Can Argentina become the world’s next AI hub? – Buenos Aires Herald

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Before the $LIBRA crypto scandal shook his government, one of Argentine President Javier Milei’s boldest technological promises was turning the country into the world’s next Artificial Intelligence (AI) hub.

Even though it is not entirely clear what that would entail, Milei and other government officials have mentioned the country’s low energy prices, highly qualified human resources, and his vow to keep technology deregulated as factors that could position Argentina as a world leader.

Generative AI took the world by storm in the early 2020s, when various tech companies launched models capable of producing text, images, videos, or music at the user’s request. To do that, these models learn the underlying patterns of massive swaths of training data and can produce their own.

Experts told the Herald that being an AI hub can mean many things. From foreign companies installing data centers to take advantage of the relatively cheap energy, all the way to national businesses making world-changing technological contributions. 

Does Argentina fit one of those descriptions?

Chief presidential advisor Demian Reidel, the main proponent of making the country an AI Silicon Valley, often cites Argentina’s low energy prices. During the announcement of  Argentina’s “Nuclear Plan” last December, he said that new nuclear capabilities and “inhospitable lands at low temperatures throughout Patagonia” were “comparative advantages for setting up Artificial Intelligence (AI) servers.” As a matter of fact, Argentine company Unblock announced it is using flaring gas in Vaca Muerta to power AI data centers.

Reidel had even champíoned the launch of a so-called Argentine Center for Artificial Intelligence (CAIA, by its Spanish acronym). It was scheduled for February 25. However, less than a week after the $LIBRA cryptoscandal, the government sent an email to the attendees of the event saying the launch had “been postponed due to a change of venue,” without setting a new date.

Data centers or apps?

Last October, sources from Oracle confirmed to the Herald that they were exploring the possibility of opening a data center in Argentina. The project could mean an investment of US$100 million. Oracle is a U.S. multinational computer technology company providing infrastructure for cloud computing and AI. Data centers are usually required to train the so-called foundational models, like GPT or DeepSeek, and require massive amounts of energy to operate.

According to Michael Mandel, Vice President and Chief Economist at the Progressive Policy Institute, Argentina could become a powerhouse — but not in the way the government seems to think.

“When I think about [Argentina as an] AI Hub, I don’t think about the foundational models because those are just too expensive to build for anyone except the largest companies,” he said. “I was thinking about apps that require AI, which are much more suited to an economy like Argentina’s.”

Mandel posits that it is “completely plausible” for the country to have a share in the global AI app market. According to a report he wrote, Argentina has an estimated 12,000 AI-related jobs – a sizeable number for Argentina’s tech sector. The document mentions homegrown AI companies such as BotMaker, a company that creates generative, large language model-based solutions for customer services; Keepcon, which leverages AI for content moderation, and Etermax, an Argentine tech company created in 2009 that helped develop a smartphone application to diagnose psoriasis.

“All this doesn’t actually require data centers or low energy costs,” Mandel added, as such software could be “running off a data center that could be anywhere in the world.” 

For Cristina Lorenzo, Oracle’s general manager in the country, the controversial Large Investment Incentive Regime (RIGI) launched by Milei “generates a positive context” making it “easier to invest”, but that’s not the reason things are moving along.

“It’s not that Oracle is going to pay attention because of that, it was already paying attention.”

Unregulated and artificial

Another point of contention is the regulation of AI. In 2024, the European Union launched the Artificial Intelligence Act, which established a common regulatory and legal framework for the technology. Also last year, a commission in Argentina’s Lower House started to discuss several bills to regulate AI. Reidel was dismissive of proposals to regulate the technology, saying they could harm the prospect of investments. 

“No stupid regulation is going to pass,” he promised in an interview with the Club de Inversores streaming channel.

According to analysts and sources in the AI sector, however, that is not enough for companies to invest in a country like Argentina. “I am not so sure that the fact that there is no regulatory framework [for AI] is a positive differential,” Agustín Schachmann, vice president of sales in Oracle, told the Herald. 

“The places that have decided to regulate are those where it has been adopted the most,” he added, saying that the use of the technology in Argentina is still nascent. He said that AI regulation should be debated because there is an “ethical issue that gets in the way.”

Nick Srnicek, a Canadian writer and academic who has investigated the global digital economy, agreed with the need to regulate the technology.

“It seems like the only things that are being regulated [in the world] are clearly terrible things for society — creating deepfakes of people who haven’t consented to it and manipulating elections with AI tools,” Srnicek told the Herald, adding that the promise to not regulate those seems like “rhetoric rather than actual substance.”

Srnicek said it is “difficult to imagine” the top-tier AI engineers and scientists in the world moving from Silicon Valley to Argentina, particularly because of the large salaries they can earn in San Francisco. He added that the United States and China’s legislation on the matter “are not significantly different from this idealized deregulated space” Milei is promising. Moreover, representatives for every major tech company in the U.S. attended Donald Trump’s inauguration, and X owner Elon Musk is a minister in the administration.

For Srnicek, another factor working against Argentina is that Silicon Valley already has a massive pool of talent, funding, and capital, a crucial factor when talking about billion-dollar tech ventures. 

“There is a reason why all these companies come out of that same spot. It can’t just be replicated by simply saying, ‘We won’t have any regulations on it.’”