With the G20 heading to Rio de Janeiro in 2024, South America’s largest economy is set to assume growing importance in the wider tech landscape. Could it hold the key to uniting leading superpowers with emerging markets?
Brazil will lead the Global South to coordinate the first global AI framework
The annual G20 summit returns to Latin America next year to be hosted for the first time by Brazil on 18-19 November 2024. The summit will take place during Lula’s second year of government in his third stint as president. It will likely present a reinvigorated position for the country, potentially setting out an outline for economic leadership of the Global South. As Lula himself has stated: Brazil is back.
Global harmonisation on AI
Lula aims to influence a global agenda around a narrative that contrasts with the G7 approach. The G20 meeting is a critical opportunity for Brazil to influence the regional and global agenda, as this is probably Lula’s last time in power and his opportunity to leave a global legacy.
In 2024, Lula’s government will lead efforts regarding the first global AI framework, seen as a tool to reduce hunger, mitigate poverty, and create new jobs. These themes are consistent with Lula’s ongoing concerns, but now include emerging economies’ big tech and AI under the leadership of Brazil and its allies across the globe. Brazil will succeed at coordinating a number of authorities and stakeholders, establishing common ground for AI development and using the G20 event to launch a vision of AI for the Global South. The spillover effect of this will be investment and an increased number of AI-related patents.
The world’s first digital central bank will be launched
One of Lula’s main goals is to increase the regional integration of economies, particularly in BRICs and emerging economies. This is nothing new in terms of Lula’s approach if we consider that some of his first measures back in 2003 were to establish a plan for economic growth and stability, coordinated with regional organisations and international banking. The difference lies in the geopolitical landscape Brazil faces and the technologies at hand.
The Brazilian central bank has already announced that the country will launch a digital currency in 2024 to enhance international trade, tokenise internal markets, and obtain efficiency gains for the economy. This has brought interest from international organisations, as the Brazilian model could challenge some of the current players.
The arrival of DREX
Back in 2020, when the official Pix app was launched, it was taken as a sign of potential disruption for financial institutions, even though the system allowed banks to agree on merchants’ costs and transfer fees. The authorities have now confirmed the launch of DREX, the Digital Real Electronic X.
Against this backdrop, Brazil will try to outperform its counterparts’ efforts. This will entail leading and proposing the entire digitisation of the Central Bank as a way to promote international digital trade, leveraging the vibrant FinTech ecosystem, robust connectivity, and the success of previous experiences. Such an endeavour follows previous ventures and might propel the Brazilian FinTech industry to new heights. Regulations and policies specifically applied to the digital currency can be expected, as well as a new set of FinTech disruptions that will transcend borders.
Brazil will produce the first Chinese-Latin-American tech unicorn
China’s growing influence
Over the last decade, conversations surrounding foreign investment and technological development in Latin America have involved a new stakeholder: China. From manufacturing to health and connectivity, Chinese investment in the region has increased to the point that most jurisdictions in LATAM take annual FDI from the Asian giant for granted.
Nevertheless, Brazil is part of a different geopolitical conversation. Its role in the region, and the Global South, involves trading with China, the EU, and the US. In the case of the latter two, Brazil’s role has been challenged in Latin America because of investments mainly concentrated in infrastructure and technology. The country gets almost half of LATAM’s Chinese FDI, and the political composition of the region combines populist governments from both ends of the political spectrum – most of which are also getting increased FDI from the Chinese.
A Brazilian tech unicorn?
Chinese investment has proven beneficial for many economies, with some countries in the region having demonstrated an openness to investment that is hard to match. Such investment has to bear fruit, either because the ROI is attractive enough or because some countries in the developed world do not have trade barriers to Brazilian tech.
As a result, taking into account the abiding technology transfer between them, as well as the symbiotic relationship China has managed to develop in Brazil, it’s only a matter of time before Brazil produces its first tech unicorn. The key point, however, will be that most of its technology will come because of Chinese influence as much as the vision of Brazilian entrepreneurs. Such a development would create an interesting landscape in which emerging markets start to play the role of incubators for second-generation Chinese technology outside China, which will be hard to sanction or limit given Brazil’s geopolitical influence and its willingness to promote disruption on a global scale. This could have disruptive consequences for several key areas, including FinTech, AI, HealthTech, and AgTech.
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