From the Archives: Colombia uses ICT to Fuel Development; ICT Leader in LATAM

Photo credit: http://www.healthcareitnews.com/news/deloitte-consumers-using-more-healthcare-tech

In an earlier post, we summarized the Colombian government’s ambitious plan to store all of its 46 million citizen’s personal data on the cloud through an app known as the Carpeta ciudadana. That was only the beginning.

Basically, the Colombian Government has declared war on the country’s social, economic, and political environments, using ICT as its main weapon to DRASTICALLY transform the lives of its citizens by 2018. Colombia’s official ICT strategy, Vive Digital, is an entire digital eco-system designed to use ICT to–among other things–overcome poverty, transform the health sector, change the justice system, aid the hearing and vision impaired, and overhaul education.

Vive Digital has two hefty goals for the country over the next four years:

• To make Colombia the world leader in the development of social applications directed at the poorest of the poor.
• To use ICT to make the Colombian Government the world’s most efficient and transparent Government.

 Ambitious huh? These statistics about Colombia present a compelling story

• In Colombia alone, between 2007-2012 Revenue’s in the country’s IT sector grew by 177%, reaching US $6.8 billion dollars.
• During the same period, the software industry in Colombia grew 3.79x due to the strengthening of the sector from Government Programs.
• Recognizing the need for more software engineers and computer scientists, Colombia invested in the Digital Talent Initiative  allowing students to study tech degrees for free.

Now consider these statistics for LATAM: This year in Latin America, the sale of the tablet will grow an estimated 24%, smartphones 18%, professional ICT services 11%, storage 11%, and software bundles 10%. Overall the ICT industry in this region is expected to grow 3.2%. While major economic growth is expected in Peru 6.3%, Chile 4.8%, and Colombia 5.8%. (SOURCE). Telecommunications investment will increase to $219 billion USD, and the ICT market will represent $358 billion USD. The Main trends in this industry include: the Cloud, Big Data, mobility, and social media.(SOURCE: siliconweek)

While countries throughout Latin America have also created ICT plans, Colombia holds a clear advantage: the re-election of President Juan Manuel Santos has allowed long-term growth in terms of government projects and partnerships. Vive Digital is now an eight-year project–uninterrupted by transitions in political administration.

Companies with a broad range of ICT expertise should look to invest in Latin American markets—and soon—using Government incentives as a way to enter the market and/or organically grow through acquisitions. Significant growth in the IT industry, software sector growing due to Government Programs, targeted Government Incentives for the ICT industry, a commitment to educate youth in the sector, a plan to fuel development through ICT, stable political environment that spans eight years...I’d start with Colombia.

Considersome of these Colombian ICT Businesses.

From the Archives:Intro to GDP

Over the past couple months, I remember these Business Insider maps floating around that roughly equated the GDP of different states in the U.S. to countries around the world.

I was anxious to see what country was producing an economic output similar to that  of my home state Kentucky: New Zealand. Oh, Cool. I hadn’t really learned much about New Zealand besides that fact that it was a small island off of the coast of Australia. For that reason, the comparison didn’t really give me a great picture of Kentucky’s relative economic position in the global marketplace, but  I thought it was an interesting insight nonetheless.

Shocker #1: The sunshine state of California.

California’s economic output was approximately the same as the country of Brazil. BRAZIL. California, a state with 38.8 million people and a GDP of $1.959 trillion produces roughly the same amount of goods and services as a South American country that spans 3.28 million miles2 and is populated by 200.4 million people.

Wow. I’m torn between being impressed with California and crying for Brazil, where GDP per capita, the greatest indicator of quality of life is only $11,208. (For reference the GDP per capita of California is ~ $46,000 and for the U.S. it is ~$42,000).

Shocker #2, and #3: Texas and the tiny state of Maryland.

Texas produces the approximately the same economic output as Canada. This is hard to fathom because Canada is a G8 country. And the tiny state of Maryland, produces about the same economic output as South Africa, which has historically been Africa’s largest economy.

