THE TECH WAR: DISTRIBUTIONAL CONSEQUENCES OF INTERNATIONAL RIVALRY

Rodney Tyers and Yixiao Zhou
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Yixiao Zhou: School of Economics, Finance and Property, Curtin University and Crawford School of Public Policy, Australian National University

No 23-07, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: International competition over the most sophisticated tech has heated up recently, approaching the forefront of great power rivalry. Meanwhile, the accelerated automation that flows from it is a primary cause of rising inequality. While strategic motivations are uppermost, there are consequences for wider economic performance. We examine these economic consequences at a global level, using a six-region global macro model with multiple households. While tech advancement means “more for less” overall, the low-skilled are hurt by it and Pareto improvement requires compensatory policies. Desirability depends on whether welfare criteria are Rawlsian, Benthamite, capital friendly, or GDP maximizing. Even where automation introduces only bias, tech advancement and automation are expansionary since they raise capital returns and attract investment. Fostering them turns out to be a dominant strategy under all but the Rawlsian criterion.

Keywords: Tech rivalry; Automation; income distribution; taxes; transfers; global modelling (search for similar items in EconPapers)
JEL-codes: C68 D33 F21 F42 O33 (search for similar items in EconPapers)
Pages: 33
Date: 2023
New Economics Papers: this item is included in nep-int
Note: MD5 = 02a772b83e9f2231ab414141716ca617
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