Opportunities and Challenges of Industries 4.0 and 5.0 in Latin America

Abstract

The Fourth Industrial Revolution is transforming global industries. However, Latin America faces significant challenges in adopting these technologies. Particularly, small- and medium-sized enterprises constitute the backbone of the economy in the region. This study analyzes the technological gap between Latin America and more developed regions, focusing on public policies, infrastructure, and gap-closing training. Based on a systematic literature review and secondary data analysis, this research highlights key indicators such as digital infrastructure, investment in research and development, and the effectiveness of government strategies in promoting Industry 4.0 and Industry 5.0. Results reveal that Latin America lags behind Europe and Asia in applications related to Internet of Things, cloud infrastructure, and artificial intelligence. However, there are opportunities for improvement through targeted public policies, increased investment in research and development, and enhanced collaboration between the public and private sectors. The study concludes that bridging the digital divide requires a holistic approach that includes improving infrastructure, fostering digital skills, and creating favorable regulatory environments. This research stands out from similar studies by providing a detailed analysis of the regional barriers to adopting Industry 4.0 and Industry 5.0 and offering concrete recommendations for policymakers.

1. Introduction

Industrial revolutions have marked significant milestones in industrial development throughout history. Each revolution has been driven by one or a set of enabling technologies that enhance industrial transformation and affect various sectors. Figure 1 shows the unique characteristics of each industrial revolution and the impacts [1,2].

The Fourth Industrial Revolution (4IR) is defined by cyber–physical systems (CPSs), artificial intelligence (AI), data analytics, and the integration of processes and business sectors [1,2]. The 4IR, with its hyper-connectivity through the IoT and smart devices, has already revolutionized our engagement with technology.

The upcoming Fifth Industrial Revolution (5IR) is expected to redefine the relationship between humans and machines, fostering a more collaborative approach [3]. The 5IR will further enhance this connection, replacing traditional smart devices with brain–computer interfaces and ushering in a transformative evolution in our interaction with technology [4].

In Latin America (LA), the transition from Industry 3.0 to Industry 4.0 (I4) is underway, although the level of implementation varies between countries in the region [5]. This transformation is essential to boost economic development and strengthen competitiveness in a globalized market. The advanced technologies characterizing this new industrial era enable optimization of production processes, increased efficiency, and reduced operating costs [6]. In addition, they improve product quality and customization, fostering innovation, which in turn generates new business and employment opportunities.

The adoption of I4 addresses local challenges, such as improving infrastructure and workforce training, thus accelerating sustainable growth and regional development [7]. This strategic change would place Latin America at the forefront of industrial innovation and integrate the region into the global landscape of research and the application of the principles of I5.

In LA, the development of I4 and I5 is underway. One of the factors that generates this technological backwardness is linked to the deficit in the adoption of 4IR. Some technologies are the Internet of Things (IoT), robotics, cloud processing, AI, and others [5,6]. These technologies aim to transform the way companies operate by enabling the integration between enterprise and plant operations, interconnecting various departments and devices within the industrial environment [6]. The interconnection between enterprise systems, commonly known as vertical integration, facilitates access to process data or any industry layer, allowing performance validation, process optimization, quality tracking, and informational analysis. In contrast, integration between different process areas is called horizontal integration. A reference model for the industry of this business integration is the reference architecture model I4 (RAMI 4.0) [8], which can be visualized in Figure 2.

The adoption of I4 and I5 brings several significant benefits, such as reducing production cycles, processing customer needs, and automating different processes, leading to the emergence of smart factories [9]. However, given the novel nature of this scenario, it is necessary to develop a solid strategy for its implementation in organizations, especially small and medium enterprises (SMEs), which represent a fundamental part of business ecosystems [10]. Therefore, they are a key component in global digital transformation processes. Their significance in the economy of each country and region makes them a reference point for the adoption of new technologies and processes [11].

In countries in LA, specifically Colombia, SMEs represent 90% of businesses and are responsible for employing more than 65% of the national workforce [6,12]; the transition to I4 presents challenges, especially in a region where the use of digital technologies in the supply chain lags behind other parts of the world [4,13]. The transition to I4 is necessary and aims to improve production processes and company interconnection. In this sense, government support and collaboration between the public and private sectors are essential to overcome these barriers and fully realize the potential of I4 for the economic and social development of the country [10].

A comprehensive public policy response is required to address the multidisciplinary challenges posed by the transition to the Fourth Industrial Revolution (4IR) [10]. A successful transition to a highly technological industrial environment requires factors such as job training, skill development, economic promotion, and policy decisions regarding environmental sustainability [14].

This paper aims to analyze the gap between developed countries and the implementation situation of 4IR in LA. In addition, the article shows the impact of public policy on the adoption of emerging technologies, research, and development (R&D) and their effect on the growth and competitiveness of SMEs. Furthermore, the document presents an evaluation on the adoption of various technologies of the industrial revolution and the impact of investments in research and development on a region’s growth.

This article presents contributions that focus on analyzing the impact of emerging technologies on the digital transformation of industry, the state of implementation of these technologies, and investment, with a particular focus on Latin America. A key contribution of the study is the identification of specific barriers faced by small and medium enterprises (SMEs) in the adoption of the 4IR, as well as recommendations for public policies and cross-sector collaboration to facilitate their digital transformation. It also provides a forward-looking perspective on the transition to the 5IR, highlighting the importance of human–machine interaction in the development of innovative and sustainable factories.