Before we can really understand the magnitude of this information and why it’s important, we must first understand what is meant by economic output.

Economic Output=GDP.

GDP is designed to measure the value of economic production. By definition, it is the market value of all final goods and services produced within a country in a given year.  GDP per capita, is actually GDP divided by the total population, and is one economic indicator of quality of life.

Market Value. GDP, however, doesn’t just add up quantities of items produced (5 bikes + 4 shirts=9). Instead GDP is adjusted to calculate the value of each item produced then totaled.  Value is then determined by the current average market price. For example: if the average price of a bike is $100 and the average price of a shirt is $20, the GDP is then calculated as (5 bikes x $100 + 4 shirts x $20=$580). Assuming those were the only 2 goods produced, of course.

Final Goods and Services. A final good, like a bike, is sold to final users for consumption or held in a personal inventory. A bike seat, that is sold to a company that manufactures bicycles, is an example of an intermediate good. When calculating GDP only the final good is counted. If you counted the bicycle seat and the value of the completed bicycle, you would be double counting the bicycle seat. To avoid this over-valuation, we use only the market value of final goods.

Goods and Services Produced.Goods and services together represent the output of an economy. Services provide a benefit to consumers without the production of a tangible output.  When calculating GDP, only goods and services produced that year are counted. The sale of used goods are not included in GDP (because they were already counted in the year that they were produced). Financial assets like stocks and bonds are not counted either.  However, the services of used-car salesman/woman and brokers, for example, are included in the calculation.

Within a country. U.S. GDP only counts the value of goods and services produced by labor and property located in the U.S., regardless of the nationality of the worker. For example the work that a German Citizen does while working in Miami, Florida on a summer internship is included in the U.S. GDP.

The comparison of U.S. states to entire countries

With a more thorough understanding of GDP, we can now understand just how mind-boggling it is that the single states of California, Texas, and Maryland produce relatively the same economic output as Brazil, Canada, and South Africa, respectively. There is no easy answer as to how individual states could single-handedly out produce entire countries, so I will not attempt to give you one.

But, in closing, I will add that in my personal opinion, this map is a great testament to the implicit and explicit problems that impede successful production and business development in other countries, and the real advantage that American companies–who do  not have business operations interrupted by things like electricity shortages and political transitions, to name a few.

Reference: Modern Principles of Economics by Tyler Cowen and Alex Tabarrok

The original map was produced by Mark Perry, author of the Carpe Diem Blog, and is available here:  https://www.aei.org/publication/putting-the-ridiculously-large-18-trillion-us-economy-into-perspective-by-comparing-state-gdps-to-entire-countries/.

From the Archives: Colombian Government Unveils Ambitious ICT plan

 So while I was trying to breathe life into this post about how the ICT sector has real potential to change the way we change the world, the Colombian Government goes and announces something awesomely ambitious.

In 2018, the Colombian Government will launch the Carpeta ciudadana application: in it’s primary phase, every Colombian will have a space on the cloud to store their medical records, certificates, public documents, and academic transcripts.

Photo credit: http://mintic.gov.co

 By providing each citizen with an email account, space on the Cloud, digital identification, access to public services online, and a readily accessible medical history, Colombians will be seamlessly connected to the national Government and public services.

Once the kinks get worked out, this app will greatly improve the quality of life of everyone in the country—or at least those with Internet access and the knowledge to use it. (Remember my post about having to mail 24 pages to the capital each pay period before I could get paid? The cloud would solve that problem).

 What exactly is the cloud? The cloud is a space for data storage/access over the Internet instead of your computer’s hard drive. (Think Dropbox). With the cloud you can access your information using any device with an internet connection. For the Colombian people some of the major benefits of transitioning to the cloud include:

1.  Less harm to the environment, as we eliminate the need for papers and copies.
2. More efficient and faster public services, as info is both more readily available and more complete.
3. Streamlined payroll systems, which would lead to a consistent pay schedule, immediately improving quality of life.
4. A diverse number of ways to access your information, so, if the power is out or the Wi-Fi is down, you can still access your info from your cell phone or tablet.

