Tuesday Nov 05, 2024
FT
Tuesday Nov 05, 2024
Monday, 8 July 2013 00:13 - - {{hitsCtrl.values.hits}}
West’s technological superiority will keep present world divide intact
The implication of these technological advancements is that the globe’s present divide into the two groups, the ‘rich’ and the ‘not-rich,’ is to continue for many more years in the same fashion and rigor unless the not-rich group – all those poor, lower middle income and upper middle income countries – change their economic policy to gain capacity to ride on the ‘technological bandwagon of the West’.
Singapore did this in 1999 when it advised all its higher education institutions to concentrate in the new millennium on four main fields which were the technological advancements that had, as identified at that time, the promise of ruling the world in the new century. They were genetic research and engineering, nano-technology, information and communication technology and entertainment.
‘Not-rich’ countries should jump on bandwagon of technological revolution
But today, with a large number of new technologies that are being developed, even Singapore has to redesign its policy strategies to align the country to emerging technological advancements in the world.
Sri Lanka is far behind in this game. Its avowed goal in development has been to double its income per head or per capita income within the next four years and elevate the country to the status of an upper middle-income economy in the next decade and finally make it a rich country within a generation’s lifetime. But if it does not become a part of the miracle being shaped in the West today, its goal of becoming a nation of worth within a generation will simply remain a dream.
Technology has changed
the world
Technology has always helped people to go beyond their limits, change the way they interact with each other and bring world nations which have been divided into different ethnic, religious and social groups together. It has been the key to continuous economic progress since the traditional contributors to economic growth, namely, capital and labour, become totally helpless without enriching technology.
Smart phones create miracles with new apps
Just how technology has made life easier has been illustrated by a recent experience of one of the Indian friends of this writer. In a duty free shop in an airport in USA, thousands of miles away from his home, he could not find a particular brand of a perfume which his wife had commanded him to bring when he returned home from his business trip. There had been many other brands but he was not sure whether they met his wife’s taste. A simple call to his wife would have sorted the issue, but without seeing what it is, his wife would not have been satisfied with his choice.
Then, the latest mobile phone technology had come to his rescue. He had made a video call by using an app in the operating system in his smart phone, shown all the brands of perfume on the shelves in their minute details in both ‘real time’ and ‘face time’ and got his wife and also his daughter to make the choice collectively. The cost of the video call? That was free and he had not been asked to pay for the internet time since the Wi-Fi in the airport had also been free. Anyone who had lived in, say the 1980s, would have seen this as a miracle since it involved seeing things thousands of miles away in actual form in real time.
McKinsey Report on Disruptive Technologies
A recent report by The McKinsey Global Institute or MGI, the business and economic research arm of the McKinsey and Company, published under the title ‘Disruptive Technologies: Advances that will transform life, business, and the global economy’ has identified 12 such miracles that are being formed into reality in various stages in the West today (available at: www.mckinsey.com/mgi).
McKinsey Report: Disruptive technologies offer new opportunities
In its Preface to the report, MGI has explained the nature of the ongoing technological advancements and their impact on global economies as follows: “Technology is moving so quickly, and in so many directions, that it becomes challenging to even pay attention—we are victims of ‘next new thing’ fatigue. Yet technology advancement continues to drive economic growth and, in some cases, unleash disruptive change. Economically disruptive technologies — like the semiconductor microchip, the internet, or steam power in the Industrial Revolution — transform the way we live and work, enable new business models, and provide an opening for new players to upset the established order. Business leaders and policy makers need to identify potentially disruptive technologies, and carefully consider their potential, before these technologies begin to exert their disruptive powers in the economy and society”.
Joseph Schumpeter: Capitalist world’s continued prosperity depends on ‘creative destructions’
What MGI has named as ‘disruptive technologies’ has already been called ‘creative destructions’ by the Austrian economist, Joseph Schumpeter in his 1942 book ‘Capitalism, Socialism and Democracy’.
In this book, Schumpeter has explained his proposition as follows: “The opening up of new markets and the organisational development from the craft shop and factory to such concerns as US Steel illustrate the process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one ... [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.”
So, according to Schumpeter, like a continuously happening gale, new inventions and innovations take place replacing the old ones driving the mankind forward; it is something about which the mankind should be happy and not angry. A lull that is there forever cannot bring this change in the capitalist world. Thus, the secret to the continuous prosperity of the capitalist world is the ‘creative destructions’ or the perennial gale prompting the later day economists to nickname it the ‘Schumpeter Gale’.
Schumpeter: Without innovation and diffusion, invention
is helpless
According to Schumpeter, three factors, namely, invention, innovation and diffusion lead to the final phase of creative destruction. Invention is the creation of a new product, new idea or a new process which comes from education, learning and research. These inventions standing along will not lead to capitalist growth. They should be put into practice or viable commercial ventures by entrepreneurs through a process known as innovation. Thus, without innovation, inventions are simply fruitless.
An example from recent times for the combination of inventions and innovation comes from the Apple products. According to Walter Isaacson, biographer of Steve Jobs, it was Steve Wozniak who invented the Mac computer. Had it not been used commercially by Steve Jobs, the innovator, that invention would have simply remained an abstract invention. Therefore, a scientist who has made an invention becomes useful only if his invention is carried forward by an entrepreneur by establishing a commercially viable enterprise, a process known as ‘innovation’.
