Overcoming Development Traps in Latin America and the Caribbean in the Digital Age: The Transformative Potential of Digital Technologies and Artificial Intelligence

Latin America and the Caribbean is affected by three major structural traps or challenges that are holding back its development: low capacity for growth, high inequality and low social mobility, and low institutional capacity and ineffective governance. These challenges are deeply interconnected and feed back into each other, and the result is a vicious circle of productive stagnation, social exclusion and institutional fragility. However, digital transformation and the use of new technologies such as artificial intelligence (AI) offer a unique opportunity to break this cycle. This document explores how digitalization, and AI in particular, can catalyse productivity improvements, reduce inequality gaps and strengthen institutional capacities in the region. The transformative impact of AI is already beginning to be felt, and some preliminary figures suggest that its influence on economic growth and the labour market will be even greater in the coming years. The document also presents an overview of the digital strategies being implemented by the countries of the region, along with a number of recommendations for optimizing the effectiveness of these and encouraging real and effective adoption of digital technologies. The purpose of these proposals is to guide the design of policies and initiatives as part of a regional digital agenda with targets for 2026.