2. Background

The Third Industrial Revolution (3IR) was driven by the transformation of energy and communications, largely due to the impact of the Internet revolution. By the end of the 1990s, software and hardware development capable of improving productivity and increasing profits for companies was booming, marking the path toward a silicon-based economy. Late capitalism was consolidating worldwide with the aim of rapidly transitioning from an oil-based economy to an innovation-based model. This involved significant transformations in microelectronics, which in turn drove the next major transformation: informatics. The shrinking size of electronic components has led to a significant increase in computational power, driving the growth of computing, telecommunications [15,16], and the impact these have had on all human processes. Similarly, advances in biotechnology and the discovery and use of new materials have led to the evolution of renewable energy generation systems.

In the Latin American context, this revolution was affected by external debt, the manufacturing trade deficit, the low level of foreign direct investment, and the shortcomings of the industrial model due to technological precariousness and low vertical integration. As a result, the 3IR arrived in Latin America later than in highly industrialized countries, and it was necessary to incorporate cultural and public policies aimed at the transition to the so-called era of access. This era, primarily driven by innovation, requires decentralized production using digital networks and platforms to promote distributed production, reducing the need for large industrial infrastructures. Similarly, it encompasses the enhancement of product innovation and the adherence to play ethics. Unlike the work ethic of the industrial era, the contemporary economy encourages the commercialization of cultural experiences, presenting a promising opportunity for Latin America [17,18].

Thus, it is evident that the 3IR in Latin America has been distinguished by digital transformation. It has been driven by the convergence of technologies such as information technology, microelectronics, and telecommunications. Hence, it facilitates the integration of Latin American nations into the global economy. This has led to the creation of the information society, largely due to access to computers, smartphones, and the Internet, which has accelerated digitization, the adoption of the information economy, and contributed to the development of e-commerce, digital banking, and telemedicine.

Automation, driven by the 3IR, has displaced manual jobs and promoted jobs in technology and services, changing old work patterns, and focusing on developing technological skills to meet the challenges of the modern labor market [19]. However, significant barriers remain to universal access to digital technologies, limiting opportunities for equitable development, and it is recognized that public policies aimed at reducing this gap are essential to maximizing the benefits of the Third Industrial Revolution.

Over the past few years, the 4IR has been established in almost all industrial countries and is supported by technologies such as IoT, robotics, AI, cloud processing, and computing. The goal of implementing this technology is to increase productivity and achieve mass production. This 4IR has changed the global workforce. Likewise, there is a relevant interest in the 5IR applied to developed countries, which includes I4-enabled technologies and a social smart factory. This revolution seeks to create a society where the advantages of cyberspace are taken advantage of and integrated with the real world; Japan is transforming itself into one of the leaders of this 5.0 society [20]. For the past few years, the Japanese government has been working to transform their industrial economy into a knowledge-based economy where education focusing on scientific knowledge and innovation prevails.

The 5IR seeks to develop social potential. To achieve this goal, it becomes necessary to adopt new concepts of human–robot cooperation, which allow synchronized working in search of the welfare of the human component, focusing not only on economic benefits, agile industries, and global supply chains but also on social benefits [21]. However, despite all the benefits that can be gained from a 5IR, it is necessary to understand the situation of each country independently. Although developed countries already have highly technological industries and have internalized the concept of 4IR, the I4 cycle is not yet complete in countries such as Colombia. In addition, it is not clear how countries in LA could access the necessary enabling technologies. For this reason, a proper transition to a 5.0 society will only be possible once some problems related to local conflicts and globalization are solved. Furthermore, it is necessary that local government policies create the conditions for the full adoption of I4 by facilitating a proper transition to I5.

Higher education institutions (HEIs) are adjusting their academic programs to meet the demands of the 4IR and 5IR. They are approaching this concept as a social process, recognizing their fundamental role in training future professionals to drive progress in terms of productivity. These institutions align themselves with the goals of sustainable development while balancing productivity and sustainability. Therefore, the need for these adjustments must be understood [22].

The challenge posed by the 4IR and its evolution towards the 5IR requires the adaptation of HEIs. New educational models must be integrated to include the knowledge required by I4 and I5. Due to this, it is crucial to promote the development of new competencies in students, providing them with the necessary skills to face a labor market that demands customized technological solutions adapted to the specific needs of users [23,24].

In the case of I4, the concept of total quality management (TQM) was strengthened, aiming to reach more customers in a nearly personalized way. With a consumer-oriented approach, they establish relationships based on individual needs, leading to the widespread adoption of smart devices, IoT-based wearables, AI, and other products, increasing customer trust. It has also enabled companies to optimize their operations by controlling all processes, from purchasing materials to delivering the finished product to the end user. For these reasons, the concept of TQM ensured that products and services consistently met customer expectations under rigorous standards, leading to the global adoption of 4IR as an inevitable step toward 5IR [25].

Public Policies, Strategic Regulation, Infrastructure, and Information and Communication Technology Training

According to the 2022 Inter-American Development Bank (IDB) report on the Broadband Development Index in LA and the Caribbean [26], the implementation of public policies to close the digital divide in the region is a critical issue that requires analysis. This analysis is underpinned by a robust and structured methodology that takes into account three additional axes: strategic regulation, infrastructure, and information and communication technology (ICT) training (see

Table 1. Evaluation pillars.

