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

Using the production function suggested by Jones and Manuelli (1990), this paper explores the consequences of introducing automation and artificial intelligence 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 artificial intelligence becomes prevalent