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51 Abstract Technological change is likely to create a dual economy of automation-resistant and automation-susceptible sectors. Corres- pondingly, the labor force employed in automatable domains is pushed toward new activities—a dynamic that we liken to the classical Lewis model. We argue that the role of artificial intelligence and other advances is likely to be what we term a “robot reserve army,” providing infinite supplies of artificial labor particularly in the agricultural and manufactur- ing sector. From this emerges a new pattern of structural transformation, as outlined in the previous chapter, with new distributional implications. We argue that tertiarization, income inequality, and wage stagnation, rather than, technological unemployment, are the key challenges of late development in the age of automation. Keywords Robot reserve army · Lewis model 2.0 · Automatability · Employment · Distribution · Tertiarization 5.1 chArActeristics of developing countries Developing countries have special characteristics (vis-à-vis OECD countries): they tend to be labor-abundant and have higher rates of popu- lation growth than OECD countries. Large proportions of the population are often relatively unskilled and tertiary education is still comparatively CHAPTER 5 Automation and Structural Transformation in Developing Countries © 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_5