El Economista | Payment methods and spectrum costs may affect digitisation of Mexican exports: AlphaBeta

El Economista | Payment methods and spectrum costs may affect digitisation of Mexican exports: AlphaBeta

This article was originally published in El Economista on 19 October 2022. 

The digitisation of exports could increase Mexican companies’ revenues by $30 billion, but obstacles make this goal seem unattainable.

There is a $40.1 billion opportunity by 2030 to leverage digital technologies in Mexican exports, but a number of obstacles hinder the application of these resources to increase profits from foreign sales.

In 2021, Mexico earned $7.4 billion (1.7% of total exports) from the value that digital technologies bring to exports, but this figure could grow 439% or $32.7 billion, to reach $40.1 billion by 2030, according to a study by Alphabeta, part of the public policy consultancy Access Partnership, which was commissioned by technology giant Google.

The report considers this estimate conservative because it does not consider the “full benefits” of applying technology to all export processes, such as tracking goods through the internet of things.

Alphabeta divides the revenues generated by the application of technologies into two categories: the export of digital goods and the reduction of costs to access international markets.

While Mexican developers earn around 92 million dollars a year from the services they provide abroad, the reduction in the cost of accessing international markets is around 2.4 billion dollars a year. The consultancy expects these figures to reverse by 2030, when most of the revenue will come from exporting digital goods.

The app shop market is currently under investigation in Mexico by both the Federal Telecommunications Institute (IFT) and Cofece. Google, which commissioned the study, is one of the players allegedly under investigation for engaging in a type of relative monopolistic practice known as tied sales, i.e. when a company makes the purchase of one product conditional on the purchase of another.

Alphabeta’s report points to digital means of payment and radio spectrum costs as obstacles to achieving this level of profit from technology applied to exports. The consultancy adds that if supply-side issues in these areas are resolved, in addition to those of talent turnover and skills shortages, and a “more conducive” policy environment is established, digital services could grow at an annual rate of 26 per cent to $21.7 billion per year by 2030.

The public policy consultancy specialising in information technology has identified five recommendations that could help Mexico reduce the gaps that hinder the digitisation of exports:

  • Improve and expand interoperable and reliable digital payment methods to boost uptake.
  • Improve connectivity and make the internet accessible by reducing the costs of spectrum rights through targeted programmes and increasing unlicensed spectrum.
  • Develop human capital and improve digital skills through online courses focused on digital commerce for SMEs and public officials.
  • Improve competitiveness by strengthening cybersecurity frameworks and building trust and confidence.
  • Improve competitiveness by supporting the full implementation of the provisions of Chapter 19 of the T-MEC.

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