Harnessing AI for Economic Growth in Latin America and the Caribbean
The advent of artificial intelligence (AI) presents significant prospects for enhancing productivity across Latin America and the Caribbean. Nonetheless, the region must ensure that businesses, governments, and the workforce possess the requisite skills, infrastructure, data, organisation, and institutional capacities to realise tangible economic growth through this technology.
This assertion is supported by a recent report from the World Bank, which outlines how the region does not necessarily need to develop cutting-edge models akin to the latest iterations of Claude or ChatGPT to reap the benefits of next-generation technological advancements.
The international organisation recommends that countries within the region consider establishing what it terms “small-scale AI” strategies. This concept refers to practical, relatively cost-effective applications designed to address specific challenges in contexts with limited resources.
By tailoring tools to meet local needs and operational conditions, small-scale AI can make scarce specialised knowledge accessible to small enterprises, workers, and public service providers. The report highlights that adopting this approach could help overcome one of the primary barriers faced by economies in the region in capitalising on the AI boom. While many local businesses are beginning to embrace automated tools, their utilisation remains largely superficial.
Surface-Level Adoption of AI in Major Latin American Economies
According to the same report, a significant number of companies in the region are employing AI solutions for relatively simple tasks, such as text generation, database optimisation, or information retrieval, rather than integrating them into their core processes, workflows, or management systems.
This trend is particularly evident in the three largest economies in Latin America by Gross Domestic Product. In Brazil, approximately 60% of firms reported experimenting with some form of AI system. However, 37% of these are still in the pilot phase of adoption, and only 28% are scaling their use of the technology.
Furthermore, the report notes that merely 38% of organisations provide AI training for their employees, and only 17% have dedicated teams or high-level positions specifically focused on this technology.
In Mexico, the adoption rates of AI among medium and large companies surpass those of other developing nations. However, the proportion of small businesses utilising these tools is significantly lower than in other countries within the region. This underutilisation among small enterprises, which constitute a substantial part of the Mexican economy, has resulted in a national average that is comparable to or even lower than that of other developing nations.
Argentina presents a unique case, as 43% of small and medium enterprises acquire specialised software, and 20% engage specialised suppliers. Notably, 44% adopt AI systems through isolated initiatives proposed by specific departments or employees. The outcome is a strategy lacking central coordination, which hinders 43% of these companies from measuring the technology’s impact on their businesses.
Addressing the Need for Coordinated AI Strategies
The World Bank categorises 56% of Argentine firms as “experimental adopters,” as they utilise one or two generative tools for a singular function without technical or governance capabilities.
Carlos Rodríguez-Castelán, the World Bank’s Chief Economist for Latin America and the Caribbean, emphasised the undeniable emergence of AI. “The question remains whether the region will be able to employ it productively. A powerful tool is of little relevance if workers and companies lack the capacity to act on the information they generate. Governments that invest now in skills and business capabilities are likely to reap substantial benefits,” he stated.
Investing in Value Creation Rather Than Just Capital
The analysis underscores that Latin America and the Caribbean possess the necessary resources to secure a prominent position within the global AI infrastructure. For instance, the region is rich in critical minerals essential for the technological value chain but faces challenges regarding refinement capacity.
These conditions create opportunities for foreign organisations seeking to leverage both the availability of these resources and the region’s strategic geographical location through significant investments and the establishment of large processing facilities.
The World Bank suggests that for this influx of foreign investment to yield genuine economic benefits for the countries in the region, such capital injections must be contingent upon agreements that promote technology transfer, consider collaborative ties with local businesses, and ensure greater national value addition.
In this context, the organisation asserts that governments should implement measures to facilitate the development of the AI ecosystem, positioning themselves as “anchor clients” rather than remaining passive observers or regulators.
Susana Cordeiro Guerra, Vice President of the World Bank for Latin America and the Caribbean, concluded that “the region possesses tremendous human talent and abundant resources. The current priority is to leverage these strengths through consistent policies and investments that enhance productivity, create better jobs, and increase incomes.”