To Örebro University

This paper studies the role of trade for the joint uptake of AI-enabled automation in manufacturing and engineering. It develops an agent-based model (ABM) where the agents are heterogeneous manufacturers and engineering firms. The ABM features two technology-related business models: engineering as a face-to-face consultancy service and engineering as automated software. The software adoption rate follows an S-shaped curve for manufacturers and a boom and bust cycle for engineers. In the early phase, shortage of engineers constrains AI uptake, while engineers become abundant when AI is fully adopted. Trade affects the cut-off productivity level at which manufacturers switch technology, the shape of the adoption rate curve, and the incentives for engineers to develop software. Bulky transactions and different productivity distributions across countries are drivers of trade in their own right.

Agent-based Simulation Modelling focuses on the agents' decision making in their individual context. The decision making details may substantially affect the simulation outcome, and therefore need to be carefully designed.

In this paper we contrast two decision making architectures: a process oriented approach in which agents generate expectations and a reinforcement-learning based architecture inspired by evolutionary game theory. We exemplify those architectures using a technology uptake model in which agents decide about adopting automation software. We find that the end result is the same with both decision making processes, but the path towards full adoption of software differs. Both sets of simulations are robust, explainable and credible. The paper ends with a discussion what is actually gained from replacing behaviour description by learning.

Against the backdrop of a new debate about a possible free trade agreement replacing Norway’s EEA membership, this article studies the impact of the EEA agreement on Norway’s services trade. Using the structural gravity model, it first analyses the impact of EEA on total services trade. Norway’s total services exports is estimated to be about 35 percent higher within EEA than with a hypothetical free trade agreement. The article next focuses on financial services and communications services. Compared to the hypothetical free trade agreement the EEA agreement has raised trade by about 50 percent in both sectors. Furthermore, providing the essential infrastructure for trade, the internal market for telecommunications and finance has boosted trade in all services sectors. Brexit does not change these estimates much.

Denne artikkelen ser på korleis EØS-medlemskapet har påverka norsk teneste­handel. Ved hjelp av ein gravitasjonsmodell studerer eg først verknaden av EØS for handel med tenester generelt. Deretter går artikkelen inn på sentrale tenestesektorar og studerer effekten av spesifikke handelspolitiske indikatorar. Analysen viser at EØS-avtalen er assosiert med rundt 35 prosent høgare eksport samanlikna med ein frihandelsavtale. I finansielle tenester og kommunikasjonstenester er eksporten rundt 50 prosent høgare med EØS-avtalen samanlikna med ein handelsavtale. Brexit endrar desse estimata overraskande lite. Opne, velregulerte og harmoniserte marknader for kommunikasjonstenester er spesielt viktig for tenestehandelen.

This paper analyses the proposed free trade agreement (FTA) between EU and India focusing on services trade. Based on the text published by the European Union, it uses the OECD STRI simulator to calculate the preference margins implied by the agreement and next predicts the impact on services trade flows using a general equilibrium structural gravity analysis. I find that the preference margin on the Services Trade Restrictiveness Index (STRI) for Indian exports to the EU is between four and eight basis points depending on the sector, while for EU's exports to India the preference margin is between 10 and 35 basis points. The predicted effect is more than a doubling of EU services exports to India, while India's services exports to the EU would increase by about 50%. EU's trade with the rest of the world would not change much, while India's exports to the rest of the world would contract by about 3%. Real services output would not change much in the EU or India. Lifting trade restrictions in the telecommunications sector is the most important policy area for facilitating services trade. About half of the predicted export expansion is driven by reforms to domestic regulation.

This policy brief sets out recommendations to achieve a new multilateral framework of trade rules in the digital arena, thereby facilitating continued digital transformation of services and growth in cross-border flows of data. The present moment is critical. Successful conclusion of World Trade Organization (WTO) negotiations on E-Commerce will support trade in digital services, underpinned by cross-border data flows, complementing the expected recovery in travel and tourism services to provide a robust basis for global economic recovery and sustainable and inclusive growth. If the talks stall and fail to complete in 2022, technological change threatens another serious blow to a global institution which is reeling and seemingly unable to manage the regulatory heterogeneity resulting from national policies that threaten to compartmentalize data governance and fragment the global digital economy.

New technology is of little use if it is not adopted, and surveys show that less than 10% of firms use Artificial Intelligence. This paper studies the uptake of AI-driven automation and its impact on employment, using a dynamic agent-based model (ABM). It simulates the adoption of automation software as well as job destruction and job creation in its wake. There are two types of agents: manufacturing firms and engineering services firms. The agents choose between two business models: consulting or automated software. From the engineering firms' point of view, the model exhibits static economies of scale in the software model and dynamic (learning by doing) economies of scale in the consultancy model. From the manufacturing firms' point of view, switching to the software model requires restructuring of production and there are network effects in switching. The ABM matches engineering and manufacturing agents and derives employment of engineers and the tasks they perform, i.e. consultancy, software development, software maintenance, or employment in manufacturing. We find that the uptake of software is gradual; slow in the first few years and then accelerates. Software is fully adopted after about 18 years in the base line run. Employment of engineers shifts from consultancy to software development and to new jobs in manufacturing. Spells of unemployment may occur if skilled jobs creation in manufacturing is slow. Finally, the model generates boom and bust cycles in the software sector.

Making trade work for all and harnessing popular support for openness to trade depends on consumers benefitting from lower prices and broader product variety. The present study reveals that those benefits depend on competition in services markets, in particular in telecommunication. These findings result from employing an industrial organisation framework to estimate the transmission of prices from the world market to consumers of certain services in local markets (distribution, transport, and financial services). The OECD Services Trade Restrictiveness Index (OECD STRI) is used to explore the relationship between the pass-through rate of input prices to consumer prices and policy measures that capture the openness and strength of competition in services markets. The OECD STRI in telecommunications is found to be associated with a more complete and faster pass-through of prices in all markets studied. The results also illustrate the crucial role played by the internet in allowing for price comparisons that generate competitive pressure on distributors.

Standing at 24% in 2018, India's female labour force participation is only half of the global average (48%). At the same time, India has one of the widest gender wage gaps in the world and women are less likely to be employed in the formal sector compared to men. This article focuses on how international trade affects relative wages and formal employment between men and women in India. Using the Revealed Symmetrical Comparative Advantage index, sectors of comparative advantage and disadvantage are identified and matched to Indian labour force surveys that contain information on sectoral employment and earnings. We find that sectors of comparative advantage in services have the lowest gender wage gap, with women earning 24% less than their male counterparts, while women in manufacturing earned on average 40% less than male workers. Using the Oaxaca-Blinder decomposition, we find that the total gender wage gap in sectors of comparative advantage in services are minor while it is quite substantial in manufacturing, regardless of comparative advantage status. The article concludes that services trade goes hand in hand with a smaller gender wage gap as women leverage their skills better in services than in manufacturing.