An Enabling Regulatory Framework for Artificial Intelligence in Latin America and the Caribbean

Abstract

Latin American and Caribbean (LAC) countries face a critical choice in artificial intelligence (AI) governance: adopt regulatory frameworks that enable innovation and competitiveness or risk falling behind in the global AI economy. This paper builds on the Inter-American Development Banks AI framework, specifically the institution and governance pillar, arguing that a smart, enabling regulation is not a constraint but a catalyst for AI adoption. It reviews global regulatory models from the comprehensive risk-based approach of the European Union to the sectoral model of the United States and the innovation-friendly framework of the United Kingdom and analyzes their implications for the LAC regions unique context of high inequality, limited institutional capacity, and fragmented regional markets. The paper introduces a three-dimensional framework for regulatory choices (what, how, and who is regulated) and examines how LAC countries can navigate the AI trilemma of protecting rights, fostering innovation, and maintaining sovereignty while building regional AI integration. Rather than prescribing uniform solutions, the author outlines how the Bank can support its member countries in designing proportionate and adaptive regulatory approaches that strengthen competitiveness, build public trust, and position the region as a thoughtful contributor to global AI governance.