The Chaotic Future of AI in Latin America

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We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

•The Chaotic Future of AI in Latin America

•Darkness Reigns Over Cuba

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•The Chaotic Future of AI in Latin America
635 words | 3 minutes reading time

Artificial intelligence’s advancement in almost all aspects of life is inevitable. It is crucial that governments ensure legislation and public policy are adjusted to reflect this reality. Moreover, AI holds the potential to significantly impact key sectors globally; amid this state of affairs, developing regions, particularly Latin America, must exercise heightened vigilance.

Overview. When compared to developed nations, Latin America’s technological lag is undeniable. This hampers the region’s ability to seize opportunities, also deepening its inability to mitigate the risks that come with new technologies like AI.

• While advanced economies allocate up to 2% of their GDP to these technologies, in Latin America, the average barely reaches 0.13%. This disparity is also reflected in efforts to equip the workforce with technological skills and in the creation and reinforcement of adequate regulatory frameworks.

• In the United States, while no specific federal legislation on AI exists, agencies such as the FDA and the FTC have issued sector-specific regulations. Firms like Google and Microsoft are developing their own ethical frameworks to ensure responsible use.

• Meanwhile, in the EU, the Artificial Intelligence Act has been widely discussed and is close to being enacted. It has, admittedly, come under fire for being excessively strict, with European legislators occasionally being cast as neo-Luddites.
  
  

Why It Matters. According to a study by the Inter-American Development Bank (IDB), in an ideal scenario, by 2030, AI adoption could boost economic growth in some Latin American countries by up to 5.4%. This scenario depends on a flexible regulatory framework that ensures legal certainty for investments and the use of AI, as well as the protection of consumer and sensitive governmental data.

• According to Sacha Alanoca, an AI governance researcher at Stanford and Harvard, it is essential for political authorities to take a leading role in creating the rules of the game.

• This is particularly relevant for Latin American countries, where the rules must be adjusted to conditions of greater uncertainty and underdeveloped technological infrastructure.

• Alanoca, who helped draft EU legislation on AI, believes that regulation should be flexible, with emphasis place on high-risk applications such as healthcare. She also mentioned that regulators must strike a balance between the risks and benefits of the technology, mitigating the negative effects of AI without over-regulating it, which could stifle growth.
  
  

Between the Lines. Predicting the impact of such a dynamic technology in a region as volatile as Latin America is exceedingly complex. Nonetheless, this has not halted the ongoing debate surrounding the potential effects of AI adoption, with one of the primary concerns being its capacity to displace workers.

• According to Melinton Navas, cloud security senior manager at PayPal, one of the main challenges for AI adaptation in the region is the lack of skilled personnel to oversee the technology’s use. He also added that “there is very little interest in many organizations,” as they see it as high-cost and unnecessary.

• The impact of AI on productivity is greater in activities with high economic complexity. Thus, AI is more likely to replace jobs in more sophisticated economies. In less developed economies, where tasks are less prone to automation, AI tends to cause less worker displacement.

• Thus, Latin America’s low-tech, highly informal economies paradoxically serve as a protective barrier for many jobs. However, this situation creates undesirable incentives, as it discourages the technological innovation necessary for creative destruction.
  
  

Balance. Latin American countries lag significantly behind the developed world in terms of AI advancement. Implementing suitable regulatory frameworks and developing specialized talent are essential steps to address this challenge.

• For Alanoca, it is crucial to act more swiftly in implementing AI regulations. She emphasized the importance of adopting an entrepreneurial and agile mindset when drafting laws, particularly those regulating technologies like AI.

• Although Latin America is not at the forefront of AI efforts, it cannot afford to fall behind. As globalization and technology broaden development opportunities, they also transform competitiveness and security into global challenges.

•Darkness Reigns Over Cuba
561 words | 3 minutes reading time

In Cuba, electricity is a luxury that the government can ill afford to provide. Last week, the country’s power grid collapsed four times in as many days. The Antonio Guiteras thermoelectric plant—the country’s largest—also failed, leaving almost all of the country’s inhabitants without power.

• Any possible improvement was wiped out by Hurricane Oscar, which left at least seven dead. Oscar was soon downgraded to a tropical storm, but the poor state of the island’s infrastructure made its effects more severe than the storm’s strength would suggest.

• The National Defense Council soon embarked on a policy of energy rationing and suspended all non-essential activities. In order to preserve scarce fuel reserves for the country’s hospitals, workplaces and schools will remain closed until at least next week.

• On Tuesday, the regime claimed to have restored power to 70% of households, especially in Havana, but other grid failures are likely to occur. For now, rolling blackouts will become more frequent.
  
  

Panorama. The situation has led to an escalation in tensions, with protests and cacerolazos taking place. This unrest is unlikely to bring great shifts, and the regime has warned against “vandalism,” threatening exemplary sanctions against those who “disturb the tranquility of our people.”

• The regime lacks permanent solutions to its electricity dilemma. The Cuban national grid relies on plants built in the 1970s, which have far surpassed their expected lifespan of 25-30 years.

• The regime makes ample use of ad hoc solutions, with the use of powerships becoming particularly common in the last few years. It has, however, shown itself unable to pay for the fuel required by Karadeniz, its Turkish provider of floating power generators.

• Of course, Havana blames the United States. The politburo, led by President Miguel Díaz-Canel, insists that its difficulties come down to the restrictions imposed by the U.S. embargo on Cuba.
  
  

Demography. The power crisis is unlikely to shake the regime from power; it will only serve to intensify the Cuban exodus. Independent studies suggest that between 2022 and 2023, the country’s population fell from 11 million to 8.62 million, an 18% fall. The regime only admits to a 10% decline in population.

• The government does not show great interest in reforming its economic model. Out of ideological zeal or mere ineptitude, the regime has ignored Beijing’s tactful suggestions to embrace a more state capitalist model.

• Cuba’s traditional allies—Venezuela, China, and Russia—have been reluctant to help. Their relationship is characterized by solidarity statements, not investments. Cuba, with a basket-case economy and a decimated population, hardly inspires the world’s investors.

• China could prove an attractive trading partner, but at this critical juncture, Cuba has little to offer. When Cuban President Díaz-Canel visits Beijing, he can only hope to receive charitable donations.
  
  

Balance. The Cuban crisis has no end in sight. Protests are unlikely to have any major effects, as it is more attractive to settle in the United States than to languish in a country that even with reforms, would take decades to recover.

• The United States may, of course, restrict Cuban immigration, especially if, as polls suggest, Donald Trump triumphs in two weeks’ time. Even so, Cubans will continue to leave en masse.

• Cubans command a special position in U.S. politics, especially in Florida, an increasingly Republican state.

• It is entirely conceivable for a future President Trump to greatly restrict immigration, without necessarily amending or repealing the Cuban Adjustment Act, which grants Cuban nationals special privileges when applying for U.S. permanent residency.