A new report from the International Monetary Fund (IMF) reveals that artificial intelligence (AI) could be the key to overcoming stagnant productivity in Latin America and the Caribbean (LAC). The region, which has lagged behind in productivity growth compared to other emerging markets like Asia and Europe, faces a critical opportunity to harness AI for economic advancement. The report, titled “What Can Artificial Intelligence Do for Stagnant Productivity in Latin America and the Caribbean?” outlines how AI can drive productivity in various sectors while highlighting the risks if adoption remains slow.

How AI Could Boost Key Sectors

Since 1980, LAC’s productivity has shown minimal improvement, contributing to a widening gap between the region and advanced economies. While regions like Asia have seen rapid growth through technological advancements and increased trade, LAC has been held back by factors such as slow technology diffusion and entrenched informality in its labor markets.

The IMF report underscores the transformative potential of AI, especially in industries with high automation potential such as manufacturing, agriculture, and public administration. By automating routine tasks, optimizing processes, and facilitating decision-making, AI could significantly enhance productivity in these sectors. For example, the report mentions how AI-driven technologies can optimize traffic management systems, streamline government services, and enhance the efficiency of public safety measures like predictive policing.

Risks of Falling Further Behind

However, the report cautions that without coordinated efforts to adopt AI technologies, the region risks falling further behind. The IMF notes that the limited presence of AI producers in LAC and the slow pace of technological adoption could hinder the region’s ability to capitalize on AI’s benefits.

Labor Market Impacts Require Careful Planning

AI’s effect on the labor market is a major theme in the report. AI will likely create new roles in areas such as AI system development, data management, and cybersecurity. However, workers in jobs built around repetitive tasks face the highest risk of displacement. To support these workers, the IMF calls for investments in skills training, targeted education programs, and policies that make it easier for employees to move into new, higher-value jobs.

Improving Job Quality Through AI

The report also highlights how AI can improve job quality in essential sectors. Teachers can use AI tools to personalize learning, and healthcare professionals can use AI-driven insights to streamline care. These tools can help workers focus on skilled tasks instead of routine administrative work, making their jobs more efficient and rewarding.

Challenges: Inequality and Data Protection

The IMF stresses that AI adoption must be inclusive. Wealthier countries and communities often benefit first from new technologies, which could widen both regional and global inequalities. To prevent this, policymakers should create conditions that support broad access to AI tools and training. Data privacy remains another central concern. Because AI systems depend on large volumes of personal data, countries need strong legal frameworks that protect individuals while still supporting innovation.

Policy Recommendations

To unlock AI’s full potential, the IMF recommends that LAC governments:

1. 1. Strengthening AI infrastructure: Governments should invest in the necessary digital infrastructure to support AI development and implementation.

1. 2. Fostering innovation ecosystems: Creating environments that encourage innovation, such as AI research hubs and startup incubators, can help countries become leaders in AI.

1. 3. Promoting regional cooperation: Countries should collaborate on AI policy and development to ensure that the region as a whole benefits from AI advancements. This includes sharing best practices and developing joint initiatives to foster AI adoption across borders.

1. 4. Developing regulatory frameworks: Policymakers need to establish regulations that ensure AI is used responsibly and ethically. Also with a focus on data privacy, security, and accountability.

Need Help?

If you have questions or concerns about global AI guidelines, regulations and laws, don’t hesitate to reach out to BABL AI. Their Audit Experts can offer valuable insight, and ensure you’re informed and compliant.