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A Note on the Implications of Automation and Artificial Intelligence for International Trade

Author

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  • Bharat Hazari
  • Jennifer T. Lai
  • Vijay Mohan

Abstract

Using the production function suggested by Jones and Manuelli (1990) , this article explores the consequences of introducing automation and artificial intelligence (A&AI) into a trade theoretic framework. An immediate implication is the possibility of a reversal of the trade patterns predicted by standard Heckscher–Ohlin theory, leading to Leontief paradox-type outcomes. We show that the Jones–Manuelli production function is capable of generating factor intensity reversals; consequently, our analysis suggests that factor intensity reversals may have a more prominent role to play in trade theory in the future when AI becomes prevalent. JEL: F10, O30

Suggested Citation

  • Bharat Hazari & Jennifer T. Lai & Vijay Mohan, 2025. "A Note on the Implications of Automation and Artificial Intelligence for International Trade," Arthaniti: Journal of Economic Theory and Practice, , vol. 24(1), pages 92-102, June.
    • Handle: RePEc:sae:artjou:v:24:y:2025:i:1:p:92-102
    DOI: 10.1177/09767479221129186
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    References listed on IDEAS

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    1. Daron Acemoglu & Pascual Restrepo, 2018. "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment," American Economic Review, American Economic Association, vol. 108(6), pages 1488-1542, June.
    2. Joseph Zeira, 1998. "Workers, Machines, and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1091-1117.
    3. Chakrabarti, Avik, 2004. "Asymmetric adjustment costs in simple general equilibrium models," European Economic Review, Elsevier, vol. 48(1), pages 63-73, February.
    4. Jones, Ronald W & Marjit, Sugata, 1985. "A Simple Production Model with Stolper-Samuelson Properties," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 565-567, October.
    5. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    6. repec:bla:econom:v:54:y:1987:i:214:p:173-84 is not listed on IDEAS
    7. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-1038, October.
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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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