A Note on the Implications of Automation and Artificial Intelligence for International Trade

Bharat Hazari, Jennifer T. Lai and Vijay Mohan

Arthaniti: Journal of Economic Theory and Practice, 2025, vol. 24, issue 1, 92-102

Abstract: Using the production function suggested by Jones and Manuelli (1990) , this article explores the consequences of introducing automation and artificial intelligence (A&AI) into a trade theoretic framework. An immediate implication is the possibility of a reversal of the trade patterns predicted by standard Heckscher–Ohlin theory, leading to Leontief paradox-type outcomes. We show that the Jones–Manuelli production function is capable of generating factor intensity reversals; consequently, our analysis suggests that factor intensity reversals may have a more prominent role to play in trade theory in the future when AI becomes prevalent. JEL: F10, O30

Keywords: Automation; artificial intelligence; AK production function; Heckscher–Ohlin model; Leontief paradox (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:artjou:v:24:y:2025:i:1:p:92-102

DOI: 10.1177/09767479221129186

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