Tech shifts could alter labour cost edge in global trade: Niti adviser

Niti Aayog official flags trade impact due to digitisation of production and consumption processes

September 25, 2022 10:33 pm | Updated 10:33 pm IST - NEW DELHI 

Niti Aayog Lead Adviser and Head, trade and commerce, Badri Narayanan Gopalakrishnan. 

Niti Aayog Lead Adviser and Head, trade and commerce, Badri Narayanan Gopalakrishnan.  | Photo Credit: LinkedIn/@badrinarayanang

The advent of technologies like 3D printing and robotics could significantly alter countries’ competitive advantages in global trade flows, and spell the end of factors like cheaper labour costs that usually benefit several developing countries, a top policymaker said on Sunday.   

“With a technology like 3D printing, you don’t actually need transportation. You can design in one country and print in another country and the trade transaction can happen digitally,” said Niti Aayog Lead Adviser and Head, trade and commerce, Badri Narayanan Gopalakrishnan. 

While technologies like Artificial Intelligence, robotics and blockchain are leading to a significant realignment in production processes as well as consumption patterns, Mr. Gopalakrishnan said that their adoption will also lead to changes in comparative advantages between countries.   

“We may have different countries that will be leading for different products, commodities, and comparative advantages may change. For example, developing countries that traditionally have a labour cost advantage… if the production processes change and you can do things without using labour with automation and technologies, that kind of competitive advantage does not actually matter,” he pointed out. 

Noting that the importance of digital trade is growing through sectors like e-commerce, he added that policymakers are now also talking about including digital provisions in trade agreements and facilitating paperless cross-border trade. He was speaking on the impact of ‘Digitisation on Foreign Trade’ at a programme hosted by Niti Aayog and Trade Promotion Council of India. 

“This marks a very substantial deviation from what we have been doing for the past few decades. While changes in cost of production, efficiencies and so on, are more mechanical and we have gone through such changes before, with technological changes... digitisation has also completely changed the way we are doing things and even consumption processes are changing,” the government think tank’s trade policy chief said. 

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