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Lazaro Gamio / Axios

The traditional exit from poverty for poor countries — followed over the decades by Japan, Taiwan and South Korea, among others -- is to be the cheap labor for rich nations. But the robotics revolution may be foreclosing that route to the middle class, MIT economist Daron Acemoglu tells Axios.

Among the potential losers: Vietnam, China and Indonesia, said Acemoglu, co-author of some of the world's most influential recent papers on the impact of robotics.

Speaking in his office, Acemoglu said that for seven decades, every fast-growing country has used export-focused manufacturing built on cheap labor to undercut foreign competition.

But, said Acemoglu: "If robotics makes labor uncompetitive in these lowest-skill and sometimes in the medium-skill occupations, this development path would be closed to the next group of developing countries and would make the further development of countries, such as China or Vietnam, also very difficult."

One of the crowning achievements of global capitalism has been a sharp reduction in global income inequality. The embrace of capitalism by populous Asian nations like China and India has prodded incomes up, even if it was paired with stagnant middle class incomes in the wealthy world. But robots make all that different, Acemoglu said. Here he is summing up the situation now.

Why it's bad for the West: The wealthy world has grown more so as a result of China's rise, even if that wealth has been mostly captured by the already rich. In fact, 80% of all global economic growth since the 2008 financial crisis has flowed from developing and emerging economies, meaning that an increasing number of U.S. jobs are dependent on exports to those countries. If these countries can no longer rely on manufacturing as a source of jobs and productivity growth, it could deal a serious blow to the U.S. economy, too.

Go deeper

28 mins ago - Health

CDC prepares tougher testing rules for international travelers

Travelers with their luggage arrive at a COVID-19 testing location at the airport in Los Angeles, Calif., on Nov. 23, 2021. Photo: Frederic J. Brown/AFP via Getty Images

The Centers for Disease Control and Prevention said Tuesday night that it is working to impose stricter testing requirements for international travelers due to the spread of the new Omicron variant.

The big picture: The new rules would require all international travelers, regardless of vaccination status, to show a negative test taken a day before their flight to the U.S. Currently, the CDC says fully vaccinated travelers are allowed to show a test taken no more than three days before their departure, AP reports.

Republicans threaten to shut down government over vaccine mandates

Sen. Mike Lee (R-Utah) in the Capitol in November 2020. Photo: Joshua Roberts/Getty Images

Conservative Republicans in the House and Senate are planning to force a government shutdown Friday to deny funding needed to enforce the Biden administration's vaccine mandates on the private sector, according to Politico.

Why it matters: Congress has until the end of the week to pass a stopgap measure to extend funding into 2022, though objection from a small group of Republicans could shut down the government.

Electric car prices could go up before they come down

Illustration: Eniola Odetunde/Axios

The secret to affordable electric vehicles is cheaper batteries. But after years of falling prices, battery costs are now headed in the wrong direction.

Why it matters: Costlier batteries could drive up the price of electric vehicles — threatening the auto industry's transition away from fossil fuels, and, in turn, society's fight against climate change.