Public policies: They describe the importance given to ICT development policies through laws and policies that foster their expansion and competition, driving technological growth.	Strategic regulation: They verify the development of strategic regulations by evaluating effectiveness indicators, such as the degree of concentration and competition in the fixed and mobile broadband market.
Infrastructure: It measures the state of digital infrastructures and the development of public–private agreements, the number of lines of different services, or investment in telecommunications.	Training: It measures the level of ICT skills through statistics on the level of education and ICT adoption in industry and households.

Own construction based on [26].

).

The evaluation of strategic regulation in the telecommunications sector requires a comprehensive approach. This evaluation involves an analysis of the regulatory frameworks in force in different countries in LA, including a documentary review of laws, decrees, and specific regulations. The focus is on aspects such as the promotion of competition, investment incentives, and public–private collaboration. The research found that the implementation of interviews with regulators, academics, and professionals in the sector provides an overview of the effectiveness of current regulations and the areas for improvement [26].

The analysis of public policies and the strategic vision for digital inclusion was carried out through a study of the national broadband plans of the countries in the region, evaluating their objectives, goals, concrete actions, and expected results. Government initiatives to digitalize public services were also investigated, including their scope, implementation, and impact on the population. In addition, data from international and local organizations were used to measure progress in broadband connectivity and the adoption of digital technologies.

The study carried out by the IDB [26,27] shows various surveys of various population groups, such as students, workers, and the unemployed, to measure their competence in the ICT sector and training needs. Access to courses and educational programs offered by HEIs and government institutions was also measured.

This analysis relies on data from multiple primary sources. They include official documents and publications from national governments and international organizations, as well as reports and studies from academic and research institutions. Additionally, expert interviews and testimonies in telecommunications, public policy, and ICT education provide valuable insights. Statistical data from institutions such as the Economic Commission for Latin America and the Caribbean (ECLAC) and the International Telecommunication Union (ITU) further support the findings. This analysis faces some limitations, such as the availability and quality of the data in certain countries and the heterogeneity in the implementation of regional public policies. Despite these limitations, the study offers a detailed and well-founded view of the strategies adopted and their impact on reducing the digital divide.

3. Methodology

The analysis of the implementation of 4.0 technologies in LA is carried out using a methodological approach based on a systematic review of the literature and the analysis of secondary data sources. The systematic literature review selected keywords such as ‘Industry 4.0’, ‘Industry 5.0’, ‘enabling technology’, ‘Latin America’, ‘digital transformation’, and ‘public policies’. These keywords were applied in searches within academic databases, including Scopus, Web of Science, and Google Scholar. The inclusion criteria focused on articles published in the last 10 years that addressed the implementation of 4.0 technologies in LA, excluding those that did not present data or focused exclusively on regions outside LA.

The selected articles were evaluated on relevance, methodology, and scientific rigor, ensuring that only high-quality studies were included. Subsequently, a thematic analysis was performed to identify the main trends, challenges, and opportunities for the implementation of I4 technologies in the region.

The secondary source analysis involved collecting data from various sources, such as statistics from the ECLAC, World Bank data, reports from government ministries and agencies, and public policy monitoring documents. These sources provided information on technology adoption, R&D investment, digital infrastructure, technological access, and industrial capabilities in LA. The data collected were analyzed using quantitative and qualitative methods. Quantitative analysis included descriptive statistics and trend analysis, while qualitative analysis focused on the content of policies and programs. The methodology followed to collect information is exemplified in Figure 3 for a better understanding.

A comparison was made between different countries in the region by evaluating the level of implementation of I4 in LA by selecting key indicators to assess the state of I4 in each country. These indicators include adopting digital technologies, investing in research and development, technological infrastructure, and government policies. The selection of these indicators allows for a complete and comparative assessment of each country’s progress in implementing I4, providing a clear view of the areas where each nation is progressing and those requiring further attention.

Data collected for each indicator and country were analyzed to identify patterns, trends, and significant differences. This detailed quantitative and qualitative analysis highlighted the variations in the adoption of digital technologies and investment in research and development between the different countries in the region. In addition, the available technological infrastructures and the implemented government policies were examined, which made it possible to identify the most effective strategies and common obstacles faced by countries on their way to industrial digitization.

The impact of public policies on the state of I4 was analyzed. A detailed analysis of the data collected for each country and their respective policies was conducted. The current state of I4 and industrial development was compared with respect to the public policies implemented, highlighting those that have had a significant positive impact. This approach allows for a better understanding of how public policies can influence the adoption and development of enabling technologies in the region, providing valuable lessons for future developments and initiatives.

In addition, a ranking was conducted to identify the 4IR technologies with the most significant impact in LA. For this purpose, examples of practical applications of these technologies in the region were compiled, allowing a concrete evaluation of their implementation. The technologies were classified according to their potential impact and level of adoption, providing a clear view of which technologies are the most influential and widely adopted in LA. This practical ranking not only highlights the most relevant technologies but also provides insight into how they can be used to drive industrial development in the region.

By applying this methodology, the study provides a comprehensive and well-founded analysis of the implementation of 4.0 technologies in LA. The results provide a solid basis for future research and the development of public policies and business strategies to increase the adoption of I4-enabled technologies in the region.

4. Results

Some observations can be seen and reflected in the co-occurrence network map, which extracts the most relevant terms or occurrences within the different articles. A second result that adds value is shown in

Table 2. Co-occurrence clusters.

