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Forecasting GDP Growth: The Rise of Artificial Intelligence in Latin America and the Caribbean



Emergence of Artificial Intelligence Technologies

The development of Artificial Intelligence (AI) has emerged as an influential driving force with profound implications for economies worldwide. An increase in public accessibility to AI during the 21st century continues to lead to the rapid evolution of complex technological systems, marked by new advancements and accessibility initiatives. Latin American countries have embraced AI positively, making it a crucial tool for fostering economic development and sustainability in the region.


As countries in Latin America embrace the potential of AI technologies, there is growing anticipation that this technological wave will significantly contribute to the region's economic growth, as measured by Gross Domestic Product (GDP). The interdependent relationship between AI and GDP is set to reshape the economic landscape, fostering a new era of efficiency, competitiveness, and prosperity across Latin American nations. The examination of the intricate connections between AI and GDP in Latin America explores potential impacts on diverse sectors and overarching implications for the future of economic development and sustainability in each individual country.


Technology and Internet Access in Latin America

In 2015, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) reported that 54% of Latin Americans had utilized the internet within the previous 12 months, depicting a notable increase of 20% since 2010. The correlation between income and internet access emphasizes a significant gap, favoring high-income sectors with better means to pursue their interests. This disparity also imposes limitations on the government's ability in these countries to effectively utilize the internet as a service delivery platform, further exacerbating inequality (Ortiz et al., 2018).


Latin America and the Caribbean lag significantly behind more advanced economies in adopting artificial intelligence technologies. While these cutting-edge technologies are extensively employed in developed nations for tasks such as financial data analysis, loan evaluations, packaging and delivery logistics, and criminal identification, their integration in Latin American and Caribbean countries is not as widespread (Zhao, 2018). This technological disparity highlights the potential for growth and development in the region as it seeks to harness the benefits of AI across various sectors. As these nations strive to bridge the technological gap, there lies a unique opportunity for them to not only catch up but also to innovate and tailor AI technologies to their specific needs.


AI in Latin America

Artificial Intelligence stands as a transformative force forecasted to elevate the economic landscape of Latin America and the Caribbean. Projections indicate that by 2030, AI could contribute to a remarkable over 5% increase in the Gross Domestic Product (GDP) of the region (Patel et al., 2022). This surge depends on governments in the region taking strategic actions, such as developing talent, improving digital infrastructure, and creating effective policies to guide responsible AI development. As these countries embrace innovative strategies, they underscore the diverse approaches taken to adopt the potential of AI to propel economic growth in the region, showcasing a dynamic landscape of AI initiatives across Latin America and the Caribbean.


Several Latin American countries, including Argentina, Brazil, Colombia, and Uruguay, have already initiated the introduction of new national AI strategies in the past decade (Hermosilla et al., 2023). Brazil, for instance, recognized the pivotal role of AI in its Digital Transformation Strategy, although with a primary focus on wider digitization to facilitate the emergence of AI capabilities. In contrast, Argentina has placed a significant emphasis on private sector growth, offering incentives such as policy amendments, tax breaks, and the establishment of the National Fund for Entrepreneurial Capital (FONDCE). Colombia, conversely, prioritized reducing barriers to AI adoption, stimulating favorable conditions, enhancing human capital, and establishing frameworks to mitigate risks in data privacy. Uruguay has uniquely concentrated on encouraging and implementing AI within its public administration, emphasizing capacity building and the responsible use of AI in the country.

Other nations across Latin America are also exploring the advantages offered by AI strategies. An example of this can be observed in Panama, where the government's COVID-19 Automatic Health Response app employs AI to assess and recommend COVID testing for patients. This is just a glimpse of the diverse opportunities that extend from formulating targeted public policies for COVID-19 response to enhancing security, transparency, integrity, and accountability. Despite boasting the second-largest economy in the region, Mexico has yet to unveil a comprehensive AI strategy. This places Mexico at a point where catching up in terms of strategy and development is imperative to make use of the economic potential offered by AI (Garrastazu et al., 2023). In light of Mexico's current absence of a comprehensive AI strategy, it is essential for the nation to quickly address this gap, ensuring the utilization of AI's economic potential.


Implications for the Future

While AI promises considerable benefits in healthcare, agriculture, education, and public services, ethical concerns surrounding job displacement, privacy, and algorithmic bias are on the forefront. Governments across Latin America and the Caribbean are responding to these challenges with customized strategies. Brazil prioritizes innovation and human capital in its national AI policy, while Mexico has established an AI ethics committee, and Colombia operates an AI observatory dedicated to understanding societal impacts and formulating responsible policies.


As AI continues to evolve and gain prominence, the region stands at a significant turning point. The potential growth in GDP in these countries comes with the responsibility of ensuring ethical AI implementation for citizen usage. Governments in the region must navigate the delicate balance between fostering innovation and safeguarding the rights and interests of their populations. Through implementing comprehensive AI policies, cultivating talent, and addressing ethical considerations, Latin American and Caribbean states can position themselves to fully gain from the advantages of the AI revolution, fostering sustainable economic growth.


Bibliography:


  1. Hermosilla, María Paz ; Swain,Wally ; Popov, Mijail. “What Can Artificial Intelligence Bring to Latin America?” The Dialogue. Latin America Advisor. March 17, 2023. https://www.thedialogue.org/analysis/what-can-artificial-intelligence-bring-to-latin-america/ 

  2. Garrastazu, Antonio ; de Anta, Beatriz. “The AI Revolution Is Coming for Latin America. Is It Ready?” Americas Quarterly, August 9, 2023. https://www.americasquarterly.org/article/the-ai-revolution-is-coming-for-latin-america-is-it-ready/

  3. Ortiz Frueler, Juan ; Iglesias, Carlos.“Algorithms and Artificial Intelligence in Latin America” World Wide Web Organization. September 2018. https://webfoundation.org/research/how-are-governments-in-latin-america-using-artificial-intelligence/

  4. Patel, Aadit, et al. “Seizing the opportunity: the future of AI in Latin America” Economist Impact, The Economist Group, sponsored by Google. 2022. https://impact.economist.com/perspectives/sites/default/files/seizing-the-opportunity-the-future-of-ai-in-latin-america.pdf



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