IMF Working Papers

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

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

October 11, 2024

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Bas B. Bakker, Sophia Chen, Dmitry Vasilyev, Olga Bespalova, Moya Chin, Daria Kolpakova, Archit Singhal, and Yuanchen Yang. "What Can Artificial Intelligence Do for Stagnant Productivity in Latin America and the Caribbean?", IMF Working Papers 2024, 219 (2024), accessed May 17, 2025, https://doi.org/10.5089/9798400290770.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Artificial intelligence, Labor productivity, Production, Productivity, Technology

Keywords: AI adoption, AI's role, Artificial intelligence, Artificial Intelligence (AI), Asia and Pacific, Automation, Caribbean, Cross-Country Analysis, Difference AI, Digital Transformation, Economic Growth, Economic Policy., Emerging Economies, Europe, Global, Labor Productivity, Latin America, Macroeconomic Impact, North America, Productivity, Productivity Stagnation, Regional Development, Technological Innovation, Technology Adoption, Technology producer

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