Moody's: Emerging markets' ability to adapt to technology crucial as robotics use surges

Submitted by ruggia on
Body

Global Credit Research - 17 May 2017 New York, May 17, 2017 -- The accelerating adoption of robotics in manufacturing in some of the worlds' more advanced economies could pose challenges to emerging market exporters that have benefited from their comparative advantage of lower cost, high skilled labor, says Moody's Investors Service in a report.

The US (Aaa stable), Germany (Aaa stable), Japan (A1 stable), Korea (Aa2 stable) and China (Aa3 negative) account for about 75% of spending on global industrial robotics worldwide. In these five countries, the use of robotics could even bring back some of the processes that have been offshored to lower labor cost destinations.

Nonetheless, the number of jobs lost to automation is likely to be higher than those gained by onshoring. Another impact of robotics is that it could offset labor market pressures in countries with aging populations. "In countries where aging populations are reducing the growth in labor supply, robotics could support growth by lowering the need for labor while also increasing productivity," said Samar Maziad, a Senior Analyst and Vice President at Moody's.

Robotics technology is most commonly used in the highly globalized automotive and electronics industries, and the five main nations that are adopting it are also key trade nodes in their respective regions. This implies that while the adoption of robotics is currently concentrated in only a few countries, it will have implications beyond their borders. In particular, the countries that are linked to them through trade and manufacturing supply chains will be impacted.

These include emerging markets economies, such as Czech Republic (A1 stable), Hungary (Baa3 stable), and Slovenia (Baa3 positive) in Central and Eastern Europe, as well as Malaysia (A3 stable) and Thailand (Baa1 stable) in Asia. These nations are deeply integrated into high technology production chains and export markets due to their comparative advantage of high-skilled, lower cost labor forces. As automation becomes more efficient and cost effective, it could negate the labor cost advantage of some of these emerging markets.

Regions / Country
Topics
Document Type
Digital Economy Topical Cluster
Digital Economy Observatory : Only Tags