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By 2035, use of AI could increase the South American GDP by 1%. Is it time to invest more in technology?
It’s not a secret that the Latin American economy needs to rethink itself to avoid deeper stagnation. Commodity dependence and productivity deficit are defining current economic development, and, as analysts have noticed, these are neither adequate nor appropriate elements to secure growth in the next years.
While some suggest that Latin America should invest in education and promote larger trade agreements with European and Asian economies, a recent study published by Accenture argues that the future lies on Artificial Intelligence (AI).
The study, written by Armen Ovanessoff –Principal Director at the Institute for High Performance– and Eduardo Plastino –Research Fellow at Accenture–, states that a higher investment in AI could increase productivity and, therefore, accelerate economic growth. While some countries are already working towards the implementation of machines, algorithms, and bots to increase efficiency, there’s still much to be done to reach the objective set in the study: “to transform our thinking about how to generate growth”.
Latin American economy is highly volatile. The up-and-downs of commodity prices have determined the latest economic booms in the region. Ovanessoff and Plastino are going against this economic trend. While the region has had times of prosperity –and has reaped from high commodity prices– it has also suffered from times of slow growth. The problem that arises from this is this region hasn’t found the right way of tackling times of economic decay.
Even though global economies have suffered from consistent decline in growth and productivity rates, Latin American lags even further. In comparison to Asia, the case of South America is worrisome.
From 2001 to 2015, South American annual change in productivity has gone from less of 1% to -1%. In the same timeframe, Sri Lanka’s productivity has grown steadily from 1% to more than 3%. Among these countries, the productivity of Colombia seems to be the more stable one, while Chile and Argentina’s are more volatile and in decline.
According to Accenture’s study, investment on AI can change everything about capital decreasing efficiency. The paper states that, unlike conventional capital, AI can improve in time, thanks to auto-learning capabilities. However, the main point of the study is that Latin American economic growth, measured by the growth in Argentina, Brazil, Chile, Colombia and Peru after the implementation of AI, will increase by a maximum of 0,9%.
Despite the optimistic outlook that the Accenture study presents, there’s something to take from this: South America should increase its investment on AI. It won’t only increase the efficiency and productivity, but it will have a direct and medium-term impact on the economy of the region.
LatinAmerican Post | Juan Sebastián Torres
Copy edited by Susana Cicchetto