Automation, Trade and Multinational Activity: Micro Evidence from Spain

72 Pages Posted: 14 Sep 2020

See all articles by Katherine Stapleton

Katherine Stapleton

University of Oxford

Michael Webb

Stanford University - Department of Economics

Date Written: August 26, 2020

Abstract

We use a rich data set of Spanish manufacturing firms from 1990 to 2016 to shed new light on how automation in a high-income country affects trade and multinational activity involving lower-income countries. By exploiting supply side improvements in the capabilities of robots over time, as described in patents, we show that contrary to the speculation that automation will cause 're-shoring', the use of robots in Spanish firms actually had a positive impact on their imports from, and number of affiliates in, lower-income countries. Robot use causes firms to expand production, increase productivity and increases the probability that they start importing from, or opening affiliates in, lower-income countries. The sequencing of automation and offshoring has important consequences for the impact of automation, however. For firms that were offshoring to lower-income countries before they starting to use robots, robot adoption had no effect on the value of imports from lower-income countries, but decreased the share of imports sourced from lower-income countries. By contrast, for firms that had not already off-shored to lower-income countries, robot adoption made them more likely to start doing so. We show that these findings can be explained in a framework that incorporates firm heterogeneity, the choice between automation, offshoring and performing tasks at home and where automation and offshoring both involve upfront fixed costs, such that their sequencing matters.

Keywords: Automation, Robotics, Technology, Offshoring, Trade, Multinationals, Global Supply Chains, Heterogeneous Firms, Labor Share, Productivity

JEL Classification: F12, F16, J23, J24

Suggested Citation

Stapleton, Katherine and Webb, Michael, Automation, Trade and Multinational Activity: Micro Evidence from Spain (August 26, 2020). Available at SSRN: https://ssrn.com/abstract=3681143 or http://dx.doi.org/10.2139/ssrn.3681143

Katherine Stapleton (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Michael Webb

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
STANFORD, CA 94305-6072
United States

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