Artificial intelligence could bolster Chile's GDP

The adoption of artificial intelligence technology has the potential to enable up to 6% GDP growth in Chile through 2028, according to Argentine public policy think-tank CIPPEC.

This is assuming government and industry succeed in incorporating AI faster than they did in the case of traditional ICT.

Growth of this kind would lead to GDP per capita in the order of US$37,900 in 2028, compared to US$25,000 expected in 2018. Chile's economy is expected to grow 4% this year, according to the IMF.

In this way, AI could allow Chile to maintain the high GDP growth rate attributable to commodities over the last 20 years, but through sources that would be more sustainable in the long-term, CIPPEC ICT research director Ramiro Albrieu told press at an event in Santiago.

CIPPEC projected that financial services, government and retail would contribute most to growth in this scenario, at 6.5%, whereas manufacturing would register 5.9% growth.

As a rough comparison, Albrieu suggested that in the best-case AI adoption scenario, Brazil would only achieve half the GDP growth possible in Chile, largely because Brazil is a more mature market where the contribution of traditional industry is already maximized.

The consultancy also considered worst case and neutral scenarios for Chile, in which, respectively, the technology adoption rate deteriorates, or matches that achieved with traditional ICT (the "third industrial revolution").

In those cases CIPPEC estimates GDP growth rates of 2.7% or 5.1%, respectively, whereas the IMF has projected a long-term rate of 3.3% for Chile, without necessarily considering advances in technology.

The relatively strong growth estimated in the neutral scenario is based on the fact that Chile had a good adoption rate of Revolution 3.0 technology, Albrieu said.

In order to surpass the adoption rate achieved with traditional ICT, Latin American countries need to address issues such as access to financing, infrastructure for data storage and analysis, incentives for initiating change, lack of awareness about the possibilities, and scarcity of skilled professionals.

The analyst recognized that most Latin American countries are addressing these issues with their digital agendas, but in a somewhat piecemeal fashion. "They may facilitate a specific technology for one sector or financing help for another, each ministry resolving problems specific to its sector, but we don't have integrated national plans like European and Asian countries have," he told BNamericas.

In Europe and Asia there is a concerted effort and incentives to help companies absorb the technology and get hold of the available talent, he said, adding that the process involves the transformation of society as a whole, which is much more than just a set of policies.

These countries run a study to determine which technology is going to be disruptive, then waive taxes for companies that use this technology, and send technicians to explain it to them. They also ask the universities to build degree courses based on it and connect the graduates with the companies that need them, he explained.

The CIPPEC study was commissioned by Microsoft, which has AI projects in Chile with the Santiago stock exchange, ticket vendor Punto Ticket, the health ministry and Valparaíso Metro.