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An update from the IMF has examined how artificial intelligence can potentially boost productivity in Latin America.
According to a blog post by the IMF, some countries reportedly risk missing out on the full economic benefits of AI, but “more formal jobs and expanded digital access can help.”
Bas B. Bakker, Sophia Chen, Dmitry Vasilyev noted in the update from the IMF that Latin America and the Caribbean has long been “a region with one of the most informal labor markets.”
As mentioned in a blog post, a large part of the workforce is “outside of the formal economy, leaving many people without access to benefits and protections.”
Informal businesses are typically small, “have limited access to financial and legal systems, and struggle to attract investment.”
They are also less likely to adopt new technologies because they “lack the talent and scale that makes such innovation viable.”
As available data and research reveals, “less than half of the region’s jobs are likely to be highly impacted by AI.”
According to the blog post from the IMF, this is lower than “for advanced economies like the United Kingdom or United States, and is 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.
As explained in a blog post, the relatively low exposure to AI may “help the region avoid more immediate disruptions, but countries also risk missing out on the full benefits of AI-driven economic growth, as we show in a recent working paper.”
The IMF update pointed out that “among exposed jobs, 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.”
Bringing more people into formal work will “help the region fully harness AI’s potential for growth.”
Formalization would help more users take advantage of “the benefits of AI and allow workers and businesses to leverage AI for growth.”
Countries can encourage relatively new businesses to “transition into the formal sector by expanding access to finance and streamlining regulation.”
As noted in a blog post , easing regulatory burdens such “as occupational licensing restrictions can reduce the costs of operating in the formal sector.”
The IMF update concluded that “providing enhanced education, training and social safety nets will equip workers to adapt to an AI-driven economy and ensure that they are not left behind.”