The Midwest is America's robot capital


According to a recent report from the National Bureau of Economic Research, the top five states in the United States that use robots in manufacturing are Iowa, Michigan, Kansas, Wisconsin, and Minnesota. This indicates that robots are set to have a significant impact on how economies operate, comparable to the influence of the internet and electricity. However, the adoption of robots in manufacturing is geographically stratified.

The report highlights that the U.S. robot economy is divided into three tiers. Three-quarters of all robots in the U.S. are concentrated in just 10% of regions defined by the Office of Management and Budget, while the remaining 50% of regions have very few robots. To arrive at this conclusion, the researchers utilized census data and surveys from around 35,000 manufacturers to assess the regional adoption of robotics.

One key finding of the report is that robots are primarily complementary to production workers, rather than replacing them. Interestingly, companies that utilize robots tend to have more human workers compared to those that do not, but they often pay their workers less. The presence of robots in an area is influenced by a "robot cluster effect," where companies are more likely to adopt robots if neighboring businesses also use them, particularly in manufacturing hubs. This effect is partly attributed to the presence of "robot integrators," which are businesses specializing in helping companies acquire and install robots. The report notes that an area with at least one integrator is significantly more likely to become a hub for robots.

However, while robots contribute to the national GDP, they have not yet improved America's lagging productivity growth. This parallels a historical trend from the 1980s when computers spread without a corresponding spike in productivity, which only occurred in the 1990s. Additionally, the adoption of automation has been linked to political polarization. Uneven deployment of robots across different regions of the country could exacerbate existing divides and contribute to further polarization.

Erik Brynjolfsson, the lead author of the report and director of the Stanford Digital Economy Lab, admits that there is still much "unexplained dark matter" regarding why robot hubs emerge in certain areas. He also expresses concerns about a potential separation, where some manufacturing sectors become more technologically advanced while others are left behind. To achieve more balanced robot adoption, the report suggests the proliferation of robot integrator firms and the implementation of policies that support investments in specialized human capital.

To summarize, while industrial robots have been utilized in the U.S. since the 1960s, there is still much to learn about the relationship between robot adoption, other forms of investment, and their impact on international trade.   

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