Paper, Year	SDGs	AI	I4	ML	LA	Tech	Obs	MC
[28] Sarker, 2021	8,9	x	x	x		x		ML
[29] Fuller, 2020	9,12	x	x					I4
[30] Mohan, 2019	3,9,17	x		x	x			AI
[7] Torres-Samuel, 2020	9,17	x	x		x			LA
[31] Van Calster, 2019	3,9			x				ML
[32] Nguyen, 2021	9	x						AI
[33] Kato, 2020	4,9			x	x			LA
[34] Qadri, 2020	3,9	x						AI
[35] Nguyen, 2019	9	x		x			x	AI
[36] Salas, 2022	3,8,13,17		x	x	x			LA
[37] Wang, 2020	9	x	x	x				I4
[38] Bzdok D, 2018	3,9			x				ML
[39] Ardolino, 2018	9	x						AI
[40] Diez-Olivan, 2019	9	x	x					I4
[41] Valencia-Moreno, 2023	3,17			x	x			LA
[42] Cano, 2020	5,9,17		x			x		Tech
[43] Sun, 2019	9	x		x				ML
[44] De Caigny, 2018	9	x		x				AI
[45] Sun, 2019	6	x		x				AI
[46] Otchere, 2021	7	x		x				ML
		Clusters on the
		Co-occurrence map

Own construction.

, which explores the 20 most cited articles within the database (123 sources between articles and secondary information such as databases or technical studies issued by government entities) for this research.

According to the above, Figure 4 shows a co-occurrence map highlighting the trend of terms in line with those mentioned in the search equation selected for the search in secondary information sources. Additionally, the groups with the highest frequency of occurrence correspond to the 4IR-enabling technologies. The second most relevant group is where the search was emphasized (in this case, LA). The third group in relevance of occurrence corresponds to the terms that refer to the applications of 4IR-enabling technologies such as neural networks, prediction, and others.

Table 2 shows the selection of the 20 most cited articles within the database generated for the article. It highlights information such as the Sustainable Development Goals (SDGs) proposed by the United Nations (UN) and the clusters of occurrence of greater significance, some of which aimed to enable technologies of the 4IR, the search region, and others. The table presents the evaluation of AI, I4, machine learning (ML), technology (Tech), and obsolescence (Obs). In addition, the term MC refers to the main cluster.

An analysis of relevant variables is presented to establish critical factors about the implementation of 4.0 technologies in LA. It can help to establish gaps and propose strategies that improve the deficiencies evidenced by each country.

4.1. Industry 4.0 and 5.0 in LATAM—Indicators

Analyzing the impact of technologies specific to I4, broken down by region, it is found that the European region has a higher level of impact with technologies such as IoT (92%), AI (78%), cloud infrastructure (84%), and Big Data (68%), surpassing the Latin America region and the Asian region in all cases (see Figure 5).

In turn, when comparing LA with the Asia–Pacific region, it can be observed that in the latter, the use of IoT stands out the most (72%). In comparison, the technology with the lowest level of impact is Big Data, with 25%. In contrast, in the America region, the technology with the most significant impact is cloud infrastructure, with 65%, while the one with the lowest impact is IoT (45%). These evident differences allow us to identify which technological aspect each region has mainly leaned towards, highlighting that the use of IoT has taken on greater relevance in the regions of Europe and Asia, where the importance of the integration of multiple technologies and systems in the countries of these regions is evident.

These results present a broad view by region, grouping countries with different levels of development and particular socioeconomic characteristics. Therefore, they offer a first approximation of the use or appropriation of specific technological solutions, which will be analyzed in greater detail throughout this chapter to understand some particularities at the country level and their impact at the regional level.

Since there are several metrics to determine the progress of a country or region, the Inter-American Development Bank (BID) decided to develop a specific metric to determine the current status and development of broadband in LA and the Caribbean (IDBA). This index is based on the benefits to the population of having a good Internet connection, including improved productivity, the development of new sectors, the dissemination of culture, the quality of education and health systems, the efficiency of public services, the defense of cultural heritage, the creation of new jobs, and the diffusion of knowledge and social inclusion, among others.

Table 3. Estimated broadband investment gap in LAC based on country projections.

Country	Population (In Millions of People)	Population Density	%RBB Adoption	% MB Adoption	Capex MB +10% (MUSD)	Capex RBB +10% (MUSD)	Increase in Employment (In Thousands)
Argentina	44.5	16.26	23.10	68.9	261.54	2244.74	305.8
Bolivia	11.4	10.48	9.3	86.7	66.73	635.28	78.03
Brazil	209.5	25.06	19.4	95.9	1231.26	9431	1439.63
Chile	18.71	25.19	22	110.8	143.12	842.06	128.7
Colombia	49.65	44.75	16.4	71.4	291.84	1874.42	341.2
Costa Rica	5	97.91	20.5	87.3	29.39	139.66	34.4
Ecuador	17.1	68.79	13.9	56.7	100.42	552.88	117.4
El Salvador	6.42	309.88	9.7	77	37.74	86.60	44.1
Guatemala	17.2	160.95	3.5	17.1	101.38	374.31	118.5
Honduras	9.6	85.69	4.1	47.6	56.36	283.86	65.9
Mexico	126.2	64.91	18.4	82.5	741.75	4175.5	867.3
Nicaragua	6.5	53.73	4.4	55.2	38	229.27	44.4
Panama	4.2	56.19	13.2	78.4	24.55	145.77	28.7
Paraguay	7	17.51	10.5	69.7	40.89	344.47	47.8
Peru	32	24.99	9.1	80.6	188.03	1441.34	219.9
Dominican Republic	10.6	219.98	9.8	66.7	62.47	189	73
Uruguay	3.4	19.71	32.3	109.1	20.27	165.7	23.7
Venezuela	28.9	32.73	9.1	44.3	169.7	1203.2	198.4

Own construction based on [26].

shows the estimated investment projection for each country with a 10% margin of error. The table shows the percentages of adoption of residential broadband (RBB) and mobile broadband (MB). Additionally, it shows the investment needs in RBB and MB per country, in terms of capital expenditure (CAPEX), given in millions of United States dollars (MUSD).

