Economic Impact of Cloud Adoption in Six Latin American Countries
Public cloud technologies have changed how private and public institutions operate globally, particularly for small businesses. By allowing greater access to digital technology, Latin America stands to gain significantly from the realization of public cloud adoption.
FTI Consulting was commissioned by AWS to estimate the economic impact of public cloud adoption in six Latin American countries: Argentina, Chile, Colombia, Mexico, Peru, and Uruguay. FTI Consulting found that the productivity enabled by cloud growth supports significant economic activity over the next 15 years.
The adoption of public cloud technologies already has economy-wide impacts in the six Latin American countries in this report. We estimate that in 2023 it supports:
Main Economic Findings for 2023-2038:
Firm productivity impacts from public cloud adoption will drive an average annual increase in the following:[1]
Cloud adoption is estimated to support $195.1 billion USD in GDP each year, on average, in the six countries combined.
For context, total baseline 2021 GDP across the six LATAM countries was $2,428 billion USD.
8.6 million jobs will be supported, on average, during the period analyzed. To put this in context, baseline 2021 employment across the six LATAM countries was 108.8 million jobs.
$60.6 billion USD in labor income will be supported, on average, each year. While all six countries will benefit in this regard, the Mexican case stands out with an average additional labor income of $20.9 billion USD per year.
Additional activity throughout the economy, enabled by the cloud, is estimated to support an additional $39.9 billion USD in fiscal revenue, on average, each year in the six countries combined. Total baseline 2021 tax revenue across the six LATAM countries was $692 billion USD.
Main Environmental Findings
The favorable characteristics of cloud computing has created significant downstream benefits. By making computing more cost-effective, cloud service providers enable more access, unlocking further ingenuity and creating new employment, spending, and investments that ripple throughout an economy.
Selected case studies support the quantitative analyses with qualitative evidence of how public cloud technologies can improve business operations. FTI highlighted key stories across sector in these six countries in which adopting public cloud technology has supported productivity and social benefits.
Research Methodology
Economic Analysis
FTI paired an analysis of the economic impact of public cloud adoption with a study of the environmental benefits of public cloud and case studies of public cloud users.
FTI first projected future rates of adoption. Those projections were then combined with the results of a recent study by the OECD that demonstrated a relationship between digital technology adoption and productivity to generate an estimate of multifactor productivity (MFP) growth resulting from public cloud adoption.
The MFP increases forecast was used to generate the amount of additional economic output produced as a result of productivity increases from public cloud. These, in turn, were fed into input-output models to simulate the additional demand for goods in the supply chain that economic expansion would create and the additional consumption spending that would be enabled by additional employment, and in that way to estimate the total impact on the economy.
Environmental Analysis
FTI estimated the emissions generated in a counterfactual scenario in which data center activity handled by public cloud technology was instead handled, less efficiently, by private enterprise servers. This counterfactual scenario was compared to a baseline forecast of data center emissions from the International Telecommunications Union (ITU).
Country-By-Country Overviews
Economic impact of public cloud adoption in:
Contact
Robert Kaineg
Managing Director, Economic Consulting
[email protected]
Damián Martínez Tagüeña
Managing Director, Strategic Communications
[email protected]
- According to latest available comparable data. Data sourced from 2021 OECD IO tables for all countries besides Uruguay. Uruguay data from Central Bank of Uruguay 2017 Supply-Use Tables.
- Compared to a counterfactual scenario without the use of public cloud.
- US EPA Greenhouse Gas Equivalencies Calculator, https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator.
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.©2023 FTI Consulting, Inc. All rights reserved. www.fticonsulting.com
