New Industrialization Strategy of Leapfrogging

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The Financial Express (Bangladesh)

December 12, 2017

Leapfrogging has been the industrialization strategy for many developing countries by pursuing export oriented manufacturing. Without having the history of innovating industrial products, globalization brought the opportunity of manufacturing those products to many developing countries, creating very large number of manufacturing jobs. For example, Vietnam without having virtually any history in electronics has been blessed with 250,000 hardware-manufacturing jobs. Similarly, globalization created almost 4 million jobs in the textile and readymade garments sector alone in Bangladesh.

In the process, although these countries lost the competitiveness of indigenous production capacity, many development planners lauded the success of rapid job creation in manufacturing as the success of leapfrogging strategy of industrialization. But the recent forecasts by international consultancies, academics and think tanks of massive job loss threat—as high as 800 million across the globe by 2030 due to robotics, artificial intelligence and automation—are raising the question: will the countries benefiting from rapid growth of manufacturing jobs suffer from premature deindustrialization?

According to a recent report of International Labor Organization (ILO), more than 1 million sewing machine operators’ jobs are vulnerable to automation in Vietnam and Cambodia alone. As The New York Times reported, the Ford plant in Hangzhou and Cadillac plants in Wuhan and Shanghai are utilizing robots for jobs that less than a decade ago were once handled by humans. Robots are cheaper than $4 to $6 an hour in respect of blue-collar jobs in automobile manufacturing. Such job loss in manufacturing due to technology is virtually the outcome of a natural process, not a science fiction or media hype.

The industrial revolution in the 20th century divided the manufacturing of products as a series of discrete steps, commonly known as job division. Upon such division, each task was defined by a set of very well-defined activities, termed as standardized process of performing repetitive activities. Such well-documented discipline in production opened the opportunity of mass production, creating the door of engagement of low skilled workers in manufacturing. The development of telecommunication, logistics and trade liberalization opened the prospect to bring those very well-defined manufacturing jobs in developing countries, to benefit from low-cost labor. Although many advanced countries, which risked their research and development financing in developing those products, starting from shoes to electronic gadgets, lost manufacturing jobs, but developing countries were very happy in getting those jobs, due to lower cast of low skilled labor. Such transformation created the impression that without risking investment in research and development to innovate industrial products, developing countries can take the share of global industrial economy just by adding low skilled labor in manufacturing-a leapfrogging opportunity.

But the same disciplined approach of mass manufacturing of industrial products, which basically made manufacturing jobs mobile, has simplified the complexity of delegating those roles to machines, accelerating the automation space. The recent development of microelectronics and sensors, primarily fueled by the growth of smartphone, has been the driver of adding further momentum to the growth of automation technology. Virtually, most of the manufacturing jobs are subject to automation. Developing machines having human like visual sensing capability, with the blessing of digital imaging sensors (thanks to smartphone revolution), at very low cost has made the automation even cheaper than the less costly labor of the world. For this reason, China has been very aggressive in procuring, developing and installing robots to stop the out-migration of 100 million labor-intensive manufacturing jobs. Due to the wage rise and aging population, those manufacturing jobs were supposed to be destined to migrate to Africa and South Asian countries to benefit from the least costly labor.

Some people still believe that history will repeat itself: technology will eventually create more jobs than likely to be lost. History also tells that horses lost jobs due to technology, and technology did not create better quality jobs for horses. In the last wave of job transformation, technology empowered low skilled workers to perform complex production jobs, once being performed by high skilled artisans creating mass production of industrial products. As a result, at a cost of meltdown of market value of a few high skilled artisans’ work, many more jobs were created for low skilled workers to manufacture standardized products. But, this time, the trend is in the opposite direction. The output of a few high-end research and development professionals in the form of mostly software intensive machine capability is going to take away far larger number of low skilled manufacturing jobs completely progressing towards human-free production of most of the industrial products. Moreover, higher level automation also opens the door of greater