Brazil is emerging as a world-class AI innovation hub

Brazil’s government has big plans for AI, despite having come late to the party. In Oxford Insights’ AI Readiness Index 2019, Brazil was ranked 40 out of 192 countries, a sign that the South American powerhouse is moving up in the AI world. The report looks at how ready countries are to take advantage of the AI technologies PwC forecasts will add $15 trillion to the global economy by 2030.

The 2019 report also cautions that the “Global South could be left behind by the so-called fourth industrial revolution.” But even as some of the planet’s richest nations, including Canada, China, Germany, Japan, Singapore, and the U.S, have become recognized AI innovation hubs, according to studies by Deloitte and others, South America — led by Brazil — is rapidly emerging as a leader in AI-enabled businesses.

Brazil’s future economy is banking on a big contribution from AI technologies, and the country is leading the rest of Latin America, based on a proprietary AI Global Vibrancy Tool used to compile the recent 2019 AI Index report from Stanford University. The study found that during the last four years Brazil has shifted into high gear as one of the top five countries in the world with the fastest growth in AI hiring.

Accenture forecast that by 2035 AI will boost annual growth rates across South America by about one full percentage point of GDP. For Brazil, already the largest Latin American economy, that prediction would “boost the 2035 GVA of the Brazilian economy by $432 billion, which represents an increase of 0.9 percentage points in comparison with the baseline scenario.” Other Latin American countries stand to gain AI-driven boosts in annual GVA in that same time frame — notably $78 billion in Colombia, $63 billion in Chile, and $59 billion in Argentina.

“Artificial intelligence offers South America a long-awaited opportunity to leapfrog toward greater levels of innovation, productivity, and socio-economic progress,” wrote Armen Ovanessoff, principal director of Accenture Research, in the report.

Where opportunity lies

One area that’s particularly ripe for AI innovation is the financial services sector that was hit hard, and then heavily regulated, after major bank crashes in the 1980s and 1990s. Brazilian financial tech companies creating workarounds to the many bureaucratic hurdles and old ways of doing things are now booming in Brazil, according to CB Insights, LAVCA, and other organizations tracking hot investment sectors there. Other fast-growth sectors that AI is redefining in Brazil include ecommerce, on-demand delivery, logistics, and digital media and entertainment.

Fortunately, the Brazilian population is tech savvy and already uses a lot of online services, which means AI technologies have a greater chance of impacting industries on a scale that matters. Mary Meeker’s Internet Trends 2019 report ranks Brazil’s population as the fifth largest group of internet consumers in the world. A global consumer insights survey by PwC in 2018 found that 59% of Brazilians plan to purchase an AI device, the highest score amongst the top 10 countries in the poll.

After the U.S., Brazil has the largest number of social media users on Facebook, Twitter, and YouTube, per Kwintessential. Mobile devices outnumber people, and a majority of Brazil’s more than 211 million citizens are avid online shoppers and consumers of internet entertainment, according to PagBrasil. Of the 149 million internet users in Brazil, 139 million are mobile, and Brazilians downloaded more than 7.3 billion apps in 2018, ranking it top four in the world, according to Forbes.

Two important applications for AI are tackling the traffic congestion issues created by Brazil’s massive cities and reaching people across a land mass of 3.28 million square miles. AI has an opportunity to make  local and cross-country delivery of products quicker and more efficient, which would mean reduced pollution, lower costs, and less traffic.

New R&D labs

Brazil and other large Latin American countries are catching up with their counterparts when it comes to funding AI innovation. The Brazilian government recently announced the creation of an AI R&D network of eight labs.

During the launch announcement in November, Marcos Pontes, Brazil’s minister of science, technology, innovation, and communications, said the eight R&D labs will boost “the ability to reason, plan, and think about Brazil’s future and our ability to create tools to solve problems and improve the quality of life.”

One of the new labs will involve the Brazilian Army and will focus on edge AI technology in areas like cybersecurity. The other seven R&D centers will work on breakthroughs tied to the country’s national IoT plan, which is focused on its four main verticals: agribusiness, health care, manufacturing, and smart cities.

Brazil understands that to keep up in the international AI race, it needs to nurture and retain strong domestic talent. Beyond the lure of bigger paychecks, the best of the best are drawn to opportunities where they can solve the most important challenges of our time.

To keep talent in the country, IBM is set to launch an AI lab in São Paulo in 2020. It will be the first Latin American-based institute from IBM’s AI Horizons Network, created by the company in 2016 for collaboration between universities, students, and IBM researchers. It will be run in conjunction with the São Paulo Research Foundation (FAPESP) and focus on solving real problems in Brazil, such as the best use of natural resources and innovation in agribusiness and health care.

Addressing the AI skills gap

According to an IBM study released in September, “the skills gap is not a myth, but can be addressed with real solutions.” The researchers — who polled 5,670 global executives in 48 countries — found that as many as 120 million workers in the world’s 12 largest economies may need to be retrained or reskilled to succeed in an age of AI and intelligent automation.

A Gartner study released at the beginning of 2019 found that 37% of organizations have implemented AI in some form but struggle with acute talent shortages. Despite a current AI skills gap, Gartner found that the number of enterprises employing AI grew 270% over a four-year period.

Google’s Peter Norvig, a legendary AI expert, spoke about the skills gap and competition for top AI talent at the recent BayBrazil conference in Silicon Valley. He said he meets with many startups that complain they can’t hire the top AI experts from MIT or Stanford because the big tech companies get to them first.

When he hears this concern, Norvig offers sage advice via an analogy. “If a new restaurant owner told me, ‘What the business needs most now is a PhD in stove design from MIT,’ that’s really a faulty way of thinking. In reality, what that restaurant owner really needs is a chef who knows how to cook tasty food who will tell the owner what stove to buy. You don’t need to design a new stove from scratch.”

The issue now is training more people to understand not only how to use AI tools but also how to implement them at every level of business. With both the Brazilian government and the private sector boosting investment in AI research, that skills gap will begin to close.

Going forward, AI will play an essential role in how people, not machines, make decisions. For Latin America — led by Brazil — the technology promises to create a significant competitive advantage in the commercial sector, faster GDP growth, broader societal benefits, and more socio-economic progress for all.