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Digitalization of Manufacturing Development in Latin America and the Caribbean

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Digital and Sustainable Transformations in a Post-COVID World

Abstract

Rapid trends toward the digitalization of global manufacturing activities are expected to guide the future of industrialization. How well-prepared are countries in the Latin America and Caribbean region to exploit the opportunities and address the challenges arising from these trends? This chapter combines macro- and micro-level data to carry out a cross-country comparative assessment of the engagement of selected Latin American countries with the Fourth Industrial Revolution, the type of engagement, and the factors that influence this engagement. The findings suggest that several factors play a role in the ability of countries in the region to gain from the digitalization of manufacturing. These factors include countries’ economic structure, their technological capabilities, and their level of industrialization. Also of relevance are the availability of skilled labor, digital infrastructure, and the adoption of proactive policies to promote innovation and the digitalization of domestic manufacturing firms.

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Notes

  1. 1.

    In a recent piece, Motta et al. [1] refer to the work of Perez [13] who, based on the notion of technological revolutions from a neo-Schumpeterian perspective, identifies five technological revolutions; hence, according to Perez, the 4IR is, in fact, the sixth revolution experienced by capitalist economies. Alternative interpretations suggest that global society is marching toward a so-called Society 5.0 [14], one that follows from hunting society (Society 1.0), agricultural society (Society 2.0), industrial society (Society 3.0), and information society (Society 4.0). In essence, Society 5.0 describes “A human-centered society that balances economic advancement with the resolution of social problems by a system that highly integrates cyberspace and physical space” [14]; that is, it goes beyond the realm of economic activities more generally, and of industrial development, specifically.

  2. 2.

    Emphasis in the original by the authors.

  3. 3.

    The index considers 11 frontier technologies: AI, IoT, big data, blockchain, 5G, 3D printing, robotics, drones, gene editing, nanotechnology, and solar PV.

  4. 4.

    See [30] for a review of this strand of literature.

  5. 5.

    These are related to HS codes 847950, 847780, 847710, 847720, 847730, 847740, 847751, 847759, 847790, 845811, 845819, 845921, 845931, 845951, 845961, 846011, 846021, 846031, 846221, 846231, 846241, as in the analysis of the development and adoption of advanced digital technologies in [8].

  6. 6.

    Based on our analysis, Germany has the highest economic complexity in terms of advanced digital technologies.

  7. 7.

    These findings are consistent with [35], which indicates that 2000 firms are particularly active in R&D globally and hold the lion’s share of patents in advanced digital technologies.

  8. 8.

    Exports of ADP-related capital goods are above the average global market share once frontrunners are excluded [9].

  9. 9.

    Imports of ADP-related capital goods are above the average global market share once frontrunners are excluded [9].

  10. 10.

    Even the most advanced European countries should expect 4IR to result in mostly incremental changes: “Rather than creating new industries, the greatest digital opportunity for Europe lies in the transformation of existing industry and enterprises” [36, p. 2]. The inclusion of SMEs remains one of the biggest challenges most European 4IR strategies face.

  11. 11.

    Based on McKinsey & Co.’s global survey of manufacturing firms conducted in 2020 among more than 400 global manufacturing firms, 74 percent of respondents indicated that they were facing challenges to breaking away from the “pilot trap” (emphasis in the original by the authors) as regards the implementation of 4IR technologies. The figure illustrates a slight increase relative to the 70 percent share of firms reporting a similar situation in the 2017 survey [37].

  12. 12.

    The UNIDO COVID-19 firm-level survey collected data for seven countries in Latin America: Argentina, Brazil, Bolivia, Ecuador, Mexico, Peru, and Uruguay.

  13. 13.

    It is important to emphasize that the Mexican sample size was significantly smaller than Argentina and Brazil.

  14. 14.

    That is, ISIC rev. 3 codes 26 to 28 and 29 to 30.

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Acknowledgements

The authors acknowledge useful comments by two anonymous reviewers to this chapter, and comments by participants at the International Conference of the RIDIT (ICRIDIT 2022 Berlin Celaya). Niki Rodusakis helped with proofreading and editing of the English language.

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Authors and Affiliations

  1. Capacity Development and Policy Advice Unit, United Nations Industrial Development Organization (UNIDO), Vienna, Austria

    Fernando Santiago & Alejandro Lavopa

  2. Division on Technology and Logistics, United Nations Conference on Trade and Development (UNCTAD), Geneva, Switzerland

    Clovis Freire

  3. Industrial Policy Research Unit, United Nations Industrial Development Organization (UNIDO), Vienna, Austria

    Alejandro Lavopa

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  1. Fernando Santiago
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  2. Clovis Freire
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Correspondence to Fernando Santiago .

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Editors and Affiliations

  1. Division of Social and Management Sciences—Department of Business and Finance, University of Guanajuato, Celaya, Guanajuato, Mexico

    Salvador Estrada

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Santiago, F., Freire, C., Lavopa, A. (2023). Digitalization of Manufacturing Development in Latin America and the Caribbean. In: Estrada, S. (eds) Digital and Sustainable Transformations in a Post-COVID World. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-16677-8_16

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  • DOI: https://doi.org/10.1007/978-3-031-16677-8_16

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