Table 4. Estimated broadband investment gap in LAC based on OCDE projections.

Country	Capex MB OCDE (MUSD)	Capex RBB OCDE (MUSD)	Increase in Employment (OCDE)	% Rural Investments
Argentina	1759.1	3161.1	1243.72	20.69%
Bolivia	330.06	1771.17	301.73	56.25%
Brazil	4957	16,768.35	4177.8	30.95%
Chile	279.2	1278.24	260.92	29.03%
Colombia	1889.92	3895	1459.4	41.30%
Costa Rica	143.58	232.95	112.6	42.86%
Ecuador	797.9	1287.1	603.17	62.79%
El Salvador	223.28	237,97	191.16	52.60%
Guatemala	1207	1260.67	905.29	74.24%
Honduras	499	939	400.76	68.48%
Mexico	3980.21	7841.56	3141.27	42.86%
Nicaragua	307.68	751.55	252.71	67.58%
Panama	141.81	349.56	117.23	58.54%
Paraguay	271.74	919	222.64	64.77%
Peru	1044.71	4047.412	919.43	45.83%
Dominican Republic	433.89	517.47	353.65	39.71%
Uruguay	54.86	80.86	37.86	13.67%
Venezuela	1558.85	3378.53	1189.9	34.62%

Own construction based on [26].

shows the projection of the Organization for Economic Cooperation and Development (OECD), applying the same factors. These tables show the investment needs in each country, verified in terms of CAPEX and its adjustment according to OECD standards, for both RBB and MB, given in millions of United States dollars (MUSD). It also shows the need for infrastructure investment in the rural sectors and how these investments would positively affect the increase in employment for people [26]. Figure 6 shows the mentioned pillars and the weight attributed to each based on the variables that compose them.

From this analysis, it has been found that there is not enough information to compare LA and other regions regarding the development of I5. The lack of consolidated data on projects, innovations, or results associated with I5 represents a challenge for LA and an opportunity for growth. The lack of such information leads to the creation of science, technology, and innovation initiatives, in which emerging technologies are addressed to support human–machine interaction and improve productivity and social benefits.

Below is a brief description of the aspects evaluated for each pillar considered for the index above.

4.1.1. Public Policies and Strategic Vision (20%)

Adaptability of the legal framework for digital business: This subcomponent highlights the importance of a legal framework that adapts quickly to technological and market changes to foster a digitally active business environment.

ICT governance: It focuses on the effectiveness of government policies and their implementation to promote information and communication technologies essential for digital development.

Research and development spending: This section underscores the critical role of investment in R&D in fostering innovation and the development of new broadband technologies, inspiring a sense of potential for technological advancement.

Quality of public policies to promote the private sector: It measures the effectiveness of policies that support the participation of the private sector in expanding and improving broadband services.

4.1.2. Strategic Regulation (25%)

Fixed and mobile broadband subscription: This indicates the level of adoption of broadband services, considering both fixed and mobile, reflecting accessibility and affordability.

Effectiveness of the universal access and service fund: This subcomponent evaluates how effective initiatives ensure that all citizens can access Internet services, regardless of location or income.

Concentration of broadband operators: This seeks the level of market competition that can affect prices and the quality of service.

Allocation of mobile communications spectrum below 3 GHz: This is fundamental to improve the capacity and coverage of mobile networks.

4.1.3. Infrastructure (40%)

Mobile broadband coverage and fixed and mobile broadband lines per 100 inhabitants: These indicators show the physical availability of the broadband network at a national level.

Broadband lines with access to optical fiber and average access speed: These aspects are critical to assess the quality of the existing infrastructure and its capacity to support high data volumes and high speed, which are essential for modern applications such as streaming and the cloud.

International fixed broadband speed in bits/inhabitants and existence of Internet Exchange Points (IXPs): These correspond to the evaluation of the infrastructure’s capacity to handle international traffic and improve local interconnection.

4.1.4. Application and Training (15%)

Broadband affordability index and terminal price: These indicators reflect how affordable the average user can access broadband technology.

E-government development index and Internet users per 100 inhabitants: These indicators reflect the penetration of the Internet and how it is used in public services.

Gender equality in Internet use and digital skills among the working population: These are key indicators to measure digital inclusion and the ability of the population to use digital technology effectively.

4.2. Gap Analysis

Figure 7 shows one of the weaknesses in the region, namely mobile Internet access. In this case, it is possible to observe how, according to the data corresponding to the year 2020, the percentage of coverage in urban areas is higher than 90%, while in rural areas, it is less than 10%.

The above graph shows the limitations faced by countries with large rural areas, where agricultural production can see its competitiveness reduced compared to developed countries in the European or Asian region.

On the other hand, continuing with the analysis of the countries in the region and considering access to the Internet as a fundamental input today, it is estimated that, on average, only 69% of people in these countries have access to the Internet (Figure 8). This reflects the development of the region in multiple aspects, recognizing that the Internet is currently the means of connection for educational activities, social and cultural development, technological development, and the appropriation of technologies or systems to generate a more competitive industry.

