Robots, industrialization and inclusive growth

Abstract

Employment opportunities, and the income they generate, are a major determinant of inclusive growth. Economists, policymakers and the general public have long accepted that technological change greatly affects employment opportunities. Historically, it has offered novel ways of producing and consuming goods and services, created new profitable areas of economic activity, and underpinned rising living standards. In the process it freed humans from physically demanding, repetitive or dangerous work. However, the creative side of new technologies often has disruptive consequences for the existing practices and structures of economic life, including the outright destruction of companies, markets and jobs, with no guarantee that the gains from the new processes will fully compensate for the losses. Over time, the distributional consequences of new technologies depend on the scope of subsequent job opportunities and the pace at which they materialize. In large part this is because new technologies do not arrive as a deus ex machina but are embodied in (and disseminated by) capital equipment, institutional routines and human capabilities, and their impact is, therefore, conditioned by macroeconomic circumstances and policy responses.