Latin America in the Second Machine Age

PANAMA CITY – At the upcoming Summit of the Americas in Panama City, business and government leaders will discuss the economic challenges facing the Western Hemisphere, especially how to support inclusive growth in the wake of the commodities bonanza that endured for the better part of the last decade. Any strategy will have to account for an inescapable global phenomenon: the so-called “Second Machine Age.”

The MIT economists Andrew McAfee and Erik Brynjolfsson, among others, identify the Second Machine Age with the rise of new automation technologies and artificial intelligence. While optimists predict that these innovations will usher in an era of unprecedented abundance, less sanguine analysts estimate that nearly half of all jobs currently performed by humans are vulnerable to replacement by robots and increasingly sophisticated software.

Advanced technologies are already making inroads into some of Latin America’s principal industries. For example, carmakers, which employ hundreds of thousands of people across the region, are rapidly deploying robots that are more efficient and precise than humans. In South America’s grain belt, GPS-guided machinery is diminishing the need for farmhands, even as output increases.

Service industries, which already account for two-thirds of all jobs in Latin America, are particularly vulnerable. One Brazilian startup’s tax-management software, for example, can perform in seconds operations that would demand thousands of billable hours from an army of accountants. Other sectors that currently account for a large share of employment in lower-income countries – including apparel, light manufacturing, logistics, and call centers – are forecast to undergo increasing automation.