What Can Artificial Intelligence Do for Stagnant Productivity in Latin America and the Caribbean?

Bas Bakker, Sophia Chen, Dmitry Vasilyev, Olga Bespalova, Moya Chin, Daria Kolpakova, Archit Singhal and Yuanchen Yang

No 2024/219, IMF Working Papers from International Monetary Fund

Abstract: Since 1980, income levels in Latin America and the Caribbean (LAC) have shown no convergence with those in the US, in stark contrast to emerging Asia and emerging Europe, which have seen rapid convergence. A key factor contributing to this divergence has been sluggish productivity growth in LAC. Low productivity growth has been broad-based across industries and firms in the formal sector, with limited diffusion of technology being an important contributing factor. Digital technologies and artificial intelligence (AI) hold significant potential to enhance productivity in the formal sector, foster its expansion, reduce informality, and facilitate LAC’s convergence with advanced economies. However, there is a risk that the region will fall behind advanced countries and frontier emerging markets in AI adoption. To capitalize on the benefits of AI, policies should aim to facilitate technological diffusion and job transition.

Keywords: Artificial Intelligence (AI); Productivity Stagnation; Technological Innovation; Latin America; Caribbean; Economic Growth; Labor Productivity; Automation; Macroeconomic Impact; Digital Transformation; Cross-Country Analysis; Regional Development; Technology Adoption; Emerging Economies; Economic Policy.; difference AI; AI adoption; technology producer; AI's role; Artificial intelligence; Productivity; North America; Europe; Global; Asia and Pacific (search for similar items in EconPapers)
Pages: 60
Date: 2024-10-11
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