The globotics transformation and development
Digital technology is transforming globalization and robotics (‘globotics’) at a furious pace, and thus changing the opportunities and challenges facing developing and developed economies. This talk argues that digitech will make manufactured goods less traded but services more traded. It goes on to conjecture about the implications for twenty-first century ‘development journeys’.
Digitech-driven automation is flattening comparative advantage chains by reducing labour cost shares — in the extreme, manufacturing will become non-traded as trade frictions outweigh production-cost differences. Simultaneously, digitech-driven globalization is making services more tradable by reducing face-to-face, matching, and language-related costs. This will allow developing nations to exploit their true comparative advantage — quality-adjusted low-cost labour — more directly. Before they made goods with labour and exported the goods. Now they can export labour services directly via ‘telemigration’ (people sitting in one nation but working in offices in another nation; i.e. international telecommuting).
These changes pose challenges to service sector and professional workers in advanced economies but new export opportunities for workers in emerging economies. This suggests that the ‘Great Convergence’ will continue, will spread geographically, and will involve development journeys that look more like India’s than China’s.
The planery session is based on the paper ‘The Globotics Transformation and Development’ by Richard Baldwin and Rikard Forslid, and the book The Globotics Upheaval: Globalization, Robotics, and the Future of Work by Richard Baldwin.
Richard Baldwin | Keynote
Richard Baldwin is Professor of International Economics at the Graduate Institute, Geneva, Founder and Editor-in-Chief of the policy portal VoxEU.org, and Associate Member, Nuffield College, University of Oxford. In addition to his research and teaching, he advises governments and international organisations around the world on globalisation and trade policy issues.
In 1990-91 he served as a Senior Staff Economist for President George Bush's Council of Economic Advisors, having completed his PhD in economics at MIT with Paul Krugman (with whom he has published a half dozen articles).
His latest book, The Globotics Upheaval: Globalization, Robotics and the Future of Work, was published in February 2019.