DIGITIZATION: A RESILIENCY PLAN FOR DEVELOPING COUNTRIES FACING PANDEMICS - Dr. Raúl L. Katz

DIGITIZATION: A RESILIENCY PLAN FOR
DEVELOPING COUNTRIES FACING
PANDEMICS

Dr. Raúl L. Katz

 Telecom Advisory Services LLC

 New York, April 23, 2020

THIS STUDY WAS PREPARED TO FIND ANSWERS TO SIX QUESTIONS

 § Can digitization mitigate the disruption caused by the COVID-19 pandemic?
 § To what degree are digital platforms adopted by consumers distributing health care information,
 facilitating e-commerce transactions, and educating students under quarantine conditions in the
 developing world?
 § Can digital information flows efficiently support supply chains and production systems in developing
 countries?
 § Can telecommunications networks sufficiently support the massive surge in telecommuting?
 § Can developing country governments continue to operate effectively as they digitize administrative
 and management systems?
 § What are the implications of these answers for public and private intervention to address ongoing
 and future threats?

 2

IN THIS CONTEXT, THE PURPOSE OF THE STUDY WAS TO EXAMINE THE LEVEL OF DIGITIZATION IN THE DEVELOPING
WORLD AS A MITIGATING FACTOR OF THE COVID-19 PANDEMIC

 OBJETIVES OF THE STUDY
 § Empirical analysis of the link between highly-developed digital ecosystems and preparedness to
 face pandemics
 § Explore the role of digitization to increase resilience of households, production and State
 operations
 § Evaluate how are developing countries positioned to face this threat

 METHODOLOGIES
 • Econometric analysis of digitization and resilience facing pandemics
 • Development of resiliency indices of digital households, production, and the State
 • Draw conclusions and policy implications for developing countries to face the COVID-19 and
 future pandemics

 3

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 4

TO UNDERSTAND THE ROLE OF DIGITIZATION AS A MITIGATING FACTOR OF PANDEMICS WE STUDIED THE IMPACT
 OF SARS-CoV IN 2003, A PANDEMIC WITH ORDERS OF MAGNITUDE LESS IMPACTFUL THAN COVID-19

 SARS-CoV (2003) COVID-19 (2020)
 Number of • Origin: China • Origin: China
 affected • Total countries: 26 • Total countries: 205
 countries • OECD: 15 • OECD: 36
 • Developing countries: 10 • Developing countries: 160
 Number of • Infected: 2,520,522
 • Infected: 8,103
 affected • Deaths: 800 • Deaths: 176,786 (by April
 22)
 individuals
 • Isolation of infected people
 • 7,000 in Canada • Isolation of infected people
 • 150,000 in Taiwan
 • Total or partial quarantine (more
 • Quarantine by city, region, and community
 • Haidian district, Beijing
 tan 100 countries)
 Examples of • Amoy Gardens Complex, Hong Kong • Social distancing
 prophylactic • Bounded social distancing rulings • Passenger limitations and flight
 • Passenger limitations and flight cancellations cancellations from affected areas
 measures • Compulsory use of masks in many
 from affected areas
 • Mask usage countries
Sources: European Center for Disease Prevention and Control; Keogh-Brown, M. R., & Smith, R. D. (2008). The economic impact of SARS: how does the reality match the
predictions? Health policy, 88(1), 110-120. 5

OUR OBJECTIVE WAS TO DETERMINE WHETHER ADVANCED DIGITIZATION COUNTRIES WERE BETTER PREPARED TO
 FACE THE NEGATIVE ECONOMIC IMPACT OF SARS-CoV

• Economic losses: Hypothesis: countries with higher fixed
 US$ 30-100 broadband adoption could mitigate partially the
 billion pandemic negative effects
• Most affected
 sectors: Health,
 tourism, Airlines,
 retail trade,
 leisure and
 entertainment log( &' ) = µ& + log( &' ) + log( &' ) + ∅ log( &' ) + &' + 789 ∗ &' + ℇ&'

 GDP Capital Labor Fixed Affected
 Broadband by SARS

 Sample: 178 countries for the period 2000-2017

 6

COUNTRIES WITH HIGHER FIXED BROADBAND PENETRATION WERE ABLE TO PARTIALLY MITIGATE THE EFFECTS OF
THE PANDEMIC
 Economic Impact of SARS CoV
 (i) (ii) (iii) (iv)
 0.387*** 0.387*** 0.388*** 0.365***
 ( )
 [0.055] [0.055] [0.055] [0.058]
 0.345*** 0.347*** 0.347*** 0.352***
 ( )
 [0.091] [0.091] [0.091] [0.091]
 0.027*** 0.027*** 0.026*** 0.040***
 ( )
 [0.005] [0.005] [0.005] [0.011]
 -0.039** -0.086*** -0.099**
 
 [0.016] [0.031] [0.046]
 0.065* 0.086*
 789 ∗ 
 [0.036] [0.052]
 Country Fixed Effects Yes Yes Yes Yes
 Year Fixed Effects Yes Yes Yes Yes
 Fixed broadband SARS has a Fixed broadband in countries
 has a positive negative impact affected by SARS mitigates its
 contribution to GDP on GDP negative economic impact 7

