The Rise of the Machines

Dear all,

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

In this issue, you will find:

• How Will AI Affect Latin American Jobs?

• The Drone Wars Come to Latin America

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The GCaM Team

In the sun-drenched offices of a Bogotá call center, Carla, a 27-year-old customer service representative, just discovered that her company is piloting a chatbot powered by generative AI.

• Her tasks—once dependent on empathetic listening and fast typing—are now being delegated to an algorithm trained to do both, faster.

• She isn’t alone. Across Latin America, the AI wave is no longer theoretical. It’s knocking on the office door.

Panorama. According to recent research by the World Bank and ILO, between 30% and 40% of jobs in Latin America and the Caribbean are exposed to generative AI (GenAI). But "exposure" doesn’t mean the same thing across the board.

• The region’s labor market falls broadly into three categories in the face of AI. First, there are those at high risk of full automation—an estimated 2% to 5% of roles, particularly in sectors like finance, insurance, and public administration.

• Second, roughly 8% to 14% of jobs could benefit from AI augmentation, where productivity gains could soar through effective human–machine collaboration.

• Then comes “the big unknown”: an estimated 14% to 21% of jobs whose future viability will depend largely on how quickly and effectively generative AI is adopted.

Regional Paradox. Surprisingly, it’s not rural or low-skilled workers who face the greatest disruption. Instead, the most exposed are urban, high-skilled, and formally employed professionals—especially younger workers. While this shift may offer opportunities for innovation and upskilling, it also points to a deeper structural challenge looming over the region’s labor markets.

• Roughly half of all jobs that could be enhanced by AI lack the basic digital infrastructure to harness it. That means nearly 17 million jobs across 16 countries are effectively stuck in limbo. The talent exists. The tools don’t.

• This includes teachers who could use AI to generate lesson plans, nurses who could streamline patient intake with chatbots, and retail workers who could benefit from automated inventory tools—but who often lack even a desktop computer at work.

• The digital gap is not evenly distributed. In countries like Guatemala, Honduras, and Nicaragua, the lack of infrastructure is so severe that even jobs in tech-friendly sectors remain disconnected from the AI boom. In contrast, Uruguay and Costa Rica are edging closer to the adoption frontier, with higher exposure and better connectivity.

Between the Lines. Projections from the IMF estimate that AI could add up to 1.5 percentage points to annual productivity in high-income countries.

• In Latin America, the potential is lower, yet still meaningful—particularly for a region long mired in low productivity growth.

• But beware of easy optimism. Adoption is not cheap. The cost of licensing tools like ChatGPT or Copilot—$20–30 per user per month—may seem modest in New York, but it’s significant in Tegucigalpa or Santa Cruz.

• With informality rates exceeding 50% in some countries, most workers are outside the reach of corporate AI rollouts or government-backed digitalization schemes.

Emerging Risks. If left unmanaged, AI won’t just widen the productivity gap. It will widen everything else: income gaps, gender gaps, rural–urban divides.

• Women, for instance, are more likely to hold clerical and service roles at risk of automation—but less likely to work in companies with AI-ready infrastructure.

• Add to this the reality that AI skills—like prompt engineering or data analysis—require foundational education and stable digital access, both of which are unevenly distributed in the region.

• Without targeted reskilling and infrastructure investment, GenAI could become less of a productivity revolution, and more of an exclusionary trap.

What's Next. The region’s governments now face a delicate balancing act. Move too slowly, and the benefits of AI may concentrate in already-advantaged sectors and regions. Move too quickly, and investments risk missing the mark in places that lack the infrastructure or skills to take advantage of them.

• The way forward lies in focused action: expanding digital infrastructure in underserved areas, crafting sector-specific strategies in health, education, and public services where AI can enhance human work.

• AI is certainly coming to Latin America. The question is whether it will be a catalyst for inclusive growth—or a sledgehammer to an already fragile labor market.

Drones are here to stay—not just on the battlefield, but across every layer of armed violence.

Panorama. Russia’s invasion of Ukraine—Europe’s largest state-on-state war since 1945—has become the defining military conflict of the 21st century.

• Unfolding as a rare case of conquest warfare in the post–Cold War era, the conflict has also served as a live testing ground for a technology not entirely new, but never before deployed on such a massive scale: drones.

