Smart AI Regulation Strategies for Latin American Policymakers

In this piece, author Eduardo Levy Yeyati (Brookings Tech Tank) looks at the growing impact of generative artificial intelligence (AI) and the critical role that regulation plays in both mitigating risks and driving development. While AI offers transformative potential across sectors, it also poses serious challenges, including the risk of deepening inequality and undermining privacy. Regulatory clarity, rather than acting as a barrier, can actually promote innovation and attract investment, as seen in countries like the U.K. Moreover, nations that lead in establishing transparent, effective standards also enhance their influence in global technology governance, giving them a diplomatic and strategic edge.

Yeyati outlines the evolution of AI regulation through three intertwined stages: ethical guidelines, national legislation, and regional governance frameworks. However, regulatory paths are not linear, as evidenced by the recent U.S. pivot toward deregulation under President Trump. In early 2025, a sweeping executive order reversed earlier safety-oriented policies, emphasizing innovation and national security over caution. This move positions the U.S. in contrast to the European Union’s more restrictive AI approach, contributing to a fragmented global regulatory landscape. As most multilateral AI initiatives remain nonbinding, coordinated regional frameworks become increasingly essential to harmonize rules and prevent divergence.

Amid these global shifts, Latin America has begun crafting its own AI regulations, albeit at a slower pace. While regional initiatives—including high-level summits and national legislative proposals in Brazil and Chile—signal growing awareness, the region still lags behind advanced economies in regulatory preparedness. According to an IMF index, this gap highlights the need for proactive engagement to address emerging risks and prevent regulatory arbitrage. Yet, the region also has an advantage: the absence of legacy systems offers an opportunity to design modern, context-sensitive frameworks. Yeyati argues that Latin American policymakers must develop smart, balanced AI regulations that protect rights without stifling innovation, drawing from both global models and local realities.

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