IN ADDITION TO ECONOMETRIC MODELS, THERE IS PLENTY OF EVIDENCE CONFIRMING THE CONTRIBUTION OF
DIGITIZATION TO LESSENING THE IMPACT OF SARS-CoV

 • Nokia, Sun Microsystems, Intel, HP and IBM cancelled regional conferences and
 replaced them with videoconference
 • InterCall, a Chicago-based teleconference platform increased its Honk Kong
 Videoconferencing subscribers by 200%, and global subscribers by 30%
 contributed to • Integrated Vision, an Australian-based teleconference systems integrator, reported a
 enterprise resilience 44% increase in sales
 • Singapore Telecom registered 20% increase in videoconferencing demand, and
 50% in the use of its videoconferencing facilities
 • StarHub underwent 50% increase in audioconferencing traffic in March 2003
 Use of video and
 audio conferencing in • JP Morgan in Hong Kong used audio and video conferencing to pitch a stock sale of
 financial services $28.2 million during the SARS pandemic

 Pandemic was a • Faced by the need to close all (except one) outlets for sales of consumer electronics,
 trigger for e- JD.com deployed an e-commerce channel, based first on instant messaging and then
 commerce through Internet
 development in China • SARS contributed to the transition of Alibaba from a small B2B e-commerce site to
 the Chinese (and then worldwide) e-commerce leader

 8

FINALLY, PRELIMINARY ECONOMIC FORECAST DATA ON THE COVID-19 PANDEMIC EFFECT PROVIDES FURTHER
SUPPORT TO THE HYPOTHESIS THAT DIGITIZATION CONTRIBUTES TO MITIGATE THE IMPACT OF PANDEMICS
 Hypothesis: countries with higher digitization of production will
 have less negative downward effect of COVID-19
 Data: IMF downward GDP forecast for 2020 and 2021 (192
 countries); TAS digitization of production (2018) (75 countries)

 Digitization of Production Index vs. Digitization of Production Index vs.
 2020 GDP downward adjustment 2021 GDP downward adjustment

 15
 0

 10
 -5

 5
 -10

 0
 -15

 -5
 0 20 40 60 80 100 0 20 40 60 80 100
 Digitalización de la producción Digitalización de la producción

 Variación crecimiento FMI 2020 Fitted values Variación crecimiento FMI 2021 Fitted values

 Evidence: Countries with higher digitization of production undergo a lower
 GDP downward adjustment as a result of COVID-19 over the long run 9

IF DIGITIZATION CAN ENHANCE SOCIAL AND ECONOMIC RESILIENCE IN THE FACE OF COVID-19, WHAT IS
ITS CURRENT LEVEL IN THE DEVELOPING WORLD?

 First conclusion: Second question: If digitization is a mitigant
 Digitization factor of pandemics, developing countries
 contributes to with advanced digitization development will
 partially mitigate the be better prepared to tackle the implicit social
 effects of pandemic and economic disruption

 10

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 11

WE MEASURE DIGITIZATION BASED ON AN INDEX COMPOSED OF EIGHT PILLARS AND SIXTY-FOUR INDICATORS
 DEVELOPMENT INDEX OF THE DIGITAL ECOSYSTEM (64
 indicators)

 4 (10) 13 (15) 15 (15) 9 (10)

 INTITUTIONAL AND CONNECTIVITY INFRASTRUCTURE FACTORS OF
 REGULATORY PILLAR PILLAR PILLAR PRODUCTION PILLAR
 • Telecommunications • Telecommunications and • Telecommunications • Human capital development
 regulatory framework pay TV affordability investment • Innovation ivestment level
 • Cibersecurity and piracy • Digital terminal • Telecommunications service • Technology adoption in
 prevention ownership (PCs, coverage schools
 • Government functions for smartphones, pay TV) • Telecommunications service • Innovative capacity
 promotion of development of • Mobile telecom., fixed quality • Desarrollo de capital
 digital ecosystem (spectrum an mobile broadband • Digital service infrastructure humano
 management, industrial and Pay TV penetration
 policy, etc.)

 7 (15) 4 (10) 6 (15) 6 (10)
 HOUSEHOLD COMPETITION DIGITIZATION OF DIGITAL
 DIGITIZATION PILLAR PILLAR PRODUCTION INDUSTRIES PILLAR
 • Internet adoption • Mobile telecommunica- • Enterprise digital • Weight of digital industries
 • E-Commerce usaage tions competitive intensity infrastructure in GDP
 • Development of E- • Fixed broadband • Digitization of the supply • Internet of Things
 Commerce platforms competitive intensity chain • Importance of local Internet
 • Video OTT adoption • Mobile broadband • Digitization of oprations and content development
 • E-Health program competitive intensity processing industries
 development • Pay TV competitive • Digitization of distribution • Exports of digital products
 intensity channels and services 12

DEVELOPING COUNTRIES ARE AT AN INTERMEDIATE TO LOW LEVEL OF DIGITIZATION

 Digitization Development Index (2018) Digitization Development Index (2018)
 (1-100) Developing Countries vs. OCDE