Each country establishes guidelines and strategies to support development processes based on the appropriation of technology, knowledge, and other factors that allow the country to meet its goals. For this, each country has a universal service fund, which can be used to support the above processes. Figure 9 shows the bar chart of the progress of universal service funds in LA, which is a crucial indicator that highlights the importance that these countries have given in recent years to industrial and technological development processes.

This graph shows the increase in the use of universal service funds over the years, highlighting a growing use of these resources. The upward trend reflects a proactive investment in improving telecommunications infrastructure, especially in less developed or rural areas. This growth indicates a continued commitment to closing the digital divide, but also suggests that strategies must be monitored and adjusted to ensure the effectiveness of spending. However, if analyzed negatively, a constant increase can pose challenges in the saturation of funds or their efficient allocation, suggesting the need for impact assessments.

On the other hand, it is also key to analyze the behavior in recent years regarding the adoption of the Internet. As mentioned above, this also guides industrial development and technological assimilation processes in different countries. Therefore, Figure 10 presents a trend line graph of Internet adoption, where a trend analysis of the rural and urban population and the total equivalent of Internet adoption by region is highlighted. In this way, there are three points of analysis that separately or together allow us to establish the relevance of the Internet in the development of multiple aspects of the countries in the region.

The graph shows an increase in the adoption of the Internet in both urban and rural settings, although there is a significant gap between the two. Urban areas show a faster and wider adoption compared to rural areas. This analysis reflects the effectiveness of current policies in urban areas and highlights the need to focus more on rural areas to balance adoption. At the same time, the persistent gap underscores the difficulties in reaching the rural population, which can limit access to economic, productive, developmental, and educational opportunities in these areas. Reaching the rural population can limit access to economic, productive, developmental, and educational opportunities in these areas.

To understand more about LA development and evolution in digital transformation and technological assimilation, the following is an analysis of Internet access gaps in LA and Caribbean countries (LACCs) compared to other regions or communities of countries.

4.2.1. Fixed Connectivity Gap

Africa–LAC: The connectivity gap between Africa and LAC has continuously increased since 2007. In 2007, Africa was approximately 1.49 percentage points (pp) behind LAC regarding fixed broadband penetration. This gap has grown significantly, reaching around −14.29 pp in 2022, which indicates that while fixed broadband penetration in LAC has improved, Africa has not kept pace, widening the gap.

Asia and Pacific–LAC: The Asia and Pacific region has had a relatively small and fluctuating connectivity gap compared to LAC. Between 2007 and 2016, the gap ranged from −0.3 to −2.16 pp, but a positive trend has been observed since 2017. Since 2019, Asia and the Pacific have surpassed LAC regarding fixed broadband penetration, with a positive gap of 0.51 pp in 2022, which suggests that improvements in connectivity in Asia and the Pacific have been faster than in LAC in recent years.

CIS–LAC (Commonwealth of Independent States): The CIS region shows a consistent improvement trend, moving from a negative gap in 2007 (−0.79 pp) to a positive gap in 2022 (4.61 pp). This drastic change reflects a significant increase in fixed broadband penetration in the CIS region, surpassing LAC from 2012 onwards.

Arab States–LAC: The connectivity gap between the Arab States and LAC has also consistently increased, although less pronounced than in Africa. From −1.19 pp in 2007, the gap grew to −6.19 pp in 2022, which suggests that while both have improved, the Arab States have not progressed at the same rate as LAC regarding fixed broadband penetration.

Europe–LAC: Europe has maintained a significant and consistent advantage over LAC regarding fixed broadband penetration. The gap increased from 8.61 pp in 2007 to a peak of 18.88 pp in 2021, showing that Europe has made significant advances in fixed broadband connectivity compared to LAC.

North America–LAC: North America shows a considerable advantage over LAC, with a gap fluctuating around 20 pp over the years. The gap has oscillated slightly but has remained around this value, indicating a stable and persistent difference in fixed broadband penetration between the two regions.

OECD–LAC (Organisation for Economic Co-operation and Development): OECD countries have also maintained a significant advantage over LAC. The gap increased from 13.49 pp in 2007 to approximately 21.19 pp in 2022. This constant increase reflects that fixed broadband penetration has consistently improved in OECD countries, surpassing LAC.

EU27–LAC: Similar to Europe in general, the 27 countries of the European Union have shown a growing advantage over LAC. The gap increased from 10.08 pp in 2007 to 21.92 pp in 2022, which reflects significant and continuous improvements in fixed broadband penetration within the EU, significantly surpassing LAC.

The subsequent analysis offers a synthesis of the comparative processes referring to the Fixed Connectivity Gap:

• The connectivity gap has increased between LAC and most regions, with LAC lagging particularly behind Europe, North America, and OECD countries.
• The CIS region is the only one that has shown significant improvement, surpassing LAC regarding fixed broadband penetration.
• Africa and the Arab States have shown improvements but not at the same rate as LAC, resulting in a growing connectivity gap.
• Asia and the Pacific have shown a positive trend since 2017, surpassing LAC recently. This analysis highlights the need for specific policies and strategies to improve fixed broadband connectivity in LAC to close existing gaps and promote more equitable technological development.

4.2.2. Mobile Connectivity Gap

Africa–LAC: The connectivity gap between Africa and LAC consistently increased from −50 percentage points (pp) in 2014 to −90 pp in 2022. This increase indicates that the difference in fixed broadband penetration between Africa and LAC has widened considerably. Despite possible improvements in both regions, LAC has advanced more rapidly than Africa, widening the gap. The growing gap suggests an urgent need for specific policies and programs to improve broadband infrastructure in Africa.