But will the scientist and entrepreneur get together to benefit from each other? No if they do not join hands and Schumpeter called this coming together as ‘diffusion’. So, for an economy to continue to thrive, according to Schumpeter, there should be three acts that have come together. Inventions created by scientists, innovations created by entrepreneurs and diffusion by combining the scientists and the entrepreneurs.
12 miracles happening
in the world
The 12 most important technological changes identified by MGI report have gone through the three factors which Schumpeter said would lead to creative destruction or in MGI words, the generation of disruptive technologies. These technologies are as follows:
1.Mobile internet: Increasingly inexpensive and capable mobile computing devices and Internet connectivity; If you are with a smart phone with internet connection today, you have the entire world at your finger tips. A comparison has been made by MGI on this count with computers of yesteryear: It has said that the most powerful computer in 1975 costing $ 5 million had the same performance of an iPhone today costing only $ 400.
2.Automation of knowledge work: Intelligent software systems that can perform knowledge work tasks involving unstructured commands and subtle judgments. The distributed intelligence now being developed in USA and elsewhere in Europe seeks to replicate human brain and pretty soon most of the brainy work handled by humans will be outsourced to these smart and intelligent computers.
3.The internet of things: Networks of low-cost sensors and actuators for data collection, monitoring, decision making, and process optimisation; software applications are now being developed in the Western world at a rate that it is practically possible to beat the limitation created by time and space when it comes to human interaction.
4.Cloud technology: Use of computer hardware and software resources delivered over a network or the Internet, often as a service; This system of data protection and storage will help people to use only a fraction of the installed capacity in their computers and travel abroad just with a bag of clothes but still access to their data files from any place in the globe. The only requirement is that they should remember their password, but today with new app, even password management has become possible.
5.Advanced robotics: Increasingly capable robots with enhanced senses, dexterity, and intelligence used to automate tasks or augment humans; These robots will not only handle monotonous routine jobs but also are capable of making decisions faster than humans having processed all the necessary information. Thus, the concept of bounded rationalist which Herbert Simon came up with in 1957 to propose that people are not rational because they cannot access to all the information and even if they have access, they are constrained by a lack of time and ability will be just a thing in the past.
6.Autonomous and near-autonomous vehicles: Vehicles that can navigate and operate with reduced or no human intervention; These are smart vehicles and already vehicle manufacturers have started to fix their products with all types of software packages that help drivers to better control their vehicles while avoiding fatal accidents or crashes.
7.Next-generation genomics: Fast, low-cost gene sequencing, advanced big data analytics, and synthetic biology (“writing” DNA); This is the most disruptive of the new technologies because sequencing one’s genome will not only be cheaper but also be quicker. This will help the diagnosis of ailments more accurately and find treatments by simply changing the copy of the genome just like we write computer software programmes today to handle processing problems.
8.Energy storage: Devices or systems that store energy for later use, including batteries; This is a real contributor to energy saving because it will help the world to develop more energy efficient machines and thereby conserve energy.
9.3D printing manufacturing: Additive manufacturing techniques to create objects by printing layers of material based on digital models; The invention of this by MIT engineers has been termed as the second industrial revolution because it has enabled producers to use 3D printers to produce practically anything from precise parts of airplanes to cars to body parts.
10.Advanced materials: Materials designed to have superior characteristics (e.g., strength, weight, conductivity) or functionality; Nano carbons and other strong materials are to replace steel as the main input in producing machines and constructing buildings.
11.Advanced oil and gas exploration and recovery: Exploration and recovery techniques that make extraction of unconventional oil and gas economical; USA and Canada have been able to come up with hydraulic fracturing and octopus horizontal drilling for tapping what was hitherto inaccessible as shale oils and natural gas that lie in shale rocks about five miles deep down in the interior of the earth. USA is to be self-sufficient in natural gas and fossil fuel by 2025 by tapping its vast shale oil fields the northern parts of the country.
12.Renewable energy: Generation of electricity from renewable sources with reduced harmful climate impact; the development of new nano solar photovoltaic solar power harvesters will revolutionise the world’s new renewable energy production methods.
This list is not exhaustive since there are many more such technological changes happening today. But MGI has chosen the above 12 in view of the far-reaching impact they are bringing to the global economy tomorrow. When one looks at them, they are really miracles as Sir Arthur C. Clarke has called them because at the present stage of human knowledge, they are unimaginable to many.
Sri Lanka has no choice but to get on bandwagon of miracles
These new technological developments have vast implications for Sri Lanka’s sustainable economic development. As it is, the bulk of the world’s income is going to be amassed by the developed world and the current divide between the developed world and the not-developed world consisting of all other countries from upper middle income to lower middle income to poor is going to remain without change.
Sri Lanka’s policy should be to jump on to the new bandwagon of technology as Singapore has done since the 1990s and produce what that world needs in order to sustain its markets. This requires Sri Lanka to divert its energy, resources and enterprise to education and research and development from the currently engaged destructive and disruptive movements like setting one ethnic or religious group against another and taking relish in those movements.
(W.A. Wijewardena can be reached at [email protected].)
