02237cas a2200277 a 4500 AALejournalIMF021244 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513556505 1018-5941 BD-DhAAL BD-DhAAL Alonso, Cristian. Will the AI Revolution Cause a Great Divergence? / Cristian Alonso, Andrew Berg, Siddharth Kothari, Chris Papageorgiou. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (42 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper considers the implications for developing countries of a new wave of technological change that substitutes pervasively for labor. It makes simple and plausible assumptions: the AI revolution can be modeled as an increase in productivity of a distinct type of capital that substitutes closely with labor; and the only fundamental difference between the advanced and developing country is the level of TFP. This set-up is minimalist, but the resulting conclusions are powerful: improvements in the productivity of 'robots' drive divergence, as advanced countries differentially benefit from their initially higher robot intensity, driven by their endogenously higher wages and stock of complementary traditional capital. In addition, capital-if internationally mobile-is pulled 'uphill', resulting in a transitional GDP decline in the developing country. In an extended model where robots substitute only for unskilled labor, the terms of trade, and hence GDP, may decline permanently for the country relatively well-endowed in unskilled labor. Mode of access: Internet Berg, Andrew. Kothari, Siddharth. Papageorgiou, Chris. IMF Working Papers; Working Paper ; No. 2020/184 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/184/001.2020.issue-184-en.xml IMF e-Library