Who’s the Smartest One of All? The Smart City Challenge in Latin America

Latin America is one of the most urbanized regions of the world, with around 80% of all inhabitants living in cities—the highest rate anywhere outside of North America. Several of its cities are among the largest on the planet, with São Paulo and Mexico City each with 21 million inhabitants. Latin America was last a mostly rural region way back in the 1960s. And today, just 10 cities generate one-third of the region’s total economic output.

As cities have continued to grow, addressing their problems—traffic congestion, pollution, high crime rates, overburdened public health systems, poor basic services, and more—has proved ever more challenging for the region’s urban leaders. Whereas many policymakers in advanced economies are adopting technological and digital solutions to address such problems, and to start to construct ”smart cities”, governments in Latin America have lagged behind.

And while the path to a smart city future is often unclear even to decision-makers in developed countries, the challenge is more formidable still in Latin America, where resources are scarcer, governance is weak, institutional capacity is poor, and the required technology foundation is lacking.

Region Starts from a Low Technology Base

Studies by the United Nations, the McKinsey Global Initiative, and others have highlighted specific areas where Latin American cities trail those in North America, Europe, and Asia in adopting data and technology tools—owing largely to the lack of strong IT and data infrastructure. This impedes the development of tools such as high-speed communications networks and sensors, traffic management and mobility solutions, security applications, and more data-driven law enforcement.

The latter is particularly crucial in a region with some of the highest crime and homicide rates in the world. McKinsey estimates that use of security applications and a more data-driven approach to policing could reduce the number of assaults and thefts by 30-40%. Tech tools in areas such as traffic management, disease prevention, and provision of basic services such as energy and water would generate similar improvements. These are all areas woefully in need of attention in Latin America.

There have been some early adopters that stand out as more innovative, “smarter” cities. These include Chile’s Santiago and Colombia’s Medellín. By 2016 Santiago had in place, for example, automated pricing for tolls based on traffic levels; smart parking systems; a “Bike Santiago” bike-sharing program; government apps for searching traffic routes, pharmacies, and gas stations; and a range of other technology-based initiatives under way. It is also ahead in telemedicine and monitoring of diseases.

Medellín’s own smart city program, Ciudad Inteligente, has made it a hub for technology and innovation in Latin America (with more than half of the businesses in the city dedicated to ICT). Ciudad Inteligente has also been used to promote social inclusion, capitalizing on the city’s universal SMS cell phone penetration to advance ICT education and use. Separately, Medellín’s MEData initiative has created a broad, data platform to support government data-driven decision-making and includes a portal that is open to the public.

Cities like Buenos Aires, Rio de Janeiro, and São Paulo have also lept ahead of their peers with specific technology-driven solutions. Buenos Aires was an early adopter of systems for real-time monitoring of traffic and crime, and for emergency response. Rio is ahead in security applications, a priority also for high-crime cities like Mexico City and São Paulo. Mexico City was a regional pioneer in constructing smart and eco-friendly buildings.

Latin American Cities are Either “Beginners” or “Transitioning”

ESI ThoughtLab’s own recent research on the smart cities of the future, Smart Cities 2025, ranked 136 cities around the world by their level of “smart city maturity” using a range of criteria. It then grouped them into the categories of “beginner”, “transitioning”, and “leader”. Of the nine cities in Latin America covered by the research, four are classified as beginners (Bogotá, Greater Belo Horizonte, Mexico City, and Panama City), five are transitioning (Buenos Aires, Lima, Rio de Janeiro, San José, and São Paulo), and none are in the leader category.

ESI’s research suggests that, in today’s digital age, the future success of cities will depend on their ability to become smarter. By drawing on the latest technology and capitalizing on data analytics, they will be better equipped to solve urban problems, provide high-quality services, and drive sustainable growth. Becoming a smart city also is becoming vital for attracting business, residents, tourists, and talent, and for ultimately fostering productivity and prosperity. Cities that undergo smart transformation will be able to unlock benefits that can then be reinvested into additional developments, creating a virtuous cycle of economic growth.

More governments in Latin America are realizing that they must draw on the latest technology and build up their digital intelligence to address urban and social challenges. However, most are having trouble keeping up with the fast pace of digital innovation. Hence, the solutions for Latin America’s cities cannot be the responsibility of governments alone. Most solutions may well be driven by the public sector, but many must also involve businesses, non-government agencies and other stakeholders.

The goal must be to improve the quality of life for city residents while enhancing prospects for over social and economic development. To do so, stakeholders must work collaboratively and evaluate the full urban ecosystem in order to find the technology solutions that will bring the best returns on investment. Cities like Santiago and Buenos Aires are more advanced in the process, but still have a way to go—while most other cities have even more work to do to catch up.


Anna Szterenfeld is Director of Editorial Operations for ESI ThoughtLab. She is a multilingual writer and editor with 30 years of experience assessing and forecasting global political and economic risk, policy trends and business operating conditions, with a particular focus on the Americas. For many years she served as Regional Manager and Latin America Editor with The Economist Group, where she supervised analysts and editorial teams in Mexico, Brazil, London, and Gurgaon (India), as well as a contributor network in more than 20 countries.

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