Working Paper: CEPR ID: DP15772
Authors: Anton Korinek; Joseph E. Stiglitz
Abstract: Progress in artificial intelligence and related forms of automation technologies threatens to reverse the gains that developing countries and emerging markets have experienced from integrating into the world economy over the past half century, aggravating poverty and inequality. The new technologies have the tendency to be labor-saving, resource-saving, and to give rise to winner-takes-all dynamics that advantage developed countries. We analyze the economic forces behind these developments and describe economic policies that would mitigate the adverse effects on developing and emerging economies while leveraging the potential gains from technological advances. We also describe reforms to our global system of economic governance that would share the benefits of AI more widely with developing countries.
Keywords: artificial intelligence; laborsaving; progress; inequality; termsoftrade losses
JEL Codes: F63; O32; O25; D63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| AI (C45) | decrease in demand for labor in developing countries (F66) |
| decrease in demand for labor in developing countries (F66) | worsening income inequality (D31) |
| AI (C45) | decline in wages for unskilled workers (F66) |
| resource-saving innovations (Q55) | decline in terms of trade for developing economies reliant on natural resources (Q37) |
| resource-saving innovations (Q55) | relative decrease in income for resource-exporting countries (F69) |
| AI (C45) | monopolistic conditions (D42) |
| monopolistic conditions (D42) | concentration of gains from technological progress among a few 'superstar' firms (O49) |
| concentration of gains from technological progress among a few 'superstar' firms (O49) | exacerbating inequality at national and global levels (F63) |
| AI (C45) | regression toward Malthusian conditions in some developing nations (O15) |