The inter-American Development Bank (IDB) has urged Latin American countries to build stronger internet infrastructure in order to reap the dividends of cloud computing, which, the bank says, is vital to the success of the digital economy.
Cloud computing represents ‘a unique opportunity for regional governments to increase productivity in the private sector’, the bank has stated in a study on the impact of the technology on regional economies.
To leverage the benefits of cloud services and new technology developments, the bank said, governments should develop policy frameworks that seek to build trust in new technologies and address concerns around data protection, cybersecurity, financial market regulation, cross-border data transfers, data privacy, and how to skill people for the future world of work.
Enabling the free flow of data across borders is critical, said the bank, warning that countries that seek to limit cross-border data flows through localization policies or data sovereignty requirements will face negative economic consequences.
McKinsey Institute estimated in 2016 that cross-border data flows contributed nearly US$2.8 trillion to the global economy in 2014 by enabling the flow of goods, services, and other resources. Similarly, the World Bank found that data localization requirements can reduce the GDP by up to 1.7%, investments up to 4.2%, and exports by 1.7%.
Cloud services enhance transparency, enabling government agencies to meet mission-critical objectives and to innovate, the bank noted. Moreover, it leaves little room for corruption.
However, analysts say cybersecurity is the huge barrier for the success of cloud, with Latin America being one of the worst victims of cybercrime.
Countries can develop safeguards against cyber attacks by modernizing IT infrastructure and legal framework, says the bank, emphasizing that ‘cloud computing is one of the main technologies leading the transformation’ to the digital economy.