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Digitalization, AI Intensity, and International Trade

Author

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  • Chu Ping Lo

    (Department of Agricultural Economics, National Taiwan University)

Abstract

The study presents a simple model that incorporates data factors into production, demonstrating that both digitalization and artificial intelligence (AI) intensities contribute to facilitating international trade. Empirically, we find for every 1% increase in a country's AI intensity that its exports rise by 1.01% to 1.30%. Furthermore, while trade elasticity of digital intensity is around 0.85 to 2.03, the trade elasticity of AI and digital intensities combined is about 43% of the trade cost elasticity. Finally, our results suggest that AI and digitalization play an equally important role as production technology in explaining the distribution of trade flows across countries.

Suggested Citation

  • Chu Ping Lo, 2024. "Digitalization, AI Intensity, and International Trade," Annals of Economics and Finance, Society for AEF, vol. 25(1), pages 251-273, May.
    • Handle: RePEc:cuf:journl:y:2024:v:25:i:1:lolee
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    More about this item

    Keywords

    Artificial Intelligence; Digital Intensity; International Trade;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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