Since the beginning of 2019, international organizations pointed out Artificial Intelligence as a critical investment to increase productivity in Latin America. The Inter-American Development Bank estimated that the Gross Domestic Product (GDP) of the region would increase by one point if Latin American countries invest in AI. And in today’s activity, LatAm is at a critical time to do so.
Economic growth forecasts for Latin America in 2019 are not the best. Both the International Monetary Fund (IMF) and the Economic Commission for Latin America and the Caribbean (ECLAC) reduced their growth forecasts for the region, which were already not very encouraging. ECLAC projected a 1.3% growth in GDP, while the IMF was more pessimistic: 0.2% would be the region’s GDP growth.
These numbers highlight the urgency that Latin America has to modernize its processes to boost productivity and, thus, remain competitive. In this process of modernization, Artificial Intelligence plays a crucial role.
How Much prepared are Latin American countries to adopt AI?
The impact of AI will be different in each Latin American country. In the AI Readiness Index, the consulting firm DuckFrontier pointed out the economic and social effects that this technology could have in the region.
The DuckFrontier index is a measurement that crosses the Development and Dissemination variables of AI. This indicator links all the factors related to the implementation and its conditions (for example, related policies, innovation environment, technological ecosystem and cybersecurity, human capital) with another axis, equally important, called Participation of the benefits of AI. With this information, the likelihood of a country experiencing social advantages, while mitigating inequalities, labor crises, economic difficulties, and analyzing governance and building coalitions to incorporate innovation is detailed.
When considering these variables, the impact that AI can have on increasing productivity in Latin America depends on the current situation in each country. In Puerto Rico, for example, forecasts estimate that AI could grow GDP to 3.8% per year, while this figure can reach 7.8% in Costa Rica. Mexico is one of the nations that have more possibilities to take advantage of the benefit of AI. However, there is also a risk that this technology will widen the social gaps that currently exist. For avoiding this situation, each country needs to create equitable opportunities for the population.
In Puerto Rico, the benefits of AI will be equitable.
“Puerto Rico can be greatly benefited at the structural level with the opportunities brought by technologies such as the cloud or artificial intelligence,” said Microsoft Manager Puerto Rico and Cariba Herbert Lewy.
The country needs to build the capabilities of its future workforce and develop the technical skills of current workers to achieve this, for the consideration of the Microsoft executive. “If we collaborate in an agile way, we can take advantage of the available technology, and from which it will come, to generate more equitable societies,” he said.
According to a DuckFrontier study for the Caribbean country, Puerto Rico could increase its GDP growth rate from current projections of 1.6% annual average growth until 2030, at levels ranging from 2.7% to 3.8% in about ten years. This scenario will only happen if the country focuses on achieving the maximum possible adoption.
This momentum could be accompanied by an increase in labor productivity four times greater than the current one. At the same time, the demand for more skilled workers would increase. According to this scheme, the Business Services industry would be the most benefited, with a 50% increase in the number of new work hours. The second most benefited industry would be Manufacturing (+ 33%) and the third, Commerce, Hospitality, and Tourism (+ 29%).
In terms of professions, highly qualified positions could be increased by 7 percentage points by 2030 (from 51% in the current scenario to 58% in the situation of maximum AI benefit), with professionals experiencing the highest growth (+42 %) technicians or technical level professionals (+ 35%), and managers (+ 23%).
In Latin America, AI would have a minor impact on GDP for Puerto Rico. Still, thanks to equal access to higher education and new technologies by all population groups, regardless of income, gender, or location, this country is the one with the highest probability of offering the benefits of AI to its entire population.
Costa Rica should take advantage of the areas of opportunity to expand AI benefits.
In case of adopting AI as much as possible, Costa Rica could increase its GDP growth rate from current projections of 3.5% annual average growth until 2030, at levels ranging from 5.6% to 7.8%.
If so, this momentum could be accompanied by a considerable increase in productivity and demand for more skilled workers. According to this scheme, the business services industry would be the most benefited, with 463,000 new jobs (81% of additional jobs in 2030).
