Robots at work in emerging developing countries: How bad could it be?

We address the impact that robots will have on emerging developing economies by using a nonlinear general equilibrium model consistent with the empirical evidence available so far. The impact in the first decades is negative at the aggregate level, which then reverses due to productivity gains. These economies accommodate the rise of robots not only with a fall in the interest rate, but also with a real depreciation in the medium term and a reduction in marginal costs. Despite these adjustments, the labor force loses out and the gap in terms of economic growth with the developed world increases dramatically. We show that the direct production of robots, and thus the existence of human capital to produce them, could trigger a virtuous circle with other sectors in these countries to achieve high growth rates driven by the export sector.