CEPII, Recherche et Expertise sur l'economie mondiale
Thursday June 3, 2021
Globotics and Development: When Manufacturing is Jobless and Services are Tradable

Richard Baldwin
Professor of International Economics and Co-Director of the Centre of Trade and Economic Integration, Graduate Institute of Geneva
Professor Richard Baldwin presents his work "Globotics and Development: When Manufacturing is Jobless and Services are Tradable" co-authored with Rikard Forslid.

Globalisation and robotics (globotics) are transforming the world economy at an explosive pace. While much of the literature has focused on rich nations, the changes are quite likely to affect developing nations in important ways. The authors propose an extreme thought experiment: what does development look like when digitech has rendered manufacturing jobless and many services freely traded? Their conclusion is that the service-led development path may become the norm rather than the exception; think India, not China. Since success in the service sector is based on quite different factors than success in manufacturing, development strategies and mindsets may have to change. This is an optimistic conclusion, since it suggests that developing nations can directly export the source of their comparative advantage - low-cost labour - without having first to make goods with that labour.