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The Tech War: Distributional Consequences Of International Rivalry

Author

Listed:
  • Rod Tyers

    (Business School, University of Western Australia and Research School of Economics, Centre for Applied Macroeconomic Analysis (CAMA), Australian National University)

  • Yixiao Zhou

    (School of Economics, Finance and Property, Curtin University and Crawford School of Public Policy, Australian National University)

Abstract

International competition over the most sophisticated tech has heated up recently, approaching the forefront of great power rivalry. Meanwhile, the accelerated automation that flows from it is a primary cause of rising inequality. While strategic motivations are uppermost, there are consequences for wider economic performance. We examine these economic consequences at a global level, using a six-region global macro model with multiple households. While tech advancement means “more for less” overall, the low-skilled are hurt by it and Pareto improvement requires compensatory policies. Desirability depends on whether welfare criteria are Rawlsian, Benthamite, capital friendly, or GDP maximizing. Even where automation introduces only bias, tech advancement and automation are expansionary since they raise capital returns and attract investment. Fostering them turns out to be a dominant strategy under all but the Rawlsian criterion.

Suggested Citation

  • Rod Tyers & Yixiao Zhou, 2023. "The Tech War: Distributional Consequences Of International Rivalry," Economics Discussion / Working Papers 23-07, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:23-07
    Note: MD5 = 02a772b83e9f2231ab414141716ca617
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Tech rivalry; Automation; income distribution; taxes; transfers; global modelling;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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