Thanks for the post! This is a very valuable topic, and the development econ mainstream is totally lost on this question!
I agree with some of your points, but I think we need to distinguish very carefully between âdeveloping countriesâ. All the factors you mention with regards to labour displacement (structure of the economy, data availability, telecommunication infra) are wildly different between, say, Togo, Brazil, and Indonesia. Same with private- vs. public sector diffusion; within âdeveloping countriesâ, youâve got countries with massive tech hubs and their own tech billionaires, and those where most people still donât have electricity.
For me, the most important development question with regards to TAI (and the reason itâs important to distinguish) is the feasibility of the export-led development model. Generally, if countries manage to develop a high-value added export sector, they attract FDI, get foreign currency, climb up the value chain, and become richer. If they donât, they stay poor. Except for the occasional country finding insane levels of natural resources, this is the only real way that countries have become rich over the last 100 years.
If we get safe, transformative AI, we can imagine that demand for imports massively rises in the West, and middle-income countries like China, Vietnam, and Indonesia with strong export sectors (and the infrastructure to build on their existing exports) are able to take advantage of this. As these countries already have good infrastructure (e.g. electrification, internet access, land and shipping transport) they can probably also benefit from AI & Robotics to develop âIndustry 4.0â and make their export sector even more dominant.
Iâd therefore estimate that a few of these âdevelopingâ countries with existing strong export sectors will catch-up and become rich relatively soon.
But what of the poorest countries?!
Most African countries with a GDP below, say $3000 are very low down the value chain in all sectors, with little but raw materials (e.g. coffee, cocoa, oil if they have it) as exports. Theyâre struggling to compete with Asian developing powerhouses, and they havenât got the transport infrastructure, governance, or capital etc. to develop a quality export-led economy. In a world without TAI, as middle-income countries get rich, poor countries would develop the export industries and climb the ladder themselves, but this seems very unlikely with displacement of manufacturing labour by robotics.
My overall take is that (in an optimistic AI scenario) well-governed middle-income countries would probably end up more similar to rich countries. But weâd have really âkicked away the ladderâ from the very poor countries.
Thank you! Yes, totally fair point. I am not trained in development economics so was very uncertain about this post, and expected there to be large differences between countries that I wouldnât pick up. Itâs disappointing to hear that the development econ mainstream has not been engaging with this topic.
I had in mind the lower-income countries (mostly in Africa) when writing most of this. Your point about how, without TAI, these countries might be able to develop export industries and climb the development ladder is an interesting one. I had thought of that briefly, but was unsure how likely that was to happen, given we havenât seen any African country do it yet (to my knowledge). But perhaps itâs just something that takes time and can only really happen after the middle-income countries become rich.
Thanks for the post! This is a very valuable topic, and the development econ mainstream is totally lost on this question!
I agree with some of your points, but I think we need to distinguish very carefully between âdeveloping countriesâ. All the factors you mention with regards to labour displacement (structure of the economy, data availability, telecommunication infra) are wildly different between, say, Togo, Brazil, and Indonesia. Same with private- vs. public sector diffusion; within âdeveloping countriesâ, youâve got countries with massive tech hubs and their own tech billionaires, and those where most people still donât have electricity.
For me, the most important development question with regards to TAI (and the reason itâs important to distinguish) is the feasibility of the export-led development model. Generally, if countries manage to develop a high-value added export sector, they attract FDI, get foreign currency, climb up the value chain, and become richer. If they donât, they stay poor. Except for the occasional country finding insane levels of natural resources, this is the only real way that countries have become rich over the last 100 years.
If we get safe, transformative AI, we can imagine that demand for imports massively rises in the West, and middle-income countries like China, Vietnam, and Indonesia with strong export sectors (and the infrastructure to build on their existing exports) are able to take advantage of this. As these countries already have good infrastructure (e.g. electrification, internet access, land and shipping transport) they can probably also benefit from AI & Robotics to develop âIndustry 4.0â and make their export sector even more dominant.
Iâd therefore estimate that a few of these âdevelopingâ countries with existing strong export sectors will catch-up and become rich relatively soon.
But what of the poorest countries?!
Most African countries with a GDP below, say $3000 are very low down the value chain in all sectors, with little but raw materials (e.g. coffee, cocoa, oil if they have it) as exports. Theyâre struggling to compete with Asian developing powerhouses, and they havenât got the transport infrastructure, governance, or capital etc. to develop a quality export-led economy. In a world without TAI, as middle-income countries get rich, poor countries would develop the export industries and climb the ladder themselves, but this seems very unlikely with displacement of manufacturing labour by robotics.
My overall take is that (in an optimistic AI scenario) well-governed middle-income countries would probably end up more similar to rich countries. But weâd have really âkicked away the ladderâ from the very poor countries.
Thank you! Yes, totally fair point. I am not trained in development economics so was very uncertain about this post, and expected there to be large differences between countries that I wouldnât pick up. Itâs disappointing to hear that the development econ mainstream has not been engaging with this topic.
I had in mind the lower-income countries (mostly in Africa) when writing most of this. Your point about how, without TAI, these countries might be able to develop export industries and climb the development ladder is an interesting one. I had thought of that briefly, but was unsure how likely that was to happen, given we havenât seen any African country do it yet (to my knowledge). But perhaps itâs just something that takes time and can only really happen after the middle-income countries become rich.