 OCDE: 70.40 LATAM: 49.92
 Africa 35.05 Infraestructura
 100
 Asia Pacífico 49.16 Institucional y 80 Conectividad
 Regulatorio
 60
 America Latina 49.92 40
 20
 Digitalización de los
 Europa del Este 52.9 Factores de Producción 0
 hogares

 MENA 55.54
 Digitalización de
 Industrias Digitales
Europa Occidental 71.06 procesos productivos

 Nivel de competencia
America del Norte 80.85
 OECD LAC Africa Asia Pacific
 0 10 20 30 40 50 60 70 80 90
 AFRICA: 35.05 ASIA & PACIFIC: 49.16
 Sources: Katz, R. and Callorda, F. (2018). “Accelerating the development of Latin American digital ecosystem and implications for
 broadband policy”, Telecommunications Policy 42 (2018), pp. 661-681; Katz, R. et al. (2020). El ecosistema digital y la digitalización de la
 producción en América Latina y el Caribe: Medición e Impacto Económico. Informe elaborado para CEPAL. 13

REGIONAL INDICES HIDE IMPORTANT DIFFERENCES AMONG COUNTRIES

 Developing Countries. Digitization Index (2018)
 (1-100)
70

60
 59
 57 56
 Advanced
 56 55 55
 53
 51 50
50 48 47 47
 44 43
 41 Transitional
 40
40 38 38 37
 33 32 Limited
 29
30 28
 26

20
 13 13
10

 0
 ina ile ia y zil ina sia ica ico ma nd or R. u
 Per Afric
 a ia y or t
 yp olivia mala agua enya 'Ivoire ití ba
 ent Ch lomb rugua Bra Ch alay sta R Mex ana haila Ecuad incan Ind agua lvad Eg Ha Cu
 rg o U Co P T m th Pa
 r a B ate Nicar K
 te
 d
 A C M
 Do So
 u El S Gu Co
Source: Katz, R. et al. (2020). El ecosistema digital y la digitalización de la producción en América Latina y el Caribe: Medición e Impacto 14
Económico. Informe elaborado para CEPAL.

AS EXPECTED. DIGITIZATION IS GROWING AT A FASTER RATE IN DEVELOPING COUNTRIES THAN IN ADVANCED
 ECONOMIES

 Digitization Index (2018) vs. Growth rate (2004-18)
 9.00%
 Asia - Pacífic
 Digital Ecosystem development Index

 Africa
 8.00%
 Growth rate (2004-18)

 7.00%
 Eastern Europe

 6.00% Latin America and
 the Caribbean MENA

 5.00%

 Western Europe
 4.00% North America

 3.00%
 20.00 30.00 40.00 50.00 60.00 70.00 80.00

 Digital Ecosystem development Index(2018)

Source: Katz, R. et al. (2020). El ecosistema digital y la digitalización de la producción en América Latina y el Caribe: Medición e Impacto
 15
Económico. Informe elaborado para CEPAL.

UNDER THESE CONDITIONS, WHAT WOULD THE CONTRIBUTION OF DIGITIZATION BE TO ENHANCE
SOCIAL AND ECONOMIC RESILIENCE IN THE FACE OF COVID-19?

 Questions:
 • What is the level of resilience of
 networks to accommodate the increase
 First Second in traffic?
 conclusion: conclusion: • Is the digitalization of households
 Digitization Developing sufficient to mitigate the effect of
 contributes to countries exhibit quarantine?
partially mitigate an intermediate • Can the digitization of production
 the effects of to low level of mitigate the disruption in supply
 pandemic digitization chains?
 • What is the level preparedness of the
 State to continue delivering public
 services?

 16

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 17

SOCIAL ISOLATION AND QUARENTINE HAS RESULTED IN AN INCREASE IN TRAFFIC, WITH A REDUCTION OF
 DOWNLOAD SPEEDS (AS MEASURED IN MBPS) (I)
 Ecuador (Fixed: -13%, Mobile: +2%) Brazil (Fixed: -3%, Mobile +1%)
 35 60
 28.76 27.35
 30 26.76 26.65 25.86 50
 24.85
 25 22.34
 23.95 23.4722.61 51.45 52.57 52.5 51.93 54.22 54.42 52.89 51.88 52.3 52.5
 40
 20
 20.94 20.73 21.27 20.27 20.41 19.94 20.51 19.45 20.7720.77 30
 15
 20 24.9
 10
 Quarantine 3/12
 24.51 24.2 24.51 25.02 25.04 24.3 23.72 25.11 25.23
 5 10
 Quarantine 3/24
 0 0
 3-Feb 10- 17- 24- 2-Mar 9-Mar 16- 23- 30- 6-Apr 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16- 23- 30- 6-Apr
 Feb Feb Feb Mar Mar Mar Mar Mar Mar
 Fixed broadband Mobile broadband Fixed broadband Mobile broadband

