitalization and technology will be key drivers of post-pandemic economic recovery and growth. 5G, especially when combined with AI and Internet of Things (IoT) devices and systems, will create opportunities for economic growth. Because of the faster speeds and larger connectivity capacities of 5G networks, 5G promises increases in productivity and efficiency across multiple economic sectors.
The pressure to increase digitalization and technology, including 5G networks, in Latin America comes at a critical economic period. The pandemic triggered the deepest recession ever in the region, with the economy decreasing by at least 6.5% in 2020. The economic recession pushed 22 million people into poverty and 8 million people into extreme poverty. This increased the regional poverty rates and extreme poverty rates to 33.7% and 12.5%, respectively. Latin America needs to bolster economic growth to fight this increase in poverty.
5G in Latin America
Nine countries in Latin America have 5G, with 13 total deployments in the region. The Global System for Mobile Communications (GSMA) estimates that Latin America will have 15 million 5G connections by 2022. GSMA also forecasts that almost 10% of network connections in Latin America will be 5G connections by 2025.
One of the largest challenges in deploying 5G in Latin America is accessibility in rural areas. Only 23% of rural households in Latin America are connected to mobile internet, as opposed to the 67% of urban households that are connected. Although only 18% of Latin America’s population lives in rural areas, 29% of Latin Americans living in poverty and 41% of the population living in extreme poverty reside in rural areas. This prompts concerns about 5G deployment increasing inequality and widening the digital divide.
However, 5G’s speed and connectivity capacities allow mobile operators to serve more users at lower costs. With smartphone adoption rising, cheaper smartphone and mobile device options are increasingly available. These factors, when accompanied with policy choices geared toward increasing internet affordability and accessibility, will hopefully prevent the deepening of digitally-driven inequalities.
5G Stimulates Economic Growth
5G in Latin America will directly and indirectly generate regional wealth by encouraging investment in and improving production, efficiency and sustainability across multiple sectors of the economy. A key industry which will experience economic growth from 5G is the mobile network industry. In 2019, the mobile network industry accounted for about 7% of Latin America’s GDP, adding a value of $421 billion and supporting 1.4 million jobs. These benefits are expected to increase with the rollout of 5G and accompanying devices and technologies.
GSMA projects that mobile network companies will invest $54 billion in 5G infrastructure between 2019 and 2025. Infrastructure projects will create jobs and bring economic activity to the area. Research performed by Omdia and Nokia suggests that 5G will have an economic and social impact in Latin America valued at $3.3 trillion between 2020 and 2035.
5G Enhances Agriculture
5G can also make agriculture smarter by utilizing sensors that analyze soil conditions, predict and monitor crop productivity and yield and track weather. Sensor technology that is enhanced by 5G can update farmers on crop conditions in real time and indicate when crops are in need of water or pesticides. Using past and current data, technologies can inform best practices for larger and higher quality crop yields at lower costs in terms of resources and money. The combination of 5G and AI enables the use of agricultural robots and remote driving equipment.
As the world’s population continues to increase, so will the demand for food. Latin America is the world’s top net food-exporting region. Therefore, improvements in agricultural capabilities in Latin America will not just benefit the region but will also help with food security and nutrition globally.
5G Improves Financial Services
5G can also enhance financial services and technologies. Financial services include mobile money and banking, which contribute to poverty reduction. These services help users manage money and provide them with information about and access to investment opportunities. Mobile money services lead to greater financial inclusion, especially for people who have difficulty accessing traditional banking services. 5G can improve the speed and knowledge of these services and help users make informed investment and money management decisions.
Many other industries stand to benefit from 5G in Latin America, including mining, healthcare, education, tourism and city planning. The incorporation of 5G and accompanying technology across industries offers opportunities for increased productivity and efficiency. This should stimulate economic growth and poverty reduction. As more Latin American countries think about deploying 5G networks and technology, their policies will determine how many people can access 5G and how quickly and how much economies will benefit.
– Camden Eckler