Robots and AI: A New Economic Era

This article highlights the immense and transformative power of Robots and AI, and the positive impacts it has on the world economy.

By Dr Lili Yan Ing, Secretary General of International Economic Association (IEA) and ERIA’s Lead Advisor, Southeast Asia Region


Before I start, let me share with you 2 facts: First, this article is written by a human. I was born and delivered by organic parents. But soon many articles and most –if not all– goods and services will be produced, operated, and delivered by Robots and AI.  Robots and AI will change not only the way we work, but also the way we live.

Second, it took 75 years for telephones to reach 100 million users, but it took only 2 months for ChatGPT to get the same number of users.  Currently, ChatGPT boasts 1.8 billion visitors a month. This showcases the massive power and rapid growth of Robots and AI, which are leading us to a New Economic Era.

Now, let’s discuss how Robots and AI will affect the world economy from three aspects: productivity, trade, and labor. First, let’s examine the impact of Robots and AI on productivity. The adoption of Robots and AI has demonstrated positive effects on productivity, both at the firm level and in aggregate. Industrial robots and AI systems contribute to significant productivity gains by enabling more accurate and precise work processes, leading to a reduction in production costs. These technological advancements result in decreased production and operational expenses. Robots are capable of performing tasks faster than humans, with greater precision and accuracy. AI can also be utilized to anticipate issues along the production line and leverage computational power as an input for production. I am taking an example: Workers in firms that have adopted industrial robots and automatic machines in Indonesia have been found to be 49% more productive compared to those in non-automating firms. At the global level, Firms that adopt Robots and AI tend to produce more outputs and have higher levels of productivity. They also tend to exhibit higher export shares, offering markets a greater variety and higher quality goods.

Second, let’s explore the impact of Robots and AI on Trade. The adoption of robots and AI facilitates trade in goods and services. When developed countries adopt robots and AI, it has an impact on trade with developing countries, leading to increased exports from developing to developed countries, particularly in sectors experiencing high levels of robotization. An increase of 10% in robot density in developed countries is associated with an increase of 12% in exports from developing countries. Larger and more globally connected firms in developing countries are more likely to adopt robots and AI, which allows them to expand their market shares at the expense of non-automating firms. Furthermore, the greater deployment of robots and AI leads to increased services trade, which ultimately enhances global trade.

Third, let’s now explore the impact of Robots and AI on labor and wages. Robots and AI are likely to influence labor in three ways. First, there are likely to be displacement effects, where routine work will be replaced by Robots and AI, resulting in negative effects on less skilled labor due to the displacement mechanism. Second, there are likely to be productivity effects, as Robots and AI have positive impacts on labor and wages by enhancing firms’ productivity and competitiveness. Lastly, there are likely to be reinstatement effects, where Robots and AI reintegrate workers into a wider range of tasks, thereby altering the nature of tasks in favor of skilled workers.

Displacement of jobs by machines generates adjustment costs, as workers need to move within firms to perform different tasks, or search for new jobs in different firms or expanding industries. But most occupations conduct non-routine as well as routine tasks, so the medium-term outlook may not be so bleak, as workers shift their attention to tasks that machines cannot perform. Industrial Robots, automation, and AI are likely to have heterogeneous effects in the labor market. High-skilled workers, those employed in technology-intensive sectors, and those performing non-routine tasks may benefit as industrial robots leverage their productivity. Workers with less education, especially those performing manual tasks on the production line, are likely to be most at risk. Whereas research findings are mixed about the net effects of continued advances in the use of industrial robots and AI on certain segments of the labor market, there is little disagreement about the distributional implications. Overall, the adoption of Robots and AI are likely to provide more advantages for capital owners and skilled workers and thus increase inequality.

In conclusion, considering the positive impacts of Robots and AI on the world economy through increased productivity, trade, and the creation of new skills, the forthcoming technological developments in robotics and AI need to be welcomed rather than discouraged. However, we should take note that with the current AI neuron system, AI possesses more knowledge than any human on Earth. AI also operates 125,000 times faster than the human brain. The annual number of robot installations worldwide has more than tripled in the last decade, reaching a total of over 500,000 by the end of 2021. Global corporate investment in AI has increased 17 times since 2015, amounting to USD 92 billion in 2022. If AI falls into irresponsible hands, it could pose significant challenges to human existence. Therefore, we need to ensure that the resources and development capacity of Robots and AI are balanced with appropriate safeguards and regulations.Along with the development of robots and AI, it is our responsibility to ensure that they are well managed, regulated, human-centric, and designed to improve human welfare.


The views and recommendations expressed in this article are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute. This article was first published  by the Economic Research Institute for ASEAN and East Asia on June 14, 2023.


About the writers

Lili Yan Ing is a Lead Advisor (Southeast Asia Region) at the Economic Research Institute for ASEAN and East Asia (ERIA). Dr Ing also serves as Secretary General of the International Economic Association (IEA).

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Mouna Aouri

Programme Fellow

Mouna Aouri is an Institute Fellow at the Tech For Good Institute. As a social entrepreneur, impact investor, and engineer, her experience spans over two decades in the MENA region, South East Asia, and Japan. She is founder of Woomentum, a Singapore-based platform dedicated to supporting women entrepreneurs in APAC through skill development and access to growth capital through strategic collaborations with corporate entities, investors and government partners.

Dr Ming Tan

Founding Executive Director

Dr Ming Tan is founding Executive Director for the Tech for Good Institute, a non-profit founded to catalyse research and collaboration on social, economic and policy trends accelerated by the digital economy in Southeast Asia. She is concurrently a Senior Fellow at the Centre for Governance and Sustainability at the National University of Singapore and Advisor to the Founder of the COMO Group, a Singaporean portfolio of lifestyle companies operating in 15 countries worldwide.  Her research interests lie at the intersection of technology, business and society, including sustainability and innovation.


Ming was previously Managing Director of IPOS International, part of the Intellectual Property Office of Singapore, which supports Singapore’s future growth as a global innovation hub for intellectual property creation, commercialisation and management. Prior to joining the public sector, she was Head of Stewardship of the COMO Group and the founding Executive Director of COMO Foundation, a grantmaker focused on gender equity that has served over 47 million women and girls since 2003.


As a company director, she lends brand and strategic guidance to several companies within the COMO Group. Ming also serves as a Council Member of the Council for Board Diversity, on the boards of COMO Foundation and Singapore Network Information Centre (SGNIC), and on the Digital and Technology Advisory Panel for Esplanade–Theatres on the Bay, Singapore’s national performing arts centre.


In the non-profit, educational and government spheres, Ming is a director of COMO Foundation and Singapore Network Information Centre (SGNIC) and chairs the Asia Advisory board for Swiss hospitality business and management school EHL. She also serves on  the Council for Board Diversity and the Digital and Technology Advisory Panel for Esplanade–Theatres on the Bay, Singapore’s national performing arts centre.


Ming was educated in Singapore, the United States, and England. She obtained her bachelor’s and master’s degrees from Stanford University and her doctorate from Oxford.