Automation and asymmetric international spillovers of technological shocks

Abstract This study examines international spillover effects of technological shocks using a dynamic open economy model in which production tasks are automated by robots. A concentration of robot production in a few countries worldwide is essential to understanding automation advances and robot price declines in a globalized economy. Technological improvements in robot‐producing countries decrease world robot prices and affect automation advances in other countries specializing in non‐robot production; however, the reverse is not true. The welfare effects are also asymmetric and depend on the type of technological shocks. For example, by improving the productivity of investment in robots, the non‐robot producing countries suffer from the deteriorated terms of trade and may become worse off depending on the global wealth distribution.