The work-sharing between humans and machines is a contentious issue. The discourse has been progressing, leading to some lamentable observations. In the face of rising low wage population, are we pushing too much technology? To create growing utility from depleting resources, increasing machine capability to take over roles from humans is indispensable, but is too much technological innovation failing to focus on more directly indigenous areas of agricultural or financial innovation, and should we focus even more on applying practices of innovation that any motivated citizen, factory worker, or local business owner can employ?
It is true that the prospect of labour reduction brings profit-making opportunities. For advanced economies, it has been a blessing to offset ageing population and creates high paying jobs for technology advancement and machine innovation. Thus, this trend appears to be unstoppable.
But what are the options for developing countries to address the negative aspects of automation? A common suggestion is to improve the skills of the factory workforce. Unfortunately, this does not work as rising automation increasingly demands only innate abilities from humans. In the past, human workers needed codified knowledge and skill to complement machines for performing productive activities. Human workers oversaw production, while machines provided supporting roles. Now, machines oversee production, leaving support roles, like fabric or work piece loading, to humans. For this reason, more than 3 million workers in the ready-made garment (RMG) factories in Bangladesh did not learn the needed skills to qualify for the jobs making products destined to the western world.
The shift to needing lower and lower skilled workers to run machines pushed factory jobs in advanced countries to the unskilled workers of less developed countries like Bangladesh, Indonesia, Vietnam, or Cambodia. Wage differential was not the only factor for this migration. The most important factor was that automation reduced the knowledge and skill requirement. Mechanisation, as it has done throughout history, brought down the complexity to such a level that unskilled individuals in less developed countries qualified to produce outputs for export. Technology has been a blessing for less developed countries, but continued technology progression risks reversing the scenario.
How can this be? Machine designers of advanced countries are progressing to automate even those innate human capabilities. This trend will create innovative jobs in advanced countries, killing factory jobs in less developed ones. Over the next 30 years, the essential problem to be addressed is that developing countries will be suffering from industrial job loss, particularly for serving the export market.
To counter it, should developing countries intensify their policies, with: 1) more training and education for factory workers, 2) borrowing and investing in infrastructure for scaling up the past success, 3) protection for import substitution, 4) increased spending on diverse incentives for export, or 5) something else?
Taking these point by point, training is of little use as there will be decreasing need for codified knowledge and skill. Borrowing will only increase the debt burden with no foreseeable payback based on market capture or growth. Protectionism will likely make a few people rich at greater cost to the masses. Spending, like borrowing, risks betting that exports will remain marketable globally. Clearly, something else, an entirely different strategy and policy framework, is needed.
What are the recommended solutions for developing countries? To begin with: 1) sharpen innate abilities of the present and future workforce to reduce the economic benefit of automation -including building on innate human abilities, such as skills as empathy, love, affection, and care-giving; 2) make lateral entries into the innovation of existing industrial products, focusing on those being consumed locally, 3) reinvent products and upgrade indigenous products and services by taking the advantage of emerging technologies to leap over imports in quality and performance, 4) train and develop a future generation to join the global innovation race, and 5) export more innovative products, equip workers with innovative skills and better innovation techniques that make indigenous workers more creative. If the expansion of indigenous opportunities is critical to kick-starting an innovation economy, then perhaps a direct focus on agricultural, financial, environmental, or other forms of innovation would serve to bootstrap a developing nation with little more than what is at hand to seed the internal investment needed for larger exploits and reduce reliance on outside investment.
One reference business model can be shown to scale well for small, indigenous efforts at innovation. Developing countries could establish innovation think-tanks to integrate and trade ideas in the idea economy. For any country, starting small with the first innovation think-tanks in the most dominant national industries, domestic consumption and export, requires substantially less investment, but brings the greatest potential for a compounding payback in the least time.
To make the next-generation innovation economically viable, there is a need to leverage the benefit of a global economy of scale. Indeed, without a workforce of innovators, all countries run the risk of a slowdown of their own innovation engine.
As we know, economic value is created out of three major ingredients: 1) Natural resources, 2) Labour, and 3) Ideas. Thus far, developing countries have been in the role of supplying natural resources and labour. Increasingly, however, we see a scarcity of natural resources. At the same time, there is a growing over supply of human work hours. The solution is to increase the supply of product and service ideas, whether through continued design refinement, better organisation of functions, fusion of capabilities into common functional elements, or increasing the adaptability of systems to their environment or customer preferences. The supply of ideas for transforming and re-innovating products and services is truly endless.
Metaphorically, we stand on the ground where we live and work, walled in by the resources and labour we have available locally, but the ceiling of ideas above us can expand infinitely. Expanding the flow of ideas makes far better use of natural resources and available work hours for supporting the continued prosperity of the whole global population.
Visionary governments should act to bring about these policies and strategies of innovative growth. If it is left in the hands of profit-making firms, start-ups, VC fund managers, and bankers, it is likely to veer off its course toward private benefit and interests rather than lasting public good. Smart policy and regulatory interventions are needed to guide industrial transformation, the likes of which are envisioned by the 4th Industrial Revolution. Policies should focus on efforts that will grow economic value by blending human and machine capabilities creatively. Policies must not discourage the progression of technology but leverage the comparative advantage of machines. And finally, policies should reflect the need for indigenous development and innovation with lasting compound benefits.
As a species, we cannot leave the job of idea mining, refinement, development to only a few countries. The source of ideas is infinite and spreads across the globe. If carefully governed and managed, the entire human race has the chance to make every country better off by empowering them to participate in the global rising tide of wealth creation out of the supply of ideas, natural resources, and labour.
M Rokonuzzaman, PhD, is an academic and researcher on technology, innovation and policy. [email protected]
J McLaughlin, is an engineer and mathematician, Managing Director, CIE Advising, LLC. [email protected]