Connecting Markets, Powering Growth: The Digital Trade Opportunity for Latin America and the Caribbean

Digital technologies such as online platforms reduce the costs firms face when selling abroad, creating new pathways into international markets and allowing them to reach new customers. They also enable services to be delivered remotely and expand consumer choice. 

These opportunities are becoming even more important as artificial intelligence (AI) transforms how the world produces, consumes, and trades. AI can further reduce information barriers and logistics and administrative costs, including those associated with product classification for customs declaration purposes and border agencies’ risk management. It is also fueling demand for supporting services such as cloud computing and data processing, many of which can themselves be delivered across borders. At the IDB, we see this shift as a direct opportunity for firms in Latin America and the Caribbean.

As a result, digital trade, defined as international trade that is ordered or delivered online, is no longer a niche segment. Since 2005, global exports of digitally delivered services have nearly quadrupled, reaching $4.78 trillion in 2024 and accounting for 14.8% of global exports. This expansion has far outpaced the growth of goods and other services exports, underscoring the central role that digital trade can play in generating new sources of growth.

Digital trade offers a new source of productivity and economic growth and has the potential to become an important engine of development for countries in the region. It can increase firms’ productivity by promoting innovation and the spread of new technologies and facilitating the import of business, financial, telecommunications, and other services, thereby supporting economic diversification. 

The new joint report Digital Trade in Latin America and the Caribbean: Connecting Markets, Powering Growth, produced by the Inter-American Development Bank (IDB), the World Bank, and the World Trade Organization (WTO), shows that the region has already built significant momentum in this rapidly expanding trade modality. It also makes clear that stronger policies, investment, and regional cooperation will be needed to convert that momentum into lasting and widely shared gains. This post distills the report's most actionable findings for policymakers and firms in the region.

A Region with Momentum in Digital Trade

Between 2005 and 2024, the region’s exports of digitally delivered services grew nearly fivefold, from $18.5 billion to $87.7 billion. These services now account for approximately one-third of the region’s commercial services exports, up from about one-fifth in 2005. Brazil, Mexico, Costa Rica, and Argentina are among the leading exporters, while a number of smaller economies have also built important positions in digitally delivered services (Figure 1).

The potential is considerable. Simulations presented in the report suggest that the region’s digitally deliverable services exports could grow by as much as 7.9% annually through 2040. Digitalization could contribute up to 4.5 percentage points to that growth. With technological progress and an improved policy environment, Latin America and the Caribbean could expand these exports faster than the projected global average.

However, Significant Potential Remains Untapped

Progress, however, should not be mistaken for the full realization of the region's potential. Despite its rapid export growth, Latin America and the Caribbean accounted for only 2% of global digitally delivered services exports in 2024. This is below the region’s 2.9% share of global services trade and far below its 6.4% share of world goods trade. In most economies in the region, digitally delivered services still account for 1% or less of gross domestic product (GDP). Latin America and the Caribbean has entered the digital trade race, but it has not yet captured a share that matches its potential.

The regional market itself is one of the largest untapped opportunities. Intraregional trade in digitally deliverable services totaled $7.8 billion in 2023, representing only 8.4% of the region’s exports in this category. By comparison, intraregional exports accounted for 62.4% of digitally deliverable services exports in Europe, 41.3% in Asia, and 14.7% in North America.

Yet regional markets are particularly important for small and emerging exporters. Evidence in the report suggests that smaller service providers often begin their export journey in neighboring countries before moving into larger and more distant markets. A better-integrated regional digital market could therefore serve as a springboard for more firms to become global exporters.

Evidence from e-commerce traffic reinforces this point. In 2023, 60% of foreign visits to e-commerce platforms in the region originated in other Latin American and Caribbean countries. At the same time, only 13% of visits by the region’s consumers to foreign platforms went to platforms elsewhere in the region. Most outbound traffic went instead to the United States and China. This gap suggests considerable scope to connect more regional demand with regional supply.

Realizing the region’s potential in digital trade requires more than technology alone. It demands an enabling ecosystem that allows firms to connect, transact, deliver, and grow across borders.

Countries need open and competitive markets for the goods and services that form the backbone of digital trade, including telecommunications, computer services, information and communications technology (ICT) equipment, transport, logistics, and payments. They also need modern, balanced, and interoperable regulations that enable electronic transactions and cross-border data flows while protecting consumer privacy and ensuring cybersecurity. 

Latin America and the Caribbean has a relatively open trade regime in several key service sectors, particularly telecommunications and computer services. However, important restrictions and regulatory gaps remain; only nine countries have eliminated tariffs on ICT goods under the WTO Information Technology Agreement. 

The region has also made substantial progress in establishing rules for electronic documents, e-signatures, data protection, and cross-border data flows, but cybersecurity frameworks and rules governing platform liability remain comparatively underdeveloped.

Affordability, reliability, and inclusive connectivity are also relevant conditions for digital trade. Although internet access has expanded significantly, usage remains below 80% in many Central American, Andean, and Caribbean economies, compared with an Organization for Economic Co-operation and Development (OECD) average of 91%. High broadband costs, uneven access to advanced networks, and the limited availability of data-processing infrastructure continue to constrain firms’ participation in digital trade.

Modern cross-border payments, efficient logistics, and streamlined customs procedures are also crucial for completing digital transactions quickly and predictably. Today, 74% of adults have a transaction account, but only 20% use it to make online payments to businesses. Cross-border payments remain slow and costly, while logistics and administrative border bottlenecks still make it difficult for firms to meet the speed and reliability that e-commerce demands.

Finally, the agenda must reach firms and workers. Firms need digital and managerial capabilities, trade information, and specific support to identify international customers and access financing. Workers need opportunities to build technical, entrepreneurial, and STEM skills. STEM graduates represent only 17% of tertiary graduates in the region, below the corresponding share in most other regions. The region also has fewer digital businesses than would be expected given its level of economic development, and many firms remain at an early stage in digitalizing their operations. Without stronger capabilities, better connectivity and regulation will not automatically translate into increased exports.

The report offers more than a diagnosis. It provides a foundation for country-specific digital trade roadmaps that can help governments sequence reforms, mobilize investment, and coordinate the efforts of the public sector, firms, and international partners.

From Roadmaps to Action: Advancing Digital Trade in Latin America and the Caribbean 

Many countries are already implementing these agendas with IDB support. For instance, in South America, the South Connection Program promotes regulatory alignment and regional coordination while supporting investments and projects in fiber-optic corridors and other digital connectivity infrastructure. In Honduras, IDB-supported regulatory, institutional, and infrastructure reforms have cut crossing times at El Amatillo from more than 74 hours to a little over two hours in recent years. In addition, ConnectAmericas, the IDB's regional online business platform, connects more than 260,000 firms to training, market intelligence, and international buyers, and has been associated with meaningful gains in firms’ exports.

Latin America and the Caribbean does not need to wait for the digital economy to arrive. It has already demonstrated its ability to participate successfully. The choice now is whether to build on this momentum or allow faster-moving competitors to capture the opportunity. With purposeful reforms, sustained investments in firms and people, and stronger regional cooperation, digital trade can effectively connect markets and help power a new phase of inclusive, shared growth across the region.

Read the full report — Digital Trade in Latin America and the Caribbean: Connecting Markets, Powering Growth — for the complete data and policy recommendations.