Harnessing Generative AI in Central America: Opportunities, Challenges, and the Digital Divide

By Mayora IP

Generative Artificial Intelligence (Gen AI) could significantly transform jobs and boost productivity in Latin America and the Caribbean, but existing digital infrastructure gaps may hinder its potential benefits, according to a new research paper from the International Labour Organization (ILO) and the World Bank.

The research, Buffer or Bottleneck? Employment Exposure to Generative AI and the Digital Divide in Latin America, finds that between 26% and 38% of jobs in the region could be influenced by GenAI. However, the technology is more likely to augment and transform jobs rather than fully automate them. Specifically, 8% to 14% of jobs could see productivity improvements through GenAI, while only 2% to 5% are at risk of full automation.

The study reveals that women, as well as urban, younger, and educated workers in formal sectors, face higher risks from GenAI automation, potentially worsening regional economic inequalities and informality.

A recent article by McKinsey & Company, a global management consulting firm, also discusses the transformative potential of generative AI but specifically in Central America. This technology is projected to add USD 20 billion to USD 30 billion annually to the region’s economy by 2030, significantly impacting sectors such as financial services, agriculture, and business process outsourcing.

Gen AI could automate up to 50% of work activities in Central America, presenting both opportunities and challenges. While the technology promises to boost productivity by allowing employees to focus on more complex tasks, it also raises concerns about workforce displacement. Many workers in lower-wage jobs, particularly in customer service and support roles, may need to transition to new occupations, necessitating collaboration between public and private sectors to provide adequate training.

In terms of value creation, Gen AI can enhance productivity by automating repetitive tasks. For instance, companies in the region could leverage gen AI to streamline operations, as seen in a leading bank that reported a 40% increase in developer productivity. Similarly, contact centers can utilize AI-driven virtual assistants to improve customer service efficiency.

According to McKinsey & Company, to harness the full potential of Gen AI, organizations in Central America should define clear long-term strategies and select key domains to pilot its implementation.