 Chile (Fixed: -1%, Mobile: -19%) México (Fixed: -7%, Mobile +13%)
 120 50
 104.29
 93.11 94.68 94.81 95.01 99.36 98.6598.72
 100 90.87 91.25
 40 35.2 36.42 36.59 37.41 38.28 38.08 37.14 36.8 36.06 35.74
 80
 Quarantine 3/14 30
 60 28.26 28.6 29.68
 2027.12 27.26 26.19 26.06 26.17 26.62 26.74
 40
 19.25 19.53 19.7 19.87 20.04 19.94 16.23 15.56 16.22 16.3 10 Quarantine 3/23
 20

 0 0
 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16- 23- 30- 6-Apr 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16- 23- 30- 6-Apr
 Mar Mar Mar Mar Mar Mar
 Fixed broadband Mobile broadband Fixed broadband Mobile broadband
 18
Note: The percentages indicate the change in average speed in the last month Source: Ookla/Speedtest

SOCIAL ISOLATION AND QUARENTINE HAS RESULTED IN AN INCREASE IN TRAFFIC, WITH A REDUCTION OF
 DOWNLOAD SPEEDS (AS MEASURED IN MBPS) (II)
 Malaysia (Fixed: +1%, Mobile: -15%) Morocco (Fixed: -29%, Mobile -8%)
 90 40
 80 35
 83.87 83.07 85.68 84.03 83.66 84.55
 70 79.96 79.91 82.1183.03 3033.45 33.93 33.56 33.2
 60 31.94 32.63
 25 29.32 29.4
 50 Quarantine 3/18 25.95 27.33
 40 20
 30 1518.04 18.04 17.82 17.7 18.29 18.36
 20 10 14.09 12.66 12.75 12.97
 1022.86 21.81 21.96 21.85 21.48 22.48 17.69 16.07 18.0818.28 5
 0 Quarantine 3/9
 0
 3-Feb 10- 17- 24- 2-Mar 9-Mar 16- 23- 30- 6-Apr 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16- 23- 30- 6-Apr
 Feb Feb Feb Mar Mar Mar Mar Mar Mar
 Fixed broadband Mobile broadband Fixed broadband Mobile broadband

 South Africa (Fixed: +15%, Mobile: -20%) Turkey (Fixed: -9%, Mobile -10%)
 40 35.36 34.93 35.12 35.99 35.44 50
 3532.59 32.22 33.2 30.91 38.92
 28.29 4034.37 34.01 34.29 35.02 34.4
 30 31.26 29.24 30.12 31.52
 30.89 30.9 31.54
 25 30.6 30.37 30.27 28.94 27.54 28.78 30
 25.87
 20 28.06 28.82 29.54 27.29
 Quarantine 3/26 2025.23 25.41 24.81
 15 23.1 22.34 22.33
 10 10
 5 Quarantine 4/11
 0 0
 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16- 23- 30- 6-Apr 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16- 23- 30- 6-Apr
 Mar Mar Mar Mar Mar Mar
 Fixed broadband Mobile broadband Fixed broadband Mobile broadband
 19
Note: The percentages indicate the change in average speed in the last month Source: Ookla/Speedtest

IN ADDITION, THE INCREASE IN THE NUMBER OF DEVICES CONNECTED IN THE HOUSEHOLD HAS CREATED A
CONGESTION WITHIN THE WI-FI ROUTERS OPERATING IN UNLICENSED SPECTRUM

 Global: Increase in Wi-Fi Traffic (December 2019-April 2020)

 Source: Assia (2020)

 20

THE COUNTRIES THAT HAVE A HIGHER LEVEL OF ULTRABROADBAND INFRASTRUCTURE (FTTH, DOCSIS 3.0)
 DEPLOYED APPEAR TO BE HANDLING BETTER THE INCREASE IN TRAFFIC

 Impact of COVID-19 Induced Traffic Increase on Latency and Speed
20.00% 40.00%

15.00% 30.00%

10.00% 20.00%

 5.00% 10.00%

 0.00% 0.00%
 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00

 -5.00% -10.00%

-10.00% -20.00% y = 0.0011x + 0.0055
 y = -0.0009x + 0.0149 R² = 0.1418
 R² = 0.1965
-15.00% -30.00%

 Horizontal axis: Ultrabroadband subscribers/households Horizontal axis: Ultrabroadband subscribers/households
 (2018) (2018)
 Vertical axis: Change between average latency Nov 2019- Vertical axis: Change between average speed Nov 2019-
 Jan 2020 and March 2020 Jan 2020 and March 2020

 The higher ultrabroadband penetration the less The higher ultrabroadband penetration the
 increase in latency from the level before the less decline in download speed from the level
 pandemic before the pandemic
 Sources: Ookla/Speedtest; IDATE; Telecom Advisory Services analysis 21

THE DIGITAL INFRASTRUCTURE OF DEVELOPING COUNTRIES HAS TO UNDERGO SOME INFRASTRUCTURE AND
SPECTRUM CHANGES TO HANDLE THE INCREASE IN TRAFFIC

 • There is enough backbone unlit fiber and the
 The backbone and distribution possibility of upgrading electronics equipment to
 networks have the capacity to accommodate the growth in traffic
 adapt to increase in traffic • However, over time countries should accelerate
 deployment in distribution

