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This study aims to examine how the adoption of digital technologies affects the business competitiveness of countries in Latin American and European countries.

This study used a structural model based on factors representing the pillars of the Global Competitiveness Index: financial system, adoption of information and communication technologies (ICT), skills, labor market, product market, macroeconomic stability, business dynamism and gross domestic product (GDP) purchasing power parity (PPP) as a percentage of the total world value. The authors considered 17 Latin American and 28 European countries. The model was analyzed by partial least squares-structural equation modeling.

ICT adoption in Latin American countries is a strong predictor of business dynamism (66% of the variance), skills (81% of the variance), product market (75% of the variance), labor market (42% of the variance) and financial system (49% of the variance). Similarly, ICT adoption in European countries is a strong predictor of business dynamism (35.6% of the variance), skills (72.2% of the variance), product market (51.6% of the variance), labor market (81.7% of the variance, but with a negative path coefficient) and financial system (38% of the variance).

Latin American countries should create policies to build skills to increase ICT adoption, and improve business and labor market dynamism. A theoretical implication is that the authors propose two structural models based on the GCI that best explains competitiveness in Europe and Latin America.

Using GCI data, the authors present empirical evidence on the predictors of competitiveness across 17 Latin American and 28 European countries with a special focus on the adoption of digital technologies.