A Sectoral Wage Gap Due to FDI Inflow in the Artificial Intelligence-Induced Non-traded Sector of an Open Economy

Shreya Roy (), Sugata Marjit () and Bibek Ray Chaudhuri ()
Additional contact information
Shreya Roy: Indian Institute of Foreign Trade
Sugata Marjit: Indian Institute of Foreign Trade
Bibek Ray Chaudhuri: Indian Institute of Foreign Trade

Chapter Chapter 7 in International Trade, Resource Mobility and Adjustments in a Changing World, 2024, pp 137-144 from Springer

Abstract: Abstract Artificial Intelligence (AI), automation, and robotics represent innovative technologies that have the potential to revolutionise various aspects of our society. From janitorial services to self-driving taxi operations, these technologies offer the promise of transformative change at the click of a button. Policymakers and economists are keenly studying how Foreign Direct Investment (FDI) in the AI sector can impact wage disparities within an open economy. This field of research, focussing on the relationship between FDI inflows and the AI sector, is still in its early stages of development. The primary aim of this chapter is to analyse the wage equality within the non-traded sector, specifically in response to FDI driven by advancements in AI technology. We have constructed a specific factor general equilibrium model employing a standard (Jones 1971a, b) framework to study how the incomes of uniform labourers may be affected by the influx of FDI triggered by AI advancements. Our model indicates that AI-induced FDI is likely to bolster the national income of the economy, although with certain short-term costs. In the short run, it is anticipated to widen the wage gap between skilled and unskilled labourers in non-traded sectors. However, over the long term, the influx of foreign capital is expected to mitigate wage disparities both within and among various labour groups.

Keywords: Artificial intelligence; Foreign direct investment; Wage gap (search for similar items in EconPapers)
JEL-codes: F21 J31 O33 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-981-97-5652-0_7

Ordering information: This item can be ordered from
http://www.springer.com/9789819756520

DOI: 10.1007/978-981-97-5652-0_7

Access Statistics for this chapter

More chapters in Contributions to Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().