Working Paper: NBER ID: w24254
Authors: Avi Goldfarb; Daniel Trefler
Abstract: This paper explores the international dimensions of the economics of artificial intelligence. Trade theory emphasizes the roles of scale, competition, and knowledge creation and knowledge diffusion as fundamental to comparative advantage. We explore key features of AI with respect to these dimensions and describe the features of an appropriate model of international trade in the context of AI. We then discuss policy implications with respect to investments in research, and behind-the-border regulations such as privacy, data localization, standards, and competition. We conclude by emphasizing that there is still much to learn before we have a comprehensive understanding of how AI will affect trade.
Keywords: Artificial Intelligence; International Trade; Comparative Advantage; Policy Implications
JEL Codes: F10; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| AI innovations (C45) | shift international comparative advantage (F29) |
| AI will likely raise average incomes (O49) | improve well-being (I31) |
| AI will likely raise average incomes (O49) | disrupt labor markets (F66) |
| AI will likely raise average incomes (O49) | increase inequality (I24) |
| regulatory asymmetries (D82) | enable Chinese firms to penetrate US and Canadian markets (O51) |
| government interventions (H53) | promote industry growth (O25) |
| strict regulations (K23) | hinder innovation and competitiveness in the AI sector (O35) |
| data localization rules (J80) | restrict the scale of AI development (O36) |
| restrict the scale of AI development (O36) | impact the quality of AI outputs (C45) |