Page - (000092) - in Disrupted Development and the Future of Inequality in the Age of Automation

86 L. SCHLOGL AND A. SUMNER This book has surveyed the literature on automation and in doing so discussed definitions and determinants of automation in the context of theories of economic development, assessed the empirical estimates of employment-related impacts of automation and outlined the public policy responses to automation. We have shown that the contentious debate on automation is not new. Its origins can be traced back to classi- cal political economy and thinking on economic development, and both the optimistic and pessimistic camps that have emerged over time have made valid points. To understand the employment dynamics of automa- tion-driven structural change, the book used a simple framework in the tradition of W. Arthur Lewis (and William Baumol) and with recognition of Marx’ reserve army thinking. In conclusion, we would argue that the main implications of advances in technology and automation are not mass lay-offs and technologi- cal unemployment necessarily (though both are plausible under certain scenarios) in developing countries, but an increasing pressure toward deindustrialization and deagriculturalization. Empirically, the impact of automation is complex to estimate, and most studies have tended toward technologically deterministic approaches. Theoretically, the net effect on jobs could be both positive (lower prices lead to higher quantities demanded and thus more labor demand) and also negative (displaced labor is not absorbed in the ARS). Manual routine work, especially in agriculture, remains prevalent throughout the developing world, which is an important concern. Overall, the focus of many studies on employ- ment is arguably too narrow, and there are broader questions about the impact of the digital revolution on structural change and strategies of economic development to be addressed. The developing world could well experience more negative impacts from automation than the developed world, since (i) there are substan- tially more jobs to be lost through labor-substituting technical progress than in the rich world and (ii) new industries may stop outsourcing pro- duction to the developing world. We argue that it is likely that real wages may stagnate rather than unemployment rise per se in the developing world which implies sociopolitical consequences. This line of argument is, of course, particularly tailored to the characteristics of labor-abundant open economies and may not be generalizable beyond that. One way or another, technological innovation is causing disruption and thus poses questions for public policy. We would express skepticism about the often-voiced call for skills-based development strategies alone.