Foresee the unseen: Evaluating the impact of artificial intelligence on international trade

Abstract

Artificial Intelligence (AI) has the potential to reshape countries’ comparative advantage and transform international trade patterns. In this paper, we model the effect of AI technologies on bilateral trade flows by introducing an AI shock to the production process and analyzing how this shock influences trade dynamics. We then empirically estimate the relationship between AI exposure and bilateral exports in recent years. Our findings reveal that AI has a significant positive correlation with trade: a one standard deviation increase in AI exposure is associated with a 31 percent rise in exports, on average. Additionally, we explore how this effect varies across trading partners, highlighting distinct patterns between advanced, emerging, and low-income economies.