Have Robots Grounded the Flying Geese? Evidence from Greenfield FDI in Manufacturing
For decades, manufacturers around the world have outsourced production to countries with lower labor costs. However, there is a concern that robotization in high-income countries will challenge this shifting international division of labor known as the "flying geese" paradigm. Greenfield foreign direct investment decisions constitute a forward-looking indicator of where production is expected, rather than trade flows that reflect past investment decisions. Exploiting differences across countries and industries, the intensity of robot use in high-income countries has a positive impact on foreign direct investment growth from high-income countries to low- and middle-income countries over 2004-15. Past a threshold, however, increased robotization in high-income countries has a negative impact on foreign direct investment growth. Only 3 percent of the sample exceeds the threshold level beyond which further automation results in negative foreign direct investment growth and is consistent with re-shoring. For another 25 percent of the sample, the impact of robotization on the growth of foreign direct investment is positive, but at a rate that is declining. So, although these are early warning signs, automation in high-income countries has resulted in growing foreign direct investment for more than two-thirds of the sample under consideration. Some geese may be slowing, but for now, most continue to fly.
| Main Authors: | , |
|---|---|
| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019-12
|
| Subjects: | AUTOMATION, ROBOTS, FOREIGN DIRECT INVESTMENT, GLOBAL VALUE CHAIN, FLYING GEESE PARADIGM, |
| Online Access: | http://documents.worldbank.org/curated/en/945231577418925587/Have-Robots-Grounded-the-Flying-Geese-Evidence-from-Greenfield-FDI-in-Manufacturing https://hdl.handle.net/10986/33105 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|