Job creation is an even thornier issue. Marc Lautier of the University of Rennes has calculated that, despite automation, the number of manufacturing jobs in the 160 countries for which he has data has remained stable since 1991, accounting for about 14% of total employment. The problem is that it has become harder for governments to attract these jobs. Manufacturing is not moving away from East Asian powers at the same rate as it did toward them in the late 20th century, partly because modern factories require more capital and skills to build. Our analysis of labor market data from 51, mostly emerging, markets finds that only five—China, Sri Lanka, Taiwan, Turkey, and Vietnam—have 18% or more of their populations employed in manufacturing, down from 16 in 1990.
since services do not tend to be labor-dense. The fax lists World Bank notes that since 1990, service jobs have increased from 40% to 50% of global employment, as workers have moved away from agriculture. But only 5% to 10% of emerging-market service jobs are in technology and tradable sectors, compared with 15% to 20% in rich countries. India’s IT industry could rake in $250 billion in annual exports, or nearly 8% of the country’s GDP, on par with manufacturing exports. Yet it employs just 8 million people in a working-age population of about 1 billion.
In the long run, AI could cause problems. Models are best suited to well-defined tasks that don’t require a human context. That leaves business services vulnerable. A report by consultancy Capital Economics says AI could lead to the “slow demise” of India’s services exports, cutting growth by 0.3-0.4 percentage points a year over the next decade. The spread of communications technology has made it easier to outsource services. New technological changes could, over time, be its undoing.