Through the looking glass: Artificial intelligence, international trade, and economic growth in the long run

Eddy Bekkers, Lee Humphreys, Hryhorii Kalachyhin, Karolina Wilczynska and Danchen Zhao

No ERSD-2025-09, WTO Staff Working Papers from World Trade Organization (WTO), Economic Research and Statistics Division

Abstract: This paper studies the macroeconomic impacts of artificial intelligence (AI) using a quantitative trade model with multiple sectors, multiple factors of production, and intermediate linkages. The reallocation of tasks from labour to AI services will generate productivity gains in the model, and AI will reduce operational trade costs. We build four scenarios that differ in how far less-prepared economies catch up. The simulations yield three main findings. First, AI adoption is projected to substantially boost global trade flows and eco-nomic growth: in the most favourable scenario, the diffusion of AI raises global GDP by an additional 13.2% over the next 15 years compared to the baseline. Global trade volumes are projected to be 35% larger than without AI. Second, low- and middle-income economies can capture more of these gains if they improve their digital infrastructure and ensure adequate AI deployment across the economy. Third, AI is projected to change the withincountry income distribution. While all factors gain in real terms, returns shift toward capital and the skill premium declines. The magnitude of these distributional effects depends on the long-run growth rate of AI and the degree of complementarity between production factors.

Keywords: Artificial Intelligence; Computational general equilibrium; Productivity; Technology adoption; Trade Cost (search for similar items in EconPapers)
JEL-codes: C68 E13 F17 O33 O41 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-ain, nep-gro, nep-int and nep-tid
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