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

Using the production function suggested by Jones and Manuelli (1990) , this article explores the consequences of introducing automation and artificial intelligence (A&AI) 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 AI becomes prevalent. JEL: F10, O30