Page - (000080) - in Disrupted Development and the Future of Inequality in the Age of Automation

5 AUTOMATION AND STRUCTURAL TRANSFORMATION … 73 3. This of course has resonance with Baumol (1967) who in a similar fashion divided up the economy into “technologically progressive” and “tech- nologically non-progressive” activities. In the former, productivity-driv- ing, sector “labor is primarily an instrument (…) while in other (…) labor is itself the end product” (ibid., p. 416). One issue is our approach implies a somewhat linear view of structural change that does not take into account the servicification of manufacturing and therefore an over- lap between APS and ARS. This would also mean for Table 5.1 that even complementarity could drive structural change in that the services that digitization adds to manufacturing could drive industrialization. 4. Baumol’s “unbalanced growth” model similarly envisaged a labor transi- tion from one to the other sector and aggregate stagnant labor produc- tivity as a result (Baumol, 1967; Baumol, Blackman, & Wolff, 1985; see also Ngai & Pissarides, 2017 for a contemporary iteration of the model). Autor and Dorn (2013), based on a spatial equilibrium model, posit a reallocation of low-skill labor into service occupations (a phe- nomenon they call “employment polarization” which then entails wage polarization). 5. Of course, both the existence of agricultural subsidies and trade of agricul- tural products makes an assessment more difficult. Without subsidies, the sector might employ even fewer people. Conversely, OECD countries are not self-sufficient and depend on labor in foreign countries to produce food for export to OECD countries. 6. The concept of disruption or disruptive innovation goes back to Christensen’s (1997) book The Innovator’s Dilemma. In it, he describes how emerging technologies developed by small challengers can threaten dominant and generally well-managed businesses. Disruption generally means an unanticipated, revolutionary transformation that impacts an established market. Such disruption could happen to global value chains and thus the export-oriented industrialization development model. 7. One issue Marx would have raised is the ownership of the intellectual property that drives robots, and the reinvestment of related rents. 8. For Lewis, wages are set at subsistence level, but since the marginal pro- ductivity of surplus workers is assumed to be (close to) zero, any wage they get exceeds their marginal contribution: “…large sectors of the economy where the marginal productivity of labor is negligible, zero, or even negative”—i.e. the subsistence sectors (1954, p. 141). And wage earners in that case receive “wages exceeding marginal productivity” (ibid.). The implication is that one can pull out workers from that sector without reducing the total output of the sector (or even increasing it in case of negative marginal productivity).