Key findings:
- Increased use of robots in developed countries erodes traditional labour-cost advantage of developing countries.
- Labour-intensive manufacturing in large developing countries with domestic production linkages is unlikely to be reshored to developed countries.
- Whatever the impacts, outcomes will be shaped by policies.
- Developing countries need to redesign education policies and embrace the digital revolution – this approach should be combined with supportive macroeconomic, industrial and social policies.
Abstract:
Industrialization has historically been synonymous with development, while
deindustrialization is a well-established trend in mature developed economies as they
move towards services-based economies. Yet recent trends show that many developing
countries – especially in Africa and Latin America – have witnessed their shares of
manufacturing employment and output shrinking long before they have attained income
levels comparable to those in the developed world. Such premature deindustrialization
began during the adjustment programmes in the 1980s and 1990s, yet has continued, as
commodity booms and speculative financial inflows have led to currency appreciation
and a loss of manufacturing competitiveness, compounded by the rise of China’s
manufacturing exports. The current question is therefore: now that the commodity bonanza
is over, capital flows are reversing and China is turning towards a more balanced growth
path driven more by domestic demand than exports, how can Africa and Latin America
reignite industrialization? Whatever the chosen strategy, it will have to account for the
rapidly increasing spread of new automation technologies and artificial intelligence in the
form of robots.
And here’s the full report (PDF):
http://unctad.org/en/PublicationsLibrary/presspb2016d6_en.pdf
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Thanks for sharing this research. It’s good to see scientific studies backing up the trends we’re feeling in the workplace. Definitely supports the view that technology is rapidly changing the way people work, sometimes by eliminating the work altogether. It’s a counter argument for sure to the sentiment that the jobs are going away to these other developing countries, when in fact they too are feeling the effects from the commoditization of human effort… probably even more so since the people in these countries had little to begin with.
If that’s the picture, you can’t help but wonder, in the future what will people actually do? If humans aren’t needed for work anymore, how do we provide for people who can’t exchange their skill and time for compensation? It draws up a picture of some dystopian future where we’re all driving around in Ubers and serving each other lattes with the world controlled by a handful of mega-billionaires. That’s a pretty bleak I know… it may not reach that point, but it seems like there’s a trend line pointed in that direction. We’re told that by all standard measures of health and wealth we live in the most prosperous age of all time and yet we look around and we see bare the signs of discontent. Some is what we see in the news, which can be questionable yes but we sense the a general signs of unease in people. Right? I can’t help but feel that much of the societal discontent we see so prominently are but symptoms of a greater worry and anxiety people feel about their future, our future… a future predicated on work as a means to secure livelihood. Work seems to bring people together in mutual dependency, because we have to rely upon each other to accomplish something bigger than ourselves. If the concept of work erodes, doesn’t our need for each other also diminish? What about our sense community and belonging which is so important to the human mind?
Maybe the question isn’t whether work is going away, but rather that education has fallen far, far behind and really failed us. Our schools and universities are wonderful institutions that teach us how to think, but if we live in a society that only rewards those who can contribute in economic terms (or those with extraordinary access to capital), shouldn’t these schools also be helping students gain competency in an area of skill and expertise that has direct value in the marketplace? It just shows you how grateful we should be for FCC, for your work Quincy, and the work of the team. It’s like a shot in the dark pointing to the fact that we can retrain ourselves to learn new technologies, get better jobs, and that there is a ton of fun, interesting, and challenging work out there to be done. Last I checked we haven’t yet explored our solar system, so yeah there’s plenty to do. I hope FCC can continue to grow and evolve so we can reach more people. Maybe then we can deliver a solid punch the arm of our education system and the people that oversee it and say WAKE UP, you need to change!
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Or…the exact opposite.