“Costa Rica has structural advantages and is in a much better position than many of its regional counterparts in some of these indicators,” said Ineke Geesink, Country Manager of Microsoft Costa Rica.
The academy, the government, and Costa Rican companies must work in areas of opportunity to impose this technology, according to the executive.” It is necessary to do it in time so that the country can take full advantage of technological adoption and equitably share its benefits in society.”, Said Geesink.
In terms of jobs, professions that require a higher qualification could increase by 51% for the next decade. In six of the seven most relevant sectors that were analyzed (Public Sector, Business Services, Commerce, Hospitality and Tourism, Construction, Manufacturing, Mining, Agriculture, and Public Services), the demand for highly qualified jobs could increase. The three sectors that would experience the highest need for skilled employees would be the Business Services, with 490,000 new jobs (160% increase), manufacturing (an additional 20,000 or 53% increase), and the construction sector (with 10,000 new jobs or an increase of 29%).
Costa Rica is in a position of relative weakness to accelerate the adoption of AI and to meet the needs of human capital. However, the country is better positioned in its ability to make these benefits equitable for the whole society compared to other countries in Latin America. This advantage is due to its positive governance indices and relatively acceptable levels of equal opportunity for access to higher education and new technologies, although the country still has a great room for improvement to approach more elevated levels of participation.
Mexico’s challenge is to offer more opportunities for its population.
In a simulation of maximum adoption of Artificial Intelligence technology in the next ten years, Mexico could increase its GDP growth rate from current projections of 2.4% annual average growth until 2030, at levels ranging from 4.6% to 6.4 %. This boost could be accompanied by an increase in productivity and demand for more skilled workers. According to this scheme, the business services industry would be the most benefited, with 9.4 million new jobs or the equivalent of new work hours (109% of additional jobs in 2030).
In Mexico, highly qualified positions could increase by 67% for the next decade. In six of the seven largest sectors that were analyzed (Public Sector, Business Services, Commerce, Hospitality and Tourism, Construction, Manufacturing, Mining, Agriculture, and Public Services), the demand for highly qualified jobs could increase. Services business would require 8.9 million additional highly skilled workers (221% more jobs or the equivalent in working hours); manufacturing, 1.8 million (92%); and construction, 1 million (157%).
Mexico is in a strong position to accelerate the adoption of AI and to meet the needs of human capital. However, it also runs the risk of not making those benefits equitable for the whole society due to its disadvantageous position concerning its ability to guarantee equality in access to higher education and new technologies for all population groups, regardless of income, gender, or location. Although Mexico has the opportunity to improve in the field of Participation of the benefits of AI, its position in the category of Development and dissemination of AI among Latin American countries indicates that it is the second most prepared country to deal with the AI impact on the economy.
Learn to implement AI in an organization responsibly.
“Technology can be a force multiplier that helps generate solutions for some of the biggest challenges facing our world today,” said Brad Smith, President of Microsoft Corp.
The executive also mentioned the ethical problems that exist around AI technologies. He described these as very important and pointed out the need for careful reflection.
” We are committed to doing our part to contribute to a broad and informed the discussion. We will need to develop capacities for countries to act and collaborate more quickly in solving these problems regularly. That is the only way to ensure that machines respond to people,” said Smith.
Microsoft specialists point out that organizations require a cultural transformation to implement an AI strategy successfully. Empathic leadership, a collaboration between departments, trust among employees, and willingness to accept change are some of the tasks that organizations must attend.
It is not easy to do. Microsoft executives themselves point out that they have not always done well at first.
“We are happy to share our lessons and best practices with our partners and customers, and with business decision-makers through AI Business School, a series of free online masterclasses.”
Microsoft launched the AI Business School by anticipating how AI would be used more and more to help businesses innovate and solve problems. For this reason, the company seeks to help business leaders be ready to do so with confidence.
The technology giant recognizes that each industry in public and private sectors face their challenges. Therefore, the company seeks to provide concrete examples for each of them, through adjusted information and real-world case studies.
Microsoft now distributes a new version of AI for Business School, with expanded information for government leaders, new and adapted lessons within our responsible IA module, and an original learning path for education takers and educators in the education industry.