• Unmanned aerial vehicles (UAVs) have become the weapon of choice, maximizing enemy casualties while minimizing risk to one’s own forces. Equipped with precision cameras and capable of remote operation from a safe distance—often with interfaces resembling video games—UAVs can detonate explosives or conduct surveillance with lethal efficiency.

• What sets them apart is how easy they are to acquire and deploy. This accessibility has not gone unnoticed by Latin America’s criminal networks.

Why It Matters. In 2024, a drone detonated on the roof of a prison in Guayaquil, Ecuador during an attempted inmate escape. That same year, Peru neutralized 35 drone threats during the APEC Leaders’ Summit.

• In February 2025, a Mexican general narrowly survived a drone attack on his convoy. Just weeks later, a Colombian soldier was killed in Catatumbo when an ELN-operated drone struck during a combat mission.

• Organized crime across the region is already leveraging drones for more than violence: they are used to surveil border crossings, deliver phones to prisons, and even smuggle narcotics. In Mexico, cartels have adopted thermal imaging drones to map out law enforcement movements and identify blind spots for trafficking routes.

• The real danger lies in their accessibility. Drones are not a restricted or specialized technology. Anyone with a basic understanding of electronics can buy one online and learn to operate it through a simple tutorial.

Between the Lines. According to R. Evan Ellis of the U.S. Army War College, at least 14 Latin American countries have UAV fleets and anti-drone systems. Yet the regional response remains constrained by limited budgets and bureaucratic barriers to procurement.

• Meanwhile, the Ukraine conflict has not only showcased the effectiveness of drone warfare—it has supercharged demand and industrial output.

• In 2021, global drone production was estimated at 5,000 to 10,000 units annually. By 2022, that jumped to 100,000; in 2023, it reached 1.2 million; and in 2024, up to 3.5 million.

• Much of this output has served the Russian and Ukrainian militaries—yet as always, surplus has spilled into the black market.

What’s Next. Both Russia and Ukraine have begun deploying drones resistant to standard countermeasures—tethered to fiber-optic cables rather than relying on GPS or radio frequencies, making them impervious to jamming.

• Ukraine has also used unmanned naval vessels to target Russian warships, a development with clear implications for Latin America’s port security and maritime trafficking routes.

• The rise of drone warfare—and its spillover into organized crime—signals a profound shift in the region’s security landscape.

• UAVs are rapidly becoming the preferred tool for asymmetric threats, and their growing presence demands urgent and coordinated action from Latin American governments. What began as a battlefield innovation is now a civilian security crisis in the making.

What We’re Watching 🔎 . . .

Trump’s FTO Policy Creates New Risks for Doing Business in Latin America [link]

Kimberly Breier y Veronica Yepez, Americas Quarterly 

The Trump administration’s recent policy designating ten major Latin American cartels as Foreign Terrorist Organizations (FTOs) has significantly heightened legal risks for companies operating in the region.

The U.S. Department of Justice is prioritizing prosecutions under the Anti-Terrorism and Effective Death Penalty Act (AEDPA), criminalizing the provision of “material support” to these groups — a category that includes indirect payments, hiring, and the supply of goods and services — even in the absence of explicit intent.

While many of these organizations were already listed under OFAC sanctions, their classification as FTOs markedly increases the severity of both criminal and civil liabilities. Strategic sectors such as energy, mining, telecommunications, and agriculture — particularly in Mexico and Colombia — now face escalating legal and operational complexities. In response, companies must urgently strengthen compliance programs, enhance due diligence efforts, and engage proactively with authorities to mitigate their exposure.

A Harvard man turned narco-gang-buster [link]

The Economist

Ecuadorian President Daniel Noboa, recently reelected, attributes his popular support to strong leadership in the face of structural crises such as natural disasters, terrorism, and organized crime. In his interview with The Economist, he emphasized that he prioritizes direct investment in security and essential services, advancing legal reforms to streamline strategic procurement and enable private donations with tax incentives.

Amid rising violence linked to transnational narco-terrorist networks associated with illegal mining and extortion, Noboa defended exceptional measures, including restrictions on alternative sentencing, judicial reform, and a legal framework that strengthens executive power. While his strategy—anchored in militarization and recurring states of emergency—has raised concerns over potential overreach, he considers it indispensable in what he calls a “non-conventional war.”

He also promotes military cooperation with the United States, Israel, and the United Arab Emirates, while keeping the door open to trade partnerships with China. At the same time, he rejected comparisons to Nayib Bukele, stressing his commitment to institutional governance.