Asia and Pacific–LAC: The connectivity gap has significantly decreased since 2014, from −19 pp to −1 pp in 2022, which reflects considerable progress in fixed broadband penetration in Asia and the Pacific, which are almost catching up with LAC. The reduction in the gap indicates that Asia and the Pacific are rapidly adopting broadband technologies, approaching LAC penetration levels. This could be associated with solid investments in infrastructure and favorable technological development policies in the region.

North America–LAC: The connectivity gap between North America and LAC decreased from 35 pp in 2014 to 17 pp in 2022. Although North America still maintains a considerable advantage, the reduction in the gap suggests that LAC is improving at a relatively rapid pace. The decrease in the gap indicates significant progress in LAC, although there is still a notable difference to close. The recent stabilization suggests that LAC is reaching more competitive levels regarding fixed broadband penetration.

OECD–LAC: The gap decreased from 35 pp in 2014 to 24 pp in 2022. Although OECD countries maintain a significant advantage, the gap has slightly reduced. The relative improvement in LAC indicates progress, but the persistence of a considerable gap underscores the need to continue strengthening broadband infrastructure and policies in the region.

EU27–LAC: The connectivity gap has fluctuated between 23 pp and 30 pp, stabilizing at 29 pp in 2022, which indicates that while there are annual variations, the European Union has maintained a consistent advantage over LAC. The stability of the gap suggests that similar advances in the EU are offsetting improvements in broadband connectivity in LAC. The persistence of a considerable gap highlights the need for continuous and possibly intensified efforts in LAC to reach EU penetration levels.

The subsequent analysis offers a synthesis of the comparative processes referring to the Mobile Connectivity Gap:

Africa–LAC: The widening connectivity gap between Africa and LAC is alarming and underscores the need for a renewed focus on improving broadband infrastructure in Africa.

Asia and Pacific–LAC: The positive trend towards gap reduction reflects substantial improvements in connectivity in Asia and the Pacific, suggesting a favorable environment for technological development in the region.

North America–LAC and OECD–LAC: Although the gap has decreased, these regions still maintain a significant advantage over LAC, highlighting the importance of continued investment in infrastructure and technological policies in LAC.

EU27–LAC: The stable and considerable gap with the EU suggests that while LAC is improving, continuous and possibly intensified efforts are needed to reach EU levels.

Finally, in addition to the comparative analyses presented above, this article reviews access to the basic digital basket in LAC. Figure 11 presents the percentage of accessibility to the basic digital basket measured in the countries of LAC for 2023.

The following conclusions are obtained from the results presented in Figure 11.

• High Accessibility
  • Argentina: This country stands out with a significantly high accessibility rate of 54.1%, indicating better access to digital services and infrastructure compared to other countries in the region.
• Moderate Accessibility
  • Peru (9.5%) and El Salvador (9.1%): These countries show moderate levels of accessibility, though there is room for improvement.
  • Bolivia (8.1%), Colombia (7.7%), and Paraguay (7.1%): These countries also have moderate accessibility levels, slightly lower than Peru and El Salvador, indicating similar challenges in terms of digital infrastructure and accessibility.
• Low Accessibility
  • Mexico (5.4%), Brazil (6.2%), and Dominican Republic (6.2%): Despite being relatively large economies, these countries show low accessibility to the digital basket, suggesting inequalities in access to digital services.
  • Costa Rica (4.2%), Chile (3.5%), and Uruguay (3.1%): These countries have the lowest accessibility values, indicating a substantial need for investment and improvement in digital infrastructure.

The analysis of results reveals significant variability in accessibility to the basic digital basket among countries of LAC. Argentina has high accessibility, while countries like Uruguay, Chile, and Costa Rica have significantly lower accessibility. This reflects the diversity in digital development across the region and highlights the need for tailored policies and strategies to improve digital accessibility equitably. This analysis can inform policymakers and stakeholders about the current state of digital accessibility and where to focus efforts to bridge the digital divide within the region.

5. Discussion—SWOT Analysis

Based on the information collected, the results presented, and their corresponding analysis, the following key aspects are reviewed: strengths, weaknesses, and opportunities.

5.1. Strengths

Integration of Legal and Governance Aspects: The strong adaptability of the legal framework for digital business and active ICT governance suggests a progressive regulatory environment that can adapt to rapid technological innovations.

Investment in R&D: Research and development spending reflects a commitment to technological innovation, which is crucial to maintaining long-term competitiveness in the ICT sector.

Infrastructure Coverage: A high degree of mobile broadband coverage and access to fiber optics indicate a robust infrastructure that supports a wide range of telecommunication and data services.

5.2. Weaknesses

Inequality in Access and Affordability: If broadband affordability indices and high handset prices indicate that economic access to the technology is a significant barrier, it can limit widespread adoption of broadband.

Market Concentration: A high concentration of broadband operators may indicate a less competitive market, leading to higher prices and less innovation, negatively affecting the quality of consumer service.

Training and Use: Low digital skills among the working population and gender inequality in Internet use suggest limitations in citizens’ ability to fully reap the benefits of digitalization.

5.3. Opportunity

Universal Access Policies: Improving the effectiveness of funding universal access and service could help expand access to less developed areas and underserved populations, improving equity in access to broadband services.

Promotion of the Private Sector: Promoting policies that support greater competition in the broadband sector could reduce market concentration and improve services by driving innovation and reducing costs.

