TLDR: Artificial intelligence (AI) is set to significantly impact Latin America’s productivity and GDP, with studies indicating that while a substantial portion of jobs could be influenced by generative AI, full automation risk remains relatively low. The region faces a unique challenge due to its large informal labor market and existing digital divides, which could hinder the full realization of AI’s economic benefits. Strategic investments in digital infrastructure, education, and formalization of labor are crucial to harness AI’s potential for inclusive growth.
Artificial intelligence (AI) is emerging as a transformative force for Latin America’s economies, holding the potential to significantly boost productivity and reshape labor markets, according to recent studies from organizations like the International Labour Organization (ILO), the World Bank, and the International Monetary Fund (IMF). While AI presents substantial opportunities for economic growth, the region’s unique characteristics, particularly its large informal sector and digital divide, pose considerable challenges to fully leveraging these advancements.
Estimates suggest that between 26% and 38% of jobs in Latin America and the Caribbean could be influenced by generative AI (GenAI). However, the prevailing view is that AI will more likely augment and transform existing roles rather than lead to widespread job displacement. Specifically, 8% to 14% of jobs are expected to see productivity improvements through GenAI, while only 2% to 5% are at risk of full automation. This contrasts with advanced economies like the United States or the United Kingdom, where a higher percentage of jobs are considered to be at risk of significant AI impact.
One of the primary factors influencing AI’s impact in Latin America is the region’s extensive informal labor market. More than half of all jobs in Latin America are informal, and in some countries like Bolivia, Peru, and Honduras, this share exceeds two-thirds. Informal businesses typically have limited access to finance, legal systems, and are less likely to adopt new technologies due to a lack of talent and scale. This low exposure to AI in the informal sector may initially prevent immediate labor market disruptions seen in more developed economies, but it also risks preventing countries from fully capitalizing on AI-driven economic growth.
The digital divide is another critical barrier. Up to half of the jobs that could benefit from GenAI-driven productivity improvements—approximately 17 million jobs—are hindered by gaps in digital access and infrastructure. This digital inequality disproportionately affects vulnerable workers and could exacerbate existing economic disparities. Women, younger, and educated workers in formal sectors are identified as facing higher risks from GenAI automation, with women workers, on average, being twice as likely to be at risk of automation from GenAI.
To harness AI’s potential for inclusive growth, experts recommend several key actions. These include fostering inclusive social dialogue among governments, businesses, and labor unions; investing in training and digital skills development to prepare the workforce for an AI-driven economy; strengthening social protection systems; improving digital infrastructure; and implementing policies to help workers in the informal sector transition to formal employment. Formalization of labor is seen as crucial, as it would enable more workers and businesses to leverage AI for growth by expanding access to finance and streamlining regulations.
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Countries like Chile, Brazil, and Uruguay have made notable progress in adopting AI-based technologies, as highlighted by the Latin American Artificial Intelligence Index (ILIA) 2024. However, the region as a whole still faces challenges related to unequal access to digital technologies and infrastructure, which limit the benefits of AI, especially for the most vulnerable populations. The strategic implementation of AI-based technologies is viewed as a catalyst for inclusive growth, with the potential to enhance processes in sectors such as defense, health, education, and public administration.
