Page - (000013) - in Disrupted Development and the Future of Inequality in the Age of Automation

1 Abstract Automation is likely to impact on developing countries in different ways to the way automation affects high-income countries. The poorer a country is, the more jobs it has that are in principle automatable because the kinds of jobs common in developing countries—such as routine work—are substantially more susceptible to automation than the jobs that dominate high-income economies. This matters because employment generation is crucial to spreading the benefits of eco- nomic growth broadly and to reducing global poverty. We argue that the rise of a global “robot reserve army” has profound effects on labor markets and structural transformation in developing countries, but rather than causing mass unemployment, AI and robots are more likely to lead to stagnant wages and premature deindustrialization. As agri- cultural and manufacturing jobs are automated, workers will continue to flood the service sector. This will itself hinder poverty reduction and likely put upward pressure on national inequality, weakening the pover- ty-reducing power of growth, and potentially placing the existing social contract under strain. How developing countries should respond in terms of public policy is a crucial question, affecting not only middle-in- come developing countries, but even the very poorest countries. Keywords Automation · Digitization · Labor-saving technology · Developing countries · Economic development · Jobs CHAPTER 1 Introduction © The Author(s) 2020 L. Schlogl and A. Sumner, Disrupted Development and the Future of Inequality in the Age of Automation, Rethinking International Development series, https://doi.org/10.1007/978-3-030-30131-6_1