Digitalization, AI Intensity, and International Trade

Chu Ping Lo ()
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Chu Ping Lo: Department of Agricultural Economics, National Taiwan University

Annals of Economics and Finance, 2024, vol. 25, issue 1, 251-273

Abstract: The study presents a simple model that incorporates data factors into production, demonstrating that both digitalization and artificial intelligence (AI) intensities contribute to facilitating international trade. Empirically, we find for every 1% increase in a country's AI intensity that its exports rise by 1.01% to 1.30%. Furthermore, while trade elasticity of digital intensity is around 0.85 to 2.03, the trade elasticity of AI and digital intensities combined is about 43% of the trade cost elasticity. Finally, our results suggest that AI and digitalization play an equally important role as production technology in explaining the distribution of trade flows across countries.

Keywords: Artificial Intelligence; Digital Intensity; International Trade (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2024
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