 • Mobile operators have experience in deploying base
 Temporary assignment of stations to respond to peaks in traffic
 spectrum coupled with a • However, It is important to relax the municipal permit
 relaxation of base station regime to allow operators to respond to surges in a
 deployment permits are timely manner
 • Temporary spectrum assignment help address traffic
 necessary steps to handle peaks
 congestion

 It is important to consider the • The increase in household traffic creates congestion
 assignment of additional at the Wi-Fi router which requires an increase in
 unlicensed spectrum to handle unlicensed spectrum assignment
 Wi-Fi congestion

 22

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 23

THE INTERNET IS ONE OF THE FUNDAMENTAL LEVERS TO FACE THE PANDEMIC IN DEVELOPING COUNTRY
 HOUSEHOLDS

 Developing Countries: Internet Adoption (2019)
 Internet use 100%

 under pandemic 90% 86%
 82%82%82%82%81%
 conditions 80% 79%77%
 77%
 72%71%
 70%69%
 70% 68%66%
 • Massive shift to 64%
 61%61%
 telecommuting 60% 57%57%56%
 53%
 51%50%
 • Distance learning to 50%
 face schools 44%
 42%41%
 40%
 closings 37%
 33%
 30%
 • Isolation mitigant to 30%
 face quarantine 21%
 19%17%
 20%
 • Possibility of 15%
 12%
 acquiring goods via 10%
 3%
 e-commerce 0%
 • Access to health
 Chile

 Paraguay
 Philippines
 Uruguay
 Argentina

 Pakistan

 Bangladesh
 Panamá

 India

 Burundi
 Côte d'Ivoire
 South Africa
 Malaysia

 Tanzania

 Madagascar
 Zimbabwe
 Vietnam
 Guatemala

 Kenya
 Perú

 Honduras
 Nigeria
 Dominican R.

 Brazil

 Thailand

 Bolivia

 Indonesia
 Colombia

 Senegal

 El Salvador
 Costa Rica

 México

 China

 Angola
 Ecuador
 OCDE

 care information

Note: The latest data provided by the ITU are from 2017 or 2018 depending on the country. The data from 2019 have been extrapolated
based on last year’s growth rate with information from the ITU.
Source: International Telecommunications Union; Telecom Advisory Services analysis 24

HOWEVER, HIGH INTERNET ADOPTION IN THE DEVELOPING WORLD DOES NOT INDICATE A HIGH LEVEL OF
HOUSEHOLD RESILIENCE

 The digital divide indicates that • In some countries, Internet adoption is much lower
 a portion of the population tan the regional prorated average
 cannot benefit from the Internet • National statistics hide important rural digital divide
 to mitigate the effects of the (Brazil-2017: urban: 65.1%, rural: 33.6%)
 pandemic
 • PC adoption per household in Latin America is
 44.89%, in Africa 8.45% and in Asia Pacific 37.35%
 In those countries that have
 (source: UIT)
 adopted the Internet, limited • In its majority, this represents one PC per household
 penetration of devices (e.g. PCs) (which limits simultaneous use by parents and
 represent a usage barrier children)
 75%
 70%
 65%
 Facebook 60%
 Internet use in the developing adoption 55%
 world is primarily linked to social (2019)
 50%
 network Access and 45%
 communications 40%
 35%
 30%
 30% 40% 50% 60% 70% 80% 90%
 25
 Internet adoption (2019)

MOST COUNTRIES IN THE DEVELOPING WORLD DEPICT A LOW LEVEL OF DIGITAL HOUSEHOLD RESILIENCE, WHICH
 WILL REQUIRE A LONG TERM EMPHASIS IN USAGE TRAINING

 Number of Developing Countries: Digital Household Resilience Index (2019)
 Healthcare apps 60
 downloaded per 53.8
 population
 (Source: App 50
 Annie)
 42.8
 41.1 40.6
 Number of 40
 Educational apps 33.9 33.2
 downloaded per
 Digital population
 31.7
 29.1 28.6
 30
 Household (Source: App 25.6

 Resilience Annie) 23.3 23.3
 22.5 22.2 21.8

 Index Number of Fintech
 20
 16.9 16.4
 14.4
• Composite platforms per 12.8
 11.7 11.5 11.4

 index 1,000,000 9.8
 10 8.7 8.2
 population
• Min-max 6.2 5.7
 5.2
 (Source: 3.8 3.4 3.1 3.1
 2.7 2.3 2.1
 normalization Crunchbase)
 1.8 1.7 1.6 1.6 1.6 1.5 1.1
 0.3
• 30% weight 0
 Chin a

 Angola
 Bolivia
 Mexico

 Madagascar
 Ecuad or
 Thailan d

 Cameroon
 Guatemala
 El Salvad or

 Mozamb iq ue
 South Africa
 Indonesia

 Kenya

 Zimbabwe

 Bu ru ndi
 Colombia
 Brazil

 Peru

 Pakis tan

 Malawi

 Zambia
 Domin ican R.
 Malaysia

 Vietnam

 Sri Lan ka

 Tanzania
 Bangladesh
 Chile

 Argentina

 Bu rkina faso

 Uganda
 Philippines

 Nigeria
 India

 Ben in
 Côte d'Ivoire
 Hond uras
 Panama

 Rwanda
 Paragu ay

 Senegal
 OCDE

 for each E-commerce as
 indicator and percentage of
 10% fintech total retail trade
 (Source:
 Euromonitor) Source: Telecom Advisory Services analysis
 26

