AI in Latin America: Opportunities and Challenges for the Future
There is little question that AI has the potential to transform industries and raise economic productivity. In Europe, Asia, and North America, the adoption of AI has contributed to labor productivity growth roughly five times greater than the average. CEOs globally are taking notice: 70% believe AI will significantly change how their companies create, deliver, and capture value in the next three years. Latin America is not an exception, with growing investment and debates on the role that AI will play in setting the economic and social panoramas of the region. Yet, the road ahead is complex, with opportunities and challenges intertwined.
SCORE OF MATURITY LEVEL FOR AI
Certain countries in the region have been setting themselves apart, some even positioning as regional leaders, playing their strengths to lead in innovation. This would include Chile, Uruguay, and Brazil (see graphic). Each of these has excellent enablers, such as infrastructure and governance. These countries present good conditions for research, development, and adoption of AI technologies, which presumes a strong enabling framework for technological growth.
Source: Índice Latinoamericano de Inteligencia Artificial (ILIA)
Mexico, Argentina, and Colombia follow closely, with an overall strong performance in research and adoption amid limiting enabling factors like infrastructure and policies. Meanwhile, countries like the Dominican Republic and Peru have shown promise in governance but struggle with investment in research and adoption. The differing dynamics of the region highlight strengths where targeted improvement is needed.
Despite this progress, most significant challenges to scaling AI remain substantial across Latin America. This certainly includes the shortage of any kind of talent. Compared with eight years ago, AI-related employment in Latin American countries has more than doubled, but it continues far behind the global leaders of today. Brain drain further reifies the issue, as many head to other countries for opportunities in search of opportunity.
Infrastructure remains another hurdle: while the region has witnessed a growing use of mobile connectivity, disparities in access to and the speed of broadband—especially in rural areas—impede full digital inclusion and innovation. In addition, the slow rollout of 5G technology in the region affects access to more advanced AI applications.
The economy is significantly informal, and there is also too little public investment in science and technology. Only six Latin American countries have issued specific strategies for AI, and even these often lack a holistic approach. In the absence of structured collaboration among governments, academia, and the private sector, scaling AI to its full potential will remain an uphill battle.
The full potential of AI can be unleashed in Latin America by concerted efforts in three basic areas: infrastructure, education, and regulation. Infrastructure investment should be made while ensuring that access to connectivity and the tools for innovation are equitably distributed. This involves expanding broadband coverage and accelerating 5G implementation.
Education and workforce development are equally important. Foundational improvements in education will be necessary to prepare a future-ready workforce, as 75% of students in the region fell below basic proficiency in mathematics and 55% in reading. Additionally, the development of specialized AI skills through targeted programs and the retention of talent with incentives will help close the gap with global leaders.
Finally, it is effective institutions and regulatory frameworks that will guide the ethical and inclusive integration of AI. Governments must adopt forward-thinking policies with diverse stakeholders, including academia, civil society, and private enterprises, to ensure that AI serves as a force for equitable development.
The path of integrating AI in Latin America is filled with promise and obstacles. The region’s entrepreneurial spirit and growing tech industry offer a strong foundation for innovation, as evidenced by the rise of unicorn startups and technological advancements. With AI expected to contribute up to 5.4% of Latin America’s GDP by 2030, the economic potential is immense. However, realizing this vision will require a unified effort to address challenges and prioritize investments in key areas.
Collaboration, better infrastructure, and an accent on education will help Latin America to use AI as an engine of economic growth and raise the quality of life of its citizens, making the region a player in this AI-driven world. Theia Consulting Group can guide you through this transformation by finding opportunities, building partnerships, and creating strategies that match the unique potential and challenges of the region.
References
PwC Chile. (2024). Barómetro de la IA en el empleo 2024. Retrieved from PwC Chile.
Índice Latam de IA. (2024). Informe sobre IA en América Latina. Retrieved from Índice Latam.
United Nations Development Programme. (2024). La revolución de la inteligencia artificial: cómo responderá América Latina y el Caribe. Retrieved from UNDP.
