Can Digital Trade Turn Latin America’s Export Potential Into a New Engine of Economic Growth?

Digital trade could become a major engine of growth for Latin America and the Caribbean, with digitally delivered services exports rising from US$18.5 billion in 2005 to US$87.7 billion in 2024. Unlocking its full potential will require coordinated action on connectivity, digital regulation, payments, customs, skills and SME finance, creating new opportunities for governments, investors and development partners.

Digital trade is becoming an increasingly important route for Latin America and the Caribbean (LAC) to diversify exports, raise productivity and create higher-value jobs. A joint report by the Inter-American Development Bank (IDB), World Bank and World Trade Organization (WTO) finds that digitally delivered services exports from the region jumped from US$18.5 billion in 2005 to US$87.7 billion in 2024, growing at an average annual rate of about 9%. Yet LAC still represented only around 2% of global digitally delivered services exports in 2024, showing how much potential remains untapped.

Brazil was the region's largest exporter in 2024, with about US$29.4 billion in digitally delivered services exports, followed by Mexico at US$15.2 billion, Costa Rica at US$8.6 billion and Argentina at around US$8 billion. Digitally delivered services also increased from 21.3% of LAC's total services exports in 2005 to 34% in 2024. For governments, these figures signal that digital trade should be treated not simply as a technology issue but as part of national strategies for trade, jobs, productivity and economic diversification.

Can Digital Trade Become LAC's Next Major Engine of Jobs and Export Growth?

The economic opportunity extends beyond technology companies. Digital platforms lower the cost of finding international customers and allow firms to export software, financial services, consulting, education and creative products without establishing a physical presence overseas. Creative industries already contribute more than 2% of regional GDP and employ around 1.9 million people.

Artificial intelligence could accelerate these changes by improving logistics, inventory management, customs processing and business operations. Under a stronger convergence scenario examined in the report, LAC's digitally deliverable services exports could grow by as much as 7.9% annually through 2040, compared with projected global growth of around 6.5%.

But these gains will not automatically reach smaller businesses or poorer economies. Broadband affordability, digital skills, financing and access to advanced infrastructure remain uneven. Data centres, for example, are heavily concentrated in Brazil, Mexico and Chile.

Why Must Governments Fix Payments, Connectivity and Digital Rules Together?

The report makes clear that governments cannot unlock digital trade through broadband investment alone. Businesses also require reliable payment systems, predictable regulations, cybersecurity, efficient customs and skilled workers.

Around 74% of adults in LAC have a transaction account, yet only approximately 20% make online person-to-business payments. Cross-border payments can remain costly and slow, creating particular difficulties for smaller exporters.

Governments therefore need coordinated reforms covering affordable broadband, cross-border payments, electronic signatures, digital identities, data protection, consumer protection and cybersecurity. Regulation must protect consumers and data without unnecessarily restricting legitimate cross-border transactions.

Regional integration is another major weakness. Intraregional digitally deliverable services exports accounted for only 8.4% of LAC's total in 2023, while the United States alone received approximately 34.4%. Harmonising digital rules and improving payment interoperability could therefore open much larger regional markets for SMEs.

How Can Faster Borders and Better Finance Help SMEs Compete Globally?

Digital trade still depends heavily on physical logistics when goods ordered online cross borders. Customs delays can erase much of the cost advantage created by e-commerce.

Existing reforms demonstrate the scale of possible improvements. At Honduras's El Amatillo border, reforms helped cut crossing times from more than 74 hours to just over two hours. Another customs integration initiative involving Guatemala and Honduras developed an online system that eliminated border processing for around 80% of goods and reduced average crossing times from 11 hours to six minutes.

Governments should expand electronic single windows, automated customs systems and risk-based inspections while improving coordination between border agencies.

Businesses themselves also need support. Many LAC companies have adopted digital marketing and sales tools but have not fully digitalised their operations. Governments and development partners can expand incubators, accelerators and training covering STEM, management, entrepreneurship and digital skills.

Financing is equally important. Technology companies often depend on software, intellectual property and other intangible assets that traditional banks may not accept as collateral. Credit guarantees, equity instruments, seed funding and risk-sharing facilities could help viable digital SMEs invest and expand.

What Should Development Partners and Investors Prioritise for the Next Digital Leap?

For international development institutions, the report points toward integrated programs rather than isolated technology projects. The IDB, World Bank and other development partners can combine financing, technical assistance and policy support for broadband networks, customs modernization, interoperable payment systems, digital skills and SME transformation.

Private-sector opportunities are expanding across fintech, cloud computing, telecommunications, cybersecurity, logistics, e-commerce, AI, digital payments and professional services. However, investors must account for fragmented regulations, cybersecurity threats, skills shortages, infrastructure gaps and dependence on a limited number of export markets.

The report ultimately proposes action across eight areas: more competitive ICT markets, modern digital regulations, stronger connectivity, better cross-border payments, efficient logistics and customs, stronger export promotion, improved business capabilities and financing, and better measurement of digital trade.

The central lesson for policymakers is that these reforms are interconnected. LAC has already expanded digitally delivered services exports almost fivefold since 2005. Turning that momentum into sustained development will depend on whether governments, development institutions and businesses can now build an integrated digital ecosystem that allows more countries, workers and SMEs to participate in global and regional markets.