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 27

THE SUPPLY CHAIN IS THE FOUNDATION OF THE PRODUCTION SECTOR – ITS EFFICIENT FUNCTIONING IS DEPENDENT
 UPON THE INTERACTION OF MULTIPLE STAKEHOLDERS
 Main stakeholders of a logistics chain
 SUPPLIERS DISTRIBUTION
 CHANNELS
 Tier 1 MANUFACTURER

 CUSTOMERS
 Retailers
 suppliers Inbound Outbound
 logistics Manufacturing logistics Wholesalers

 Tier 2 eCommerce
 suppliers platforms

 SUPPLY CHAIN ENABLERS
 Logistics Service Providers

 Carriers

 Gateway Operators/Infrastructure
 Customs Agencies

 Technology providers
 Financial Services

Source: Calatayud, A. y Katz, R. (2019). Cadena de Suministro 4.0: Mejores prácticas internacionales y Hoja de Ruta para
 28
América Latina. Banco Interamericano de Desarrollo y Foro Economico Mundial

DIGITIZATION IS A CRITICAL COMPONENT OF THE EFFICIENT OPERATION OF A SUPPLY CHAIN

 § Manufacturers need have conducted their digital transformation to handle digital purchase orders
 of inputs and they have to be ready to interact with logistics firms for the for their delivery
 § Transportation firms need to dispose of tracking information to monitor cargo in transit
 § Logistics freighters have to be ready to interact with port operators and customs agencies to handle
 the automated processing of foreign trade documentation, inspection, etc.
 § Port operations have to be sufficiently digitized to be have to route trucks and speed up upload
 and download operations
 § The last mile of urban distribution has to have the capacity of addressing traffic congestion
 § In sum, all stakeholders in the logistics chain have to have and advanced level of digitization to be
 able to interact among themselves

 29

ENTERPRISE TECHNOLOGY ADOPTION IS HIGH RELATIVE TO ASSIMILATION OF TECHNOLOGY IN SUPPLY CHAIN
 OPERATIONS

 Developing Countries: Percent of Enterprises Developing Countries: Percent of Enterprises
 connected to the Internet (2018) using the Internet to acquire inputs (2018)
100 96.4
 94.6 94.3 94.2 94.0 93.9 93.4 100
 92.8

90 86.2 90
80 80
70 67.8
 65.9
 64.3
 70 66.0

 58.7
60 54.3
 60
50 46.2
 44.0
 50 46.2 45.8
 41.8
 38.4 37.0
40 40
 31.9
 30.1 28.8
 28.5
30 27.5 26.9
 30 26.0
 24.1
 22.2
 18.3 19.5
20 20 15.2 14.2 13.9
 13.5 12.2 11.9
 9.9
 8.1
10 10 6.0

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 In oire

 re
 ga

 In azi

 do
 Ca and

 d
 bi

 ny

 ny
 in

 in

 di
 ric
 lan

 lan
 oo

 oo
 go

 go
 g
 an

 an
 oi
 a

 d
 Pe

 Pe

 i
 an
 So Ch

 Ch
 ne
 r

 Cô ene

 Cô ne
 ay

 ay
 ex

 ex
 m

 So m
 In

 In
 Ch

 Ch
 nt

 nt
 Br

 Br
 ua

 ua
 Ke

 Ke
 ug

 ug
 Af

 Af
 n
 Iv

 Iv
 er

 er
 nz

 nz
 ai

 ai
 al

 al
 lo

 lo
 M
 ge

 ge
 do
 h

 h
 S

 Ca
 te

 te
 Note: The difference between countries is mainly due to differences in survey sampling approaches (e.g. inclusion or not of microenterprises)
 Sources: Argentina. INDEC; Brasil. CETIC.; Chile. Ministerio de Economía, Fomento y Turismo. División de Política Comercial e Industrial; Colombia. Ministerio TIC y
 Cámara de Comercio de Bogotá; Ecuador. Instituto Nacional de Estadística y Censos. Perú: Instituto Nacional de Estadística e Informática; Estimación TAS en base
 a datos de Eurostat and UNCTAD; Telecom Advisory Services analysis. 30

WHILE MOST COUNTRIES HAVE IMPROVED THEIR LOGISTICS PERFORMANCE, THEIR LEVEL LAGS THAT OF
 ADVANCED ECONOMIES

 Latin America and the Caribbean: Index of Latin America Time required to process foreign trade
 Logistics Performance (2007 – 2018) documentation (2018, in hours)
4.0
 Singapur 3
 OECD (2018): 3.74 2
3.5 3.32 3.28
 3.05 2.99 2.94 Países Bajos 1
3.0 2.89 2.88
 2.78 2.79 1
 2.69 2.69 2.66
 2.58 2.6 2.52
2.5 2.41 2.36 36
 2.23 Paraguay 24
 2.11
2.0
 México 18
 8
1.5
 Colombia 64
1.0 60