Education and Training: Investing in digital education and training programs to improve general digital skills and close the gender gap in the use of the Internet can empower the population to participate more effectively in the digital economy.

Innovation in Infrastructure: Expanding and upgrading infrastructure to include more advanced technologies such as 5G and improving interconnection through IXPs can significantly improve the speed and quality of broadband service.

5.4. Threats

Based on the discussion of strengths, weaknesses, and opportunities, the following threats have been identified as critical barriers to achieving a successful and inclusive digital transformation for LA development to consolidate I4 and I5:

Worsening of the Digital Divide: Despite efforts to improve infrastructure and access, the persistence of affordability issues and unequal access, particularly in rural and underserved regions, poses a significant threat. This digital divide could deepen further if universal access policies fail to address the socioeconomic factors that limit the affordability of broadband and devices. The gap in access to digital services between urban and rural populations and between different socioeconomic groups threatens to exacerbate existing inequalities.

Cybersecurity Vulnerabilities: The rapid adoption of advanced technologies, such as 5G, and increasing interconnection of networks through Internet Exchange Points (IXPs) bring increased risks of cyberattacks and data breaches. The lack of robust cybersecurity frameworks or insufficient investment in cyber defense mechanisms could leave critical digital infrastructure vulnerable to threats from malicious actors, posing significant risks to national security, economic stability, and personal privacy.

Regulatory Lag and Fragmentation: One of the main threats identified is the lag in regulatory frameworks keeping pace with technological advancements. As digital technologies evolve rapidly, fragmented or outdated regulations could inhibit innovation and lead to inconsistencies between regions, potentially resulting in market inefficiencies and reduced competitiveness. This regulatory lag could also create environments where digital services are inadequately governed, leading to unfair practices and reduced consumer trust.

Market Monopolization: High levels of market concentration within the broadband sector present a serious threat to the competitiveness of the digital economy. Lack of effective competition could result in higher prices, poorer service quality, and less innovation, particularly in markets dominated by a few key players. Without policies that foster greater competition and market liberalization, the monopolization of critical digital infrastructure can hinder progress and limit consumer choice.

Inadequate Workforce Preparedness: The current low levels of digital literacy and skills within the workforce, combined with persistent gender disparities in Internet use, pose a significant threat to the long-term sustainability of digital transformation efforts. If these gaps are not adequately addressed through targeted education and training initiatives, there is a risk of a mismatch between the technological needs of the digital economy and the capabilities of the workforce, which could hinder productivity and innovation.

Environmental Impact of Technological Expansion: The expansion of digital infrastructure, mainly through energy-intensive technologies like 5G and data centers, presents a growing environmental threat. Without adopting sustainable practices and renewable energy solutions, the carbon footprint of the ICT sector could increase substantially. This environmental impact threatens to undermine the sustainability goals of digital transformation and may provoke societal backlash if not adequately managed.

These threats must be mitigated through coordinated policy efforts, public–private partnerships, and forward-looking strategies prioritizing economic growth and social inclusion. Addressing these challenges is crucial to ensuring that digital transformation catalyzes equitable and sustainable development rather than a source of further division or risk.

6. Conclusions

This paper analyzed the technological gap between Latin America (LA) and more developed regions. It focused on public policies, infrastructure, and gap-closing training. This study highlighted key indicators such as digital infrastructure, R&D, and the effectiveness of government strategies to promote I4 and I5 technologies. The following conclusions are obtained from the results:

• Despite global advances in implementing I4-enabling technologies (IoT, robotics, AI), LA lags far behind. When LA is compared with regions such as Europe and Asia, deep gaps are found in implementing I4-enabling technologies and mobile and fixed broadband connectivity. This is due to inadequate infrastructure, limited investment in R&D, and insufficient public policies to drive technology adoption.
• SMEs, representing a large part of the business structure in LA, face significant difficulties in implementing advanced technologies due to lack of resources, limited digital capabilities, and unequal access to technological infrastructure, especially in rural areas. Therefore, the study highlights the importance of effective collaboration between the public and private sectors to overcome barriers to adopting I4 initiatives that promote training in digital technologies, encourage private investment, and improve strategic regulation, which will be crucial to accelerating the region’s digital transformation.
• The paper highlighted that public policies focused on expanding digital connectivity and increased investment in telecommunications infrastructure are fundamental to closing the technology gap. Countries that have adopted proactive policies have shown improvements in technology adoption, although progress varies significantly between urban and rural areas.
• The analysis of results reveals significant variability in accessibility to the basic digital basket among countries of LAC. This analysis can be useful for policymakers and stakeholders to know more about the current state of digital accessibility and where to focus efforts to bridge the digital divide within the region.
• Public policies implemented by LA governments need a comprehensive approach to strengthening and promoting the capacities of higher education institutions in science, technology, and innovation training. It is essential to develop training and technological assimilation programs driven by government entities that enhance the development of technical skills in rural regions or communities beyond the reach of HEIs. This would facilitate the use of technologies associated with I4 and would give rise to an opportunity for I5 implementation in the region.

In future work, education programs in higher education institutions and universities should be reviewed to meet the demands of the 4IR and 5IR. It is also important to gain a deeper understanding of how public policies can affect the adoption and development of enabling technologies in the region, which can then be applied to new developments and initiatives. In addition, new strategies for companies must be defined to increase the adoption of I4-enabled technologies in the region. Furthermore, it would be relevant for future work to analyze the impact of education, public policies, and complementary training on adopting new technologies and processes associated with 5IR.