Adopting an industrial policy for good jobs

M Rokonuzzaman | Published: May 31, 2019 20:32:08 | Updated: June 09, 2019 21:15:54

We produce Engineering graduates with the competence of Science, Technology, Engineering, and Creativity (STEC). Human beings are driven by incentives. One of the most desirable incentives is to get the job done better at less cost while increasing comfort. STEC competence is our primary means for delegating roles to machines -- increasingly better machines -- to get jobs done better. Such role delegation to machines forms the backbone of the industrial economy. The strength of the industrial economy depends on our attaining STEC capacity and transferring it to building increasingly better-performing machines, consequently getting numerous jobs done better at less cost.

Unfortunately, developing countries are finding increasing number of their engineering graduates unemployed or underemployed. On the other side, due to eroding labour advantage, the sustainability of the industrial economy in developing countries is facing a growing challenge, particularly in the age of the fourth industrial revolution.  

In a recent opinion article, Dani Rodrik and Charles F. Sabel emphasised the necessity of an industrial policy for good jobs. In one hand, technology import-driven industrial strategy has been continuously killing factory jobs, and on the other, such an approach does not encourage investment for research and innovation in creating quality jobs, primarily for engineering graduates. Historically, developing countries have been failing to integrate quality job creation with the strengthening of the industrial economy.

To harness STEC competence in creating wealth, engineering graduates are engaged in three modalities. The first one is to engage them as in-house employees. In the early stage of the industrial economy, particularly in the 60s and 70s, state-owned enterprises used to employ engineers to select, set up and maintain imported production machinery for expanding industrial outputs. Over time, instead of hiring engineers as in-house employees, the option of contracting jobs for designing and building factories by importing machinery became economically more attractive. On the other hand, due to higher-level automation, the need for in-house engineers for maintaining production plants has been steadily declining. The third form of engagement of engineers to turn STEC competence into wealth is through innovation and start-ups. Despite having high potential, this third form of engagement demands an institution for supporting time and money to pursue innovation amid uncertain demand and revenue.

By engaging engineers as in-house employees, creating quality jobs and driving industrial economy simultaneously was relatively easy. The third form, engaging engineering graduates to innovate, is highly challenging as well as rewarding. If developing countries can succeed in creating success stories of pursuing innovation for strengthening the industrial economy and creating quality jobs, an endless frontier of growth could open up.

Quality of engineering education could be a question here. Let's make the assumption that if we increase the STEC competence, does it mean that job opportunity for engineering graduates will also proportionately expand. It's fair to say that there is no natural correlation between the quality of graduates and employment opportunities. In addition to improving the quality of graduates, we should also create the capacity of the economy to turn the STEC competence into wealth. Managing risk in turning the investment made in pursuing innovation to profitable return appears to be a difficult task. It might be argued that as there are numerous opportunities to innovate to get limitless jobs done better, why cannot engineering graduates pursue those opportunities? It has been found that chances of risk are so high that more than 90 per cent start-ups in even Silicon Valley fails. To harness innovation opportunity to create quality jobs and strengthen the industrial economy, we need to create a pathway of manageable risks so that graduates can succeed.

The USA, and also other industrially advanced countries like Germany, adopted two essential strategies to leverage the innovation opportunity-for creating quality jobs and strengthening industrial base simultaneously. The first one is the adoption of sound as well as fair policy and regulation to govern competition, wealth creation and distribution. The second one is defence related research. Through smart policies and regulation, the US gave a very clear signal to the industry and the business community as a whole. In order to make more money, you need to devise a way to offer better quality products at a lower cost, so that both consumer and producer surpluses go up concurrently. To devise means to do so, the industry started investing in scientific research for technology inventions and product as well as process innovations.  Eventually, the industry succeeded to fine-tune the correlation between R&D investment and profitability. As a result, quality jobs started growing, primarily for the scientists and engineers for undertaking R&D. This strategy also created quality management jobs for knowledge generation and its conversion to product and process features, consequently driving revenue and profitability. Such an approach is the underpinning of the success of industrial economy of not only the USA but also of other advanced countries.  

The USA's 2nd strategy was the scientific R&D funding for strengthening Defence capacity. On one hand, this strategy created quality jobs for scientists and engineers within academic research institutions, national laboratories, and defence contractors. On the other hand, it increased the supply of science and technology-centric intellectual assets. For example, many innovations starting from Apple's iPhone to Boeing's passenger jetliners are basically the outcome of fine tuning and assembling of defence technologies.

For many developing countries, adopting the second option may not be feasible at this point in time. But what about adopting the first one? They should increasingly focus on creating a favourable situation for encouraging investment in science and technology R&D for offering better quality products at lower costs, thereby expanding as well as strengthening the industrial base. The progression of this strategy will lead to the formation of productive knowledge base and creation of local demand for supporting innovation and start-ups, creating both quality jobs and strengthening the industrial base simultaneously.   


M Rokonuzzaman PhD is an academic and researcher on technology, innovation ands policy. zaman.rokon.bd@gmail.com

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