0.5 Brasil 48
 12
0.0
 Argentina 192
 30
 Co ras
 Pa do r

 ca
 Ho uay

 Ja R.
 at a
 M a

 Bo i
 Ur ala
 ico
 Ar h ile

 S a il

 Ec l a
 Pa na

 ru

 ne r

 ia
 sta y

 in a

 it
 Ve ad o

 Gu Ric
 Co gu a

 m bi
 m

 El raz

 e

 liv
 Ha
 ai
 Pe

 n
 i

 ex

 em

 u
 zu
 nt

 Do o m
 na

 ua

 ug
 C

 ica

 m
 B

 nd
 lv

 ra
 ge

 l

 0 50 100 150 200 250
 2007
 Improvement between 2007 and 2018 Importación Exportación
 Decline between 2007 and 2018

 Source: World Bank. Logistics Performance Index (2007-18) Source: World Bank. Doing Business 2018
 31

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 32

STATE DIGITAL RESILIENCE IS CONCENTRATED AROUND LARGE DEVELOPING COUNTRIES

 State Developing Countries: State Digital Resilience Index (2019)
 administration 80
 • Ease of doing
 business
 70 67.3
 • Ease to
 conduct 62.7
 59.7
 foreign trade 60 57.4
 54.5
 • Logistics 52.8 52.5
 50.2 50.1 49.2
 Performance 50 48.8 47.9
 47.3
 • (Source: 44.5 44.3

 State World Bank) 40.3 40.0
 40 38.0 37.9 37.9
 Digital 36.8
 35.6 35.4 35.2
 34.5
 32.7
 Public service 31.5
 Resilience 30
 29.3 29.0 28.7
 platforms
 Index • E-government
 25.7
 24.5 24.4 24.2
 22.2 22.1 21.8
 20.5 20.2
• Composite development 20 18.5

 Index
 index • Quality of
 13.3 12.5

• Min-max Government
 10
 normalization sites
• 50% weight • National 0
 Chin a

 Angola
 Bolivia
 Mexico

 Madagascar
 Ecuad or
 Thailan d

 Cameroon
 Guatemala
 El Salvad or

 Mozamb iq ue
 South Africa

 Indonesia

 Kenya

 Zimbabwe

 Bu ru ndi
 Colombia
 Brazil

 Peru

 Zambia

 Pakis tan
 Domin ican R.
 Malaysia
 Uruguay

 Vietnam

 Sri Lan ka

 Tanzania
 Bangladesh
 Chile

 Argentina

 Botswana
 Uganda
 Philippines

 Nigeria
 India

 Ben in
 Côte d'Ivoire

 Hond uras
 Panama

 Paragu ay

 Senegal
 OCDE

 for each Telemedicine
 pillar Plan
 • (UNDP, WHO)

 33

HIGH STATE RESILIENCE INDEX IS CORRELATED WITH THE CAPACITY TO IMPLEMENT A WIDE COVID-19 TESTING
PROGRAM

 Correlation between the State Resilience Index and logarithm of number of
 COVID-19 tests by 100,000 population (2020)
 10
 Logarithm of number of COVID-19 tests by

 9
 8
 100,000 population (2020)

 7
 6
 5
 4
 3
 2
 y = 3.5901ln(x) - 8.1332
 1 R² = 0.5031

 0
 0 10 20 30 40 50 60 70 80 90
 State Resilience Index (2020)

 Source: Ourworldindata.org; Telecom Advisory Services analysis

 34

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 35

THE ESTIMATION OF THE EFFECT OF THE PANDEMIC ON THE LABOR FORCE IS CRITICAL TO UNDERSTAND COVID-19
SOCIAL IMPACT

 § What is the magnitude of the changes caused by the pandemic as measured by the number of
 workers who now work from home?
 § Which sectors are most- and least-affected?
 § How many workers can continue working through telecommuting?
 § What does this situation look like in developing countries?

 Analysis of Statistics from Chile
 • Chile’s National Socioeconomic Characterization Survey (CASEN) carried out by the Ministry of Social
 Development in 2017
 • The survey provides a dataset of more tan 200,000 which represent (through expansion codes)
 the total Chilean workforce, classified according to 387 occupations

 36

THE ANALYSIS DEFINES A PROBABILITY THAT EACH OCCUPATION HAS TO CONTINUE WORKING AT ITS WORKPLACE
 OR NOT, AND FROM THOSE THAT CANNOT, WHETHER THEY CAN WORK THROUGH TELECOMMUTING

 Telecommuting impact analysis methodology

 Examples
 • Health care workers
 Yes • Food processing workers
 • Police
 • 20.56%
 • 1,610,241
 Do they have to workers • Information
 387 Yes
 continue working workers
occupations
 at their • 28.95%
• 7,830,958 workplaces? Can they • 1,801,187
 workers continue to work workers
 No
 through
 • 79.44% telecommuting?
 • 6,220,717
 workers • Manufacturing
 No workers
 • 71.05% • Construction
 • 4.419,530 workers
 Source: Encuesta CASEN; Telecom Advisory Services analysis
 workers
 37

