Explore Economics

In many production processes, human labour and machines are substitutes. Wages are rising quickly in countries such as China. For some years now the annual increase in wages in manufacturing in China has been above ten cent and this rise in labour costs is causing many businesses to consider investment in robotics to fast-forward the process of automatic in factories.

This is known by economists as capital-labour substitution. Rising demand for robotics provides a large commercial opportunity for businesses that supply the necessary technology - many are based in Taiwan. But automation is not a smooth process, businesses replacing people with technology need to be aware of some of the pitfalls - can you think what some of these might be?

This video from Financial Times news provides some of the background

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