Before we get into my concerns and those of the Colombian people, let’s just take this in for a moment: all public and private documents for all Colombian citizens will now be stored on the Cloud. If this can be executed safely, securely, and consistently imagine how monumental this will be for the Colombian people and the Colombian Government. Colombia will blaze the way for Governments all over the world and the lives of it’s people will be forever transformed.

Now to the concerns.  In total there are approximately 46,000,000 people in Colombia. FORTY-SIX million (Source: CIA World Factbook). According to Colombia’s ICT website, approximately 9,000,000 have access to the Internet. That’s about 19% of the population. What I’m concerned about is the other 81% of Colombian citizens, who may become even more marginalized as the rest of the country moves on to digital storage. Due to the potential risks, I also think that citizens should be given the choice to opt-in or opt-out of the program. In terms of infrastructure, for those with internet service, how reliable is it outside of the major hubs like Medellin, Bogota, Cali, Barranquilla, and Cartagena?

 Some Concerns of the Colombian People per the Government’s website:

• Many think the idea is buenisimo (really great).
• Some suggested a pilot phase where the Government works with people from different parts of life with varying levels of internet access.
• Many worry that corruption in the government will put their most private info in the hands of dangerous individuals.
• Many worry about security/privacy.
• Many question how this application will affect people in the campo where the internet service is virtually non-existent.

While this app has the potential to literally transform the lives of Colombian citizens, is four years enough to make the changes necessary for this initiative to benefit the other 81% of the population? Do you think Colombia’s plan to connect every citizen’s personal data to the cloud is a good idea? Will it further marginalize the poorest of the poor? 

Let us know in the comments.

Visit the Colombian Government’s ICT site here to learn about other life-changing initiatives. (SPANISH).

From the Archives: Luxury and Poverty

Photo credit:   http://www.ifitshipitshere.com/guccis-2009-collection-to-benefit-unicef/

For my international marketing project my sophomore year of college, I decided to write a proposal recommending that Coach, the luxury goods company, expand into South Africa. When I shared my idea with my teacher, her reaction was something along the lines of  “Can people there afford luxury goods?”

I didn’t know much about the specifics of the wealth of individual South Africans, but collectively, I knew that South Africa was, at that time, the richest country on the African continent.

This article from the Financial Times reports that  South Africa had 71,000 millionaires in 2013, accounting for 60% of the continents total. By 2020, Bain Capital estimates that 420,000 South African households will have more than $100,000 USD in disposable income. While the fact that South Africa houses the majority of the continent’s millionaires doesn’t imply that droves of these people would buy luxury products (although it’s very likely), it shows that, in South Africa, a country known for issues such as high-unemployment, short-life expectancy, and high HIV/AIDS rates, the educated and well-connected upper class has more financial freedom than your average South African.

A few months after I finished my project, I actually moved to Johannesburg, South Africa. Jo’burg is a city with electric billboards (we still don’t have these in my hometown), and a local mall that was so expensive I could only afford to eat lunch there. There were Gucci, Prada, and Luis Vuitton stores—stores I had actually never even been to in the United States (In fact, we don’t have these stores in my city at all). When I saw those stores, I just laughed to myself and thought, Coach would have been just fine in this country.

In my report, I found that using luxury items to display status in South Africa was very important to the professional class. Even if the entire population isn’t walking around with $1000 handbags, there is at least a portion of the population that can afford to—and is more than willing—to do so.

People around the world are transitioning into the middle class and enjoying luxuries once reserved for the elites in their countries. Check out this video on the growing middle class in Kenya and the rising consumption of luxury goods in Africa.

My teacher, although well versed in international business, failed to realize that, there is in fact a difference between being poor and living in a poor country. “Poor” countries all over the world still have lawyers, doctors, bankers, business owners, and working class individuals who can indulge in luxury purchases; just like the United States, the richest country in the world, still has homeless people.