The Rise of Robot Capital and Its Impact on International Capital Flows

Because robots are classified as capital, the replacement of human tasks with robots increases the capital–labor ratio, and the resulting change in the rate of return on capital affects international capital flows. Using panel data for Germany, a major robot-exporting country, this paper shows that current account balances improve as the robot–labor ratio increases relative to that of trading partners. To interpret the empirical results theoretically, this paper develops an open-economy model with robot capital. A key factor allowing the replication of the empirical results is a technology shock that enables the setup of robot capital with less investment costs. Given that many countries rely on imports for their robot supply, global robotization may promote global imbalances between robot-exporting and robot-importing countries