How Artificial Intelligence Can Boost Productivity in Latin America

IMF Blog, March 20, 2025

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Latin America and the Caribbean has long been a region with one of the most informal labor markets; a large part of the workforce is outside of the formal economy and lacks access to benefits and protections.
Informal businesses are typically small, have limited access to financial and legal systems, struggle to attract investment, and are less likely to adopt new technologies because they lack the talent and scale that makes such innovation viable.
Less than half of the region’s jobs are likely to be highly impacted by AI. This exposure is lower than for advanced economies like the United Kingdom or United States, mostly due to the large size of the informal sector.
Overall in the region, more than half of all jobs are informal.
In some countries, like Bolivia, Peru and Honduras, the share of informal jobs exceeds two-thirds, according to International Labour Organization data.
Among jobs exposed to AI:
- About half, such as those in healthcare, would gain from AI-enhanced productivity without major job losses.
- Others, like call center jobs, would face a high risk of displacement.
The relatively low exposure to AI may help the region avoid more immediate disruptions, but countries risk missing out on the full benefits of AI-driven economic growth (as discussed in a recent working paper by the authors).

Bringing more people into formal work will help the region fully harness AI’s potential for growth by enabling wider access to AI benefits for users, workers, and businesses.
Encourage business formalization by:
- Expanding access to finance for relatively new businesses.
- Streamlining regulation to reduce barriers to formal entry.
Ease regulatory burdens such as occupational licensing restrictions to reduce the costs of operating in the formal sector.
Provide enhanced education, training, and social safety nets to equip workers to adapt to an AI-driven economy and ensure that they are not left behind.

Authors: Bas B. Bakker, Sophia Chen, Dmitry Vasilyev — March 20, 2025