International trade : effects of computerization and offshoring in developing countries

Abstract

The adoption of new technologies has consequences for the evolution of global value chains and international trade. Antr`as (2020) argues that whereas in the 1990’s it was profitable to fragment production processes, now computerization reduces labor costs and substitutes the offshoring of certain activities. Using data on imports from six developed countries (sourced from 40 developing countries) between 2000 and 2016 we provide evidence on the effects of computerization and offshoring in trade patterns. The results show that imports of developed economies in sectors in the 90th percentile of the share of employment at risk of computerization relative to an industry in the 10th percentile fell (depending on the specification) between 19 to 25 percentage points more for sectors with higher ICT adoption during this period, effect that increased using an IV strategy. Furthermore, we find that an initial higher offshoring has a negative effect on imports (26 and 44 percentage points without and with IV) in countries with greater technology capital. Current labor-replacing technologies, that are mainly in occupation with low wages, are changing the comparative advantages of developing economies, which should invest in reallocation policies to cope with this new reality.