THE ANALYSIS BY EDUCATIONAL AND INCOME LEVELS INDICATES THE DISPROPORTIONATE IMPACT OF THE
 PANDEMIC ON THE MOST VULNERABLE SOCIAL GROUPS

 By educational level By income level
 Total No Primary Secondary Tertiary 1st 2nd 3rd 4th 5th
 education education education education quintile quintile quintile quintile quintile

 Workers that to
 continue work at 1,610,241 169,614 384,599 676,925 369,701 192,495 342,862 392,459 407,535 274,586
 heir workplaces

 Workers that do
not work at their 1,801,187 29,828 98,872 429,245 1,234,063 61,732 149,758 267,170 436,918 885,610
 workplace but
can telecommute

Workers that do
not work at their 4,419,530 516,194 1,098, 905 1,819,559 957,042 604,999 985,042 1,080,271 1,056,496 673,520
 workplace and
 cannot
 telecommute
 Source: Encuesta CASEN; Telecom Advisory Services analysis 38

AGENDA

• Digitization and socio-economic resilience facing pandemics

• The state of digitization in developing countries

• Resilience of digital infrastructure

• Resilience of digital households

• Resilience of digital production

• Resilience of the State

• Digitization and social resilience

• Policy implications

 39

IN SUM, THE RESILIENCE OF DEVELOPING COUNTRIES FACING THE PANDEMIC BASED ON THEIR DIGITIZATION LEVEL
INDICATES SOME STRENGTHS AND WEAKNESSES

 Strengths Weaknesses
 • Enough unlit fiber in backbones • Need to reduce infrastructure deployment regulation
 • Operators can address traffic peaks by surgical to increase response capability
 Network deployment of base stations • Increase unlicensed spectrum assignment to reduce
 resilience • Temporary assignment of spectrum helps Wi-Fi congestion
 address congestion problems • Emphasize ultrabroadband deployment in distribution

 • High adoption of Internet in individuals and • Digital divide in rural areas
Household households, with a preponderant use for social • Limited PC adoption
resilience networking and communications • Limited use of educational apps and e-commerce

Production • High adoption of Internet in enterprises
 • Limited technology adoption in business processes
 • Limited digitization in the supply chains
resilience

 State • High resilience of public sector
 • Lag in state resilience in nations with limited
 digitization
 resilience

 Social • Telecommuting capacity concentrated in • High potential unemployment due to the lack of
 population with secondary and tertiary telecommuting concentrated in lower income social
 impact education and higher income quintiles groups
 40

PUBLIC AND PRIVATE SECTORS, WITH THE SUPPORT OF CIVIL SOCIETY, MUST COLLABORATE AND WORK TOGETHER
TO PROMOTE THE ENHANCEMENT OF CERTAIN COMPONENTS OF THE DIGITAL ECOSYSTEM

 § Accelerate the deployment of a large number of base stations for mobile broadband, reducing the
 permit requirements for the deployment of antennas
 § Temporarily allocate additional spectrum to mobile operators to face traffic spikes.
 § Require video streaming service providers to reduce traffic volume generated from high definition
 content.
 § Consider the need to increase unlicensed spectrum in the upper 5 GHz and 6 GHz bands in order to
 resolve Wi-Fi router bottlenecks.
 § Promote platform development innovation in order to improve supply chains. Key activities include
 stimulating technology companies to develop platforms that can improve the efficiencies between
 logistics providers and transportation service providers
 § Encourage enterprises to further digitize business processes in order to increase the percentage of the
 workforce that can work remotely
 § Invest in the training of the most vulnerable population groups in order to decrease unemployment rates
 § Address some of the digital divide factors by providing devices (PCs, tablets, Wi-Fi modems, subsidized
 broadband service) to vulnerable consumers, and combine with distance learning training on e-education
 and telemedicine
 41

IT IS CRITICAL THAT COUNTRIES BEGIN IMMEDIATE WORK ON A DIGITAL RESILIENCE PLAN TO ADDRESS FUTURE
PANDEMIC DISRUPTION

 § Conduct a comprehensive diagnostic of country resilience
 • Infrastructure (deployment, service quality, Stress testing of current infrastructure deployed)
 • Components of digital divide (urban vs. rural, income groups, large enterprises vs. SMEs)
 • Assessment of applications and usage levels across social groups
 • Evaluation of level of digitization of production (by sector and enterprise size, entailing both
 technology adoption and assimilation in business processes)
 • Resilience of state operations (administrative processes and delivery of public services)
 § Develop a plan to address shortfalls at each potential points of failure
 • Infrastructure deployment (backbone and distribution networks, spectrum availability – licensed and
 unlicensed)
 • Initiatives to address all components of digital divide
 • Training and stimulation of consumer apps
 • Concurrent efforts with private sector to stimulated digital transformation of production
 • Initiatives to address shortfalls in state operations
 42

TELECOM ADVISORY SERVICES, LLC

For further information please contact:

Raul Katz, raul.katz@teleadvs.com, +1 (845) 868-1653
Telecom Advisory Services LLC
139 West 82nd Street, Suite 6D
New York, New York 12581 USA