Argentina’s AI Future: Reversing a Century of Decline
Prior to the First World War, Argentina was the richest and most developed country in Latin America, and one of the ten wealthiest in the world. However, over the past century, Argentina’s GDP per capita has declined relative to nearly every economically developed country in the world. Its economy is famously turbulent, having undergone multiple periods of high growth and contractions in the past few decades. In the past 10 years, Argentina’s GDP per capita has grown by almost 75%, but in the past 5 years, it has shrunk by about 4%. Unemployment is up by 1.6 percentage points in the past 5 years, but only up by 0.3 percentage points in the past 10 years. With such a turbulent economy, investors have been wary of starting and funding businesses in Argentina. In recent years, the Argentine government has attempted to woo investors with legislation supporting startups and technology firms. The result has been a rise in firms utilizing AI, machine learning, and robotics. Perhaps if these advancements are fully utilized, they could assist in returning Argentina to its former economic glory.
The government of Argentina has used various methods to boost the technological industry over the past few years. In 2015, the Ministry of Science, Technology and Productive Innovation took a $150 million loan from the Inter-American Development Bank for the purpose of investment in research, development, and technology. However, in 2016, following the election of President Mauricio Macri, that same ministry’s budget was cut by more than 30%. President Macri’s policies were negative on loans. Instead of loans, to attract investors and startups his policies pushed providing tax incentives and deregulation. This was accomplished in the summer of 2017 with the Entrepreneurship Law. As a result of the law, the majority of Latin America’s tech unicorns are now located in Argentina, many of them using AI, machine learning, and robotics.
In addition to tech startups, large Argentinian corporations have begun utilizing advanced technology to boost efficiency and reduce employment costs. La Anónima, one of the largest supermarket chains in the country, constructed a completely automated storage warehouse. This warehouse maximized productivity, capacity, and simplicity compared to the old human-operated warehouses. As another example, Argentinian fact-checking outlet Chequeado has release Chequeabot, an automated fact-checker that identifies claims in the media and matches them with a growing database of existing facts. In addition, government agencies have been promoting automation. The state-run National Institute of Agricultural Technology produced Trakür, a robot that applies pesticides in greenhouses to boost efficiency and protect workers from toxic gases. It sells for about a third of the price of commercially-available models. Also, in late 2017, the Argentinian government utilized US and Russian robots to find a missing submarine. Despite these advancements, Argentina’s AI technology usage is still far below potential.
According to a report by Accenture’s Armen Ovanessoff and Eduardo Plastino entitled “How Artificial Intelligence Can Drive South American Growth,” if Argentina fully utilizes AI, it can expect annual GDP growth to increase by 0.6 percentage points and gross value added to increase by $59 billion. Automation and AI are expected to cause further innovations that boost productivity. Full AI utilization could reverse some troubling trends, most notably a decline in productivity from 2011 to 2015 by 1.0% and a decrease in marginal capital efficiency from 0.6 to 0.03 from 2005 to 2015. Reducing declines in productivity and efficiency and boosting output would attract more investors, thus stabilizing Argentina’s historically volatile economy.
Oxford Insights measures AI readiness scores for 25 advanced economies. Argentina’s AI readiness index stands at a mere 51.7 out of 100, which places it at 17th out of 25 countries. If the Argentine government strengthens its commitment to attracting investments and tech startups and the private sector boosts its investments in AI and machine learning, Argentina can boost its readiness index and fully realize the benefits predicted in the Accenture study. Perhaps if Argentina becomes a hub of AI and advanced technology, it could reclaim its former position of economic power and reverse a century of decline.
Written by Jack Vasquez & Edited by Alexander Fleiss
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