Robotization, Multinational Production, and Country Welfare

Abstract

This paper provides a comprehensive analysis of the impact of robot adoption on multinational production (MP) and country welfare. We develop a multi-country, multi-sector general equilibrium model incorporating labor-robot substitution to quantify the effects of robotization. Through counterfactual analyses, we examine global robotization, asymmetric robotization, and the role of MP in amplifying welfare effects. Our results indicate that global robotization enhances country welfare, especially in Asia and developing countries, yet contributes to polarized development, with highly robotized countries realizing substantial welfare gains while less robotized European countries face welfare declines. Additionally, asymmetric robotization benefits developed countries but imposes costs on others through intensified MP competition and reshoring. Lastly, we demonstrate that MP plays a critical role in amplifying the welfare benefits of robotization, highlighting that robotization alone is insufficient for sustained and equitable welfare growth.

Publication
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