This article was originally published in The Diplomat.

Export-led growth strategies have played a central role in generating economic growth throughout the Asia-Pacific for more than 60 years. China certainly provides one of the most noteworthy examples, but it is by no means the only success story.

Japan, South Korea, Hong Kong, Taiwan, and others also moved rapidly up the economic development ladder by pursuing policies deliberately designed to foster competitive export sectors.

The particular circumstances of the past several decades provided an exceedingly favorable environment for export-led strategies to succeed: trade and investment liberalization opened markets, while protectionism fell largely out of ideological favor. And for the past two decades, foreign direct investment – bringing capital, technology, and knowledge of international markets – surged into developing countries with abundant low-cost labor. Factories were built, exports expanded rapidly, and the growth trajectory of many developing countries sky-rocketed.

Today, however, a number of changes are underway which could substantially diminish the relevance of export-led development strategies.

Let’s be clear on one basic point, though: when we talk about an “export-led” development strategy, what we are really talking about is manufactured exports. And the substantial changes that are underway in the nature of manufacturing could have profound impacts on the viability of export-led growth strategies (the World Bank has recently done excellent work on this topic).

The competitive edge derived from low-cost labor is declining

The competitive edge developing countries derive from low-cost labor is now on the wane, as automation, smart factories, and the use of mobile robots continues to rise (sales of industrial robots grew by almost 30 percent last year, to record levels). At the same time, artificial intelligence is becoming more capable of handling cognitive tasks that could previously only have been done by humans. These technological advances are chipping away at the relevance of wage rates in determining where manufacturing takes place.