The AI Revolution is Here: How Will Latin America and the Caribbean Respond?

To maximize AI’s advantages for all, LAC must build robust digital public infrastructure.

March 1, 2024

This technology offers extraordinary potential to accelerate the 2030 Agenda

UNDP Trinidad and Tobago

Artificial intelligence (AI) is already transforming the world and is widely expected to alter countries' growth and development trajectories. AI is broadly defined as the ability of machines and systems to acquire and apply knowledge, and to carry out intelligent behavior. In the context of sustainable development, this technology offers extraordinary potential for accelerating the achievement of the Sustainable Development Goals by opening new opportunities for education, health care, production, economic growth, communication, and transportation, among others.  However, it also comes with significant risks for sustainable development.

To timely engage in the global discussion on AI in, Latin America and the Caribbean (LAC) as a region must straddle the line between seizing the right opportunities and mitigating its perils.  

A Current Assessment of AI in LAC

Initial data on the uptake of AI in industries in LAC shows that our region is already lagging behind global adoption rates. While AI is forecasted to contribute up to 5.4 percent of Latin America's GDP by 2030, equivalent to approximately US$ 0.5 trillion, this number falls behind those for North America, poised to gain over 14.5 percent of its GDP in the same period.  LAC’s lower uptake reflects limited public investment in science and technology, insufficient skill levels necessary to embrace AI, and a highly informal economy dominated by small enterprises.

There are however factors that show there is still opportunity on the horizon. Despite low economic growth in the region, LAC is a highly entrepreneurial region. The technology industry has grown rapidly, up 5.6 percent since 2022. The rising rate of tech startups valued at more than US$ 1 billion, otherwise known as ‘unicorns’, is a testament to this boom. In 2022 alone, there were 34 of these unicorns, standing out among developing regions. Furthermore, governments in the region are open to experimenting innovatively and embracing digital technologies for national registries, data collection, and citizen engagement.

If LAC is to reap the potential development gains of the AI revolution in a way that is inclusive, ethical, and sustainable, it needs a deliberate regional commitment to build a robust AI ecosystem, and it must start now.  Among its several components, this ecosystem must include:

(i) Substantial investment in digital public infrastructure, 
(ii) Education and upskilling of the workforce, and 
(iii) Effective governance

Digital Public Infrastructure to Reduce the Digital Divide

To maximize AI’s advantages, strong digital infrastructure, including widespread internet access and reliable digital services, is a pre-condition. However, LAC is among the most unequal regions in the world also when it comes to technology. Currently, about 74.3 percent of the population has broadband access, but only 37 percent have the necessary internet connections at home required to study, work, or complete online transactions. When we look beyond averages we see that access is very unequally distributed.

The digital divide is also acutely evidenced between rural and urban centers. Nearly 3 out of 4 people in cities have access to broadband coverage, compared to 1 in 4 rural inhabitants. There are also large discrepancies across countries and their neighbors: only 5 of the regional largest economies have 5G commercial capabilities (Brazil, Chile, Colombia, Peru, and Mexico). These disparities reflect the already unequal distribution of income in the region that, if remains unchanged, will determine who benefits from the AI revolution and who is left behind.

Education and Upskilling the Workforce

The region is facing what could be considered an education crisis. According to OECD's Programme for International Student Assessment 2022, approximately 75 percent of students in LAC fall below basic proficiency in mathematics and 55 percent sit below basic proficiency in reading. Again, these disparities in education also widen between rural and urban areas and along socioeconomic lines.

The interconnection between education and the labour market presents a higher risk, meaning governments in the region will have to simultaneously address AI’s impact on both students and the workforce.

Currently, the Inter-American Development Bank (IDB) estimates that job automation rates in the region could soar as high as 36-43 percent by 2030. The region must continue to invest in STEM education in Schools while preparing its workforce. By retraining workers who lost their jobs due to AI and cultivating high-in-demand skills, the region can remain resilient in the face of these looming shifts.

Effective Governance: values, policies, and institutions

Public policy has a pivotal role in driving digital ecosystems. Whether by promoting digital literacy, ensuring the accessibility of digital infrastructure, or supporting new digital business models, policies can significantly improve the population's readiness to engage with AI technologies, and ensure that regulation is conducive to innovation while protecting the interests of all stakeholders.

To implement these policies, the region needs institutions that can leverage the power of AI, reacting quickly to a fast-changing technological environment. In some cases, this means strengthening existing institutions, while in others, it will require the creation of new government capacities. Currently, for example, 16 countries in LAC have ministries responsible for the innovation agenda. However, only 6 countries in LAC have formulated specific strategies or agendas for AI adoption and promotion. And even where strategies are in place, they often lack a holistic approach. One of the critical challenges in designing policies is ensuring broader participation and engagement of academia, civil society, and the private sector, especially small and mid-sized enterprises.

Projects such as the AI Readiness Assessment, currently being piloted by UNDP in the region, offer governments guidance on ethical AI regulatory approaches. As AI technologies evolve, institutions with the capacity to continuously adapt and respond will be the most successful.

A Final Message to the Region

To leverage AI as an enabler for sustainable development in LAC, decisive action to enable a supportive ecosystem is required.  Substantial investment in digital public infrastructure, education, and upskilling, together with an effective governance are key elements of this ecosystem.  In this process, regional cooperation will be fundamental. By paving a common view and sharing infrastructure, experiences, and best practices, countries can learn from each other and collectively tackle common challenges. A regional approach can also help navigate the perils of regulation, bringing a unified voice to the global debate.

UNDP stands available as a steadfast partner in digital for the region. With the launch of LAC’s Digital 4 Development Hub in Latin America and the Caribbean, we enhance our technical assistance for countries in the region to leverage digital technologies as a driver of inclusive and sustainable growth.  

These reflections portray a blunt reality. If measures are not taken, AI will exacerbate already high inequalities, further polarize societies, and make collective action increasingly difficult. Therefore, the message is clear: action is needed to harness AI as a force for good – a driver of improved well-being for people and the planet; and it is needed now.  Only through decisive actions and cooperation can we shape a future where AI drives development in LAC that leaves no one behind.