Latin America stands at a critical juncture, with a projected US$100 billion opportunity in artificial intelligence (AI) for knowledge-based services over the next decade. Irene Arias Hofman, CEO of IDB Lab, emphasizes that AI has the potential to significantly improve efficiency and affordability within the region's service economy. However, the influence of AI has thus far been largely confined to manufacturing, leaving service industries lagging behind. If Latin America fails to leverage AI effectively, it risks falling behind in the global AI boom [d05b5ff3].
Currently, investment in AI within Latin America amounts to only US$8.2 billion, a stark contrast to the US$190 billion invested in the global north. A 2022 OECD survey highlights that cost and a lack of skills are significant barriers to AI adoption in the region. Over the past decade, Latin America's service exports have grown by a mere US$52 million, totaling US$235 million, which reflects a global market share of just 1.6% in knowledge-based services [d05b5ff3].
The adoption of AI in Latin America is primarily driven by government initiatives rather than private companies. The World Bank forecasts a modest 1.6% GDP growth for the region in 2024, indicating a need for strategic investments to harness AI's full potential. High-skilled workers are expected to benefit the most from AI advancements, while companies like Slang and Clip are already leveraging AI for workforce upskilling and enhancing customer service. Notably, NotCo, a food-tech unicorn from Chile, utilizes AI to replicate animal products, showcasing innovative applications of the technology [d05b5ff3].
In the broader context of AI's impact on employment, a study based on US commuting zones between 2000 and 2020 found that AI adoption has led to a reduction in employment, particularly in low-paying occupations. The service sector has seen the highest levels of AI adoption, contributing to job automation and widening inequality. Economist Daron Acemoglu from MIT warns that the hype surrounding AI could lead to overinvestment and misallocation of resources, ultimately hindering productivity gains [c866df9e].
Despite concerns about job displacement, some experts argue that AI will not lead to mass unemployment. Philipp Carlsson-Szlezak and Paul Swartz highlight that since 1944, the US economy has added 120 million jobs despite technological advancements. They assert that while AI may disrupt certain roles, it will also create new employment opportunities and drive economic growth [55d438ea].
A recent YouGov poll indicates that nearly half of employed Americans believe AI advancements will reduce job availability in their industry, reflecting a growing concern about the future job market. However, KPMG's U.S. CEO Outlook survey reveals that over 70% of CEOs believe AI will not lead to significant layoffs, suggesting a more optimistic outlook for workforce dynamics [55373b35].
To realize AI's potential in Latin America, significant investments in digital infrastructure and talent development are essential. The region must prioritize bridging the skills gap and fostering an environment conducive to innovation to fully harness the benefits of AI in its service economy [d05b5ff3].