This is futurist-optimist me speaking, of course, so take this with a grain of salt. Or sand - which can be made into silicon (which is important…):
First, read Quincy’s recent Medium post about why FCC is free, and pay particular attention to the notion of the Abundance (rather than scarcity) mindset. Also, I asked a follow up question, in reply to which Quincy recommended the book Free, by Chris Anderson. That book explores some of the economics of this idea in far greater detail (and the audio book is free - definitely worth a listen, it’s great!)
So, let’s playfully assume the following:
- Some things can reach a point where they become “too cheap to meter” (i.e. We can essentially round down their operating costs to zero)
- Digital things reach that point much faster than material things, due to the interplay between the improvements continuously being made in processor speed, bandwidth speed and capacity, and storage speed and capacity.
- Material things can reach that point, if the material required to produce them can become abundant and the labour required to manipulate it into something desirable can be automated. (Both of these things can be achieved - consider the abundance of corn in the States, something the book Free has really interesting things to say about! - also consider the rise in automation, as described in the report above)
- One day we will have abundant energy - we just need to crack the efficient/renewable puzzle. Abundant energy means something like a desalination plant becomes much more cost effective - essentially the energy cost can be too cheap to meter. We can have clean, fresh water, directly from the sea and introduce water abundance, and therefore food abundance to areas currently suffering from scarcity.
- Nanotechnology that allows us to reconstruct things at a molecular level is conceivable (not sure where the current progress on this is). This would conceivably allow us to recycle any material into any other material, by tinkering with the molecular structure. We might finally be able to turn lead into gold, as the alchemists used to dream, or CO2 into carbon and oxygen - we don’t want too much CO2, but we have great uses for both carbon and oxygen!
So, yeah - one trendline goes down. But the other goes up, past anything we currently have experienced.
In a world where all the above points have become a daily reality, what would happen to our need for money? What would work look like? What would international relations look like?
Obviously, this stuff won’t happen tomorrow - it might not happen in our lifetimes - and we might nuke ourselves into oblivion before we crack all of the above…but if we continue the course we are on, it’ll all turn out just fine.
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It’s a traaaap!!!
But at this moment I see some opportunity here. So if developing countries get faster and faster new technologies. Some of us can provide services for them. Not only multinational companies can make money here.
Want to hear your opinions. Thanks.
I see what you mean, the developments in technology are making these things more available and cheaper than ever before. Reminds me of Bucky Fuller who said “It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest.” I too am an optimist that tech can solve many problems. It’s hard to deny though that there remains a digital divide, and the disruption caused by the tech revolution has/is/will affect a lot of people.
For instance, you mention how the price of material goods falls in relation to automation and efficiency. We see that on prominent display with Amazon or Walmart, which are by all measures a triumph of ingenuity the way they were able to gain massive purchasing power, create an efficient and distributed supply chain, and consolidate shipping under a central distribution system. Think of all the cost savings and price reduction this enabled. It’s never been cheaper or more convenient to buy stuff. But this efficiency also displaced a lot of people. Small towns in America were hit particularly hard where many lost farms and businesses since they couldn’t compete. Some saw this as a catalyst which left many American downtowns abandoned. Career positions were often replaced by hourly part-time associate jobs without health coverage or benefits. A lot of these folks are trying to work hard, they are trying to adapt, but they don’t know if it’s going to work out for them.
Uber is an example we can relate to from our own trade. The company employs approximately 4,000 people and generates 17.5 million in market capitalization per employee compared with GM which has 216,000 employees and generates 0.2 million market cap per employee. What does this show us? The industries of yesterday put millions of households on the map, while the comparisons today are thus far making a select few exceptionally rich.
All this aside, we have a certain luxury to be here typing out our points on this board, while many don’t have access to the internet, food or water… And thankfully we don’t have bombs dropping on our heads like other people in this world. So there is a lot to be grateful for sure. And there is a lot of great work going on to lift more people up so they have access to these basic things. So yeah seems like is more general prosperity for us humans as a whole but also seems that unless the nature of work changes in the developed world, there will be a lot more people in the future sitting at home on the couch during the work-day with a powerful smartphone and an enormous tv