The adoption of artificial intelligence (AI) can drive productivity increases across various sectors and reduce trade costs, leading to global gains in trade and GDP, stated the World Trade Organization (WTO) in its latest report. Simulations using the WTO global trade model show that under an optimistic scenario of universal AI adoption and high productivity growth, global real trade growth could increase by almost 14 percentage points by 2040.
In contrast, a cautious scenario, with uneven adoption and low productivity growth, projects trade growth of just under 7 percentage points during the same period. The report added that while high-income economies are expected to see the largest productivity gains, lower-income economies have better potential to reduce trade costs.
“AI has the potential to reduce trade costs, enhance productivity across sectors, and reshape traditional trade patterns. I often say the future of trade is services, digital, and green, and that it must be inclusive. AI can accelerate trade’s journey into this future,” stated WTO Director-General Ngozi Okonjo-Iweala.
AI to overcome trade costs
The WTO says that AI can be leveraged to overcome trade costs associated with trade logistics, supply chain management, and regulatory compliance. By enhancing trade logistics, overcoming language barriers, and minimizing search and match costs, AI can make trade more efficient. It can also help to automate and streamline customs clearance processes and border controls, navigate complex trade regulations and compliance requirements, and predict risks.
AI tools can be used in trade finance, and can significantly enhance supply chain visibility by providing real-time data analytics, predictive insights, and automated decision-making processes. All of these AI applications could lower trade costs and level the playing field for developing economies and small businesses. This, in turn, helps them overcome trade barriers, enter global markets, and participate in international trade.
AI to raise demand for trade of technology products
AI can also increase the demand and trade of technology products. Because AI systems often rely on real-time data streams and seamless connectivity, the adoption of AI is spurring demand for complementary goods relating to information and communications technology (ICT) infrastructure and information technology (IT) equipment. These include computer and telecommunications services, specialized development tools, and software libraries.
For instance, the global market for AI chips reached $61.5 billion in 2023 and could reach $621 billion by 2032, according to S&S Insider. These goods and services come from a small number of economies. Therefore, international trade serves as a major channel to foster AI development worldwide.
Further upstream in the value chain, trade in the extraction and processing of critical metals and minerals, as well as energy trade, are also likely to gain in importance. In addition, AI has substantially heightened the demand for data, fundamentally reshaping the landscape of data usage and trade.
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Low-income economies to see much higher trade growth
The WTO added that the adoption of AI can drive productivity increases across various sectors and reduce trade costs, leading to global gains in trade and GDP. However, the impact of AI on global trade and GDP varies significantly across economies and sectors, depending on the choices they make concerning innovation and policies.
While trade growth in high-income economies remains relatively stable across scenarios, low-income economies could experience much higher trade growth of 18.1 percentage points under the scenarios of universal AI adoption and high productivity growth compared to those of uneven AI adoption and low productivity growth (6.5 percentage points).
The simulation results also suggest that if developing economies improve their AI readiness by strengthening digital infrastructure, enhancing skills, and boosting innovation and regulatory capacity, they will be in a better position to adopt AI effectively.
However, the report also warns that the risk of a growing AI divide between economies and between large and small firms is significant, as are data governance challenges and the need to ensure that AI is trustworthy. There is also a need to clarify how AI relates to intellectual property (IP) rights.
