Topics: AI-Generated Production Networks: Measurement and Applications to Global Trade

Speaker: Professor Thiemo Fetzer, University of Warwick

Host: Professor Zhang Lei from RIEM

Time: June 10 (Tuesday) 10:00-11:30

Location: Conference Room 1211, Gezhi Building, Liulin Campus

Organizer: RIEM

Speaker's Profile

Thiemo Fetzer is a Professor in the Departments of Economics at the University of Warwick (UK) and the University of Bonn (Germany), and serves as an Associate Editor for the Economic Journal. His research spans multiple fields, including international trade, economic development, finance, spatial economics, and political economy, frequently employing frontier technologies such as machine learning, artificial intelligence, and computer science. Numerous papers have been published in authoritative international journal such as the American Economic Review, Science, PNAS, Journal of the European Economic Association (JEEA), and the Review of Economics and Statistics (REStat). Focusing on economic development and industrial policy, he has consulted for policymakers and institutions in several G20 countries to help navigate away from non-cooperative "lose-lose" equilibria. His research is widely covered by media outlets including Bloomberg, The New York Times, The Guardian, and the Financial Times, sparking active discussions in the policy sphere and among the general public. He was awarded the Philip Leverhulme Prize in Economics in 2022 and has received a Starting Grant from the European Research Council (ERC).

Abstract

This paper leverages generative AI to build a network structure over 5,000 product nodes, where directed edges represent input-output relationships in production. We layout a two-step 'build-prune' approach using an ensemble of prompt-tuned generative AI classifications. The 'build' step provides an initial distribution of edge predictions, the 'prune' step then re-evaluates all edges. With our AI-generated Production Network (AIPNET) in toe, we document a host of shifts in the network position of products and countries during the 21st century. Finally, we study production network spillovers using the natural experiment presented by the 2017 blockade of Qatar. We find strong evidence of such spill-overs, suggestive of on-shoring of critical production. This descriptive and causal evidence demonstrates some of the many research possibilities opened up by our granular measurement of product linkages, including studies of on-shoring, industrial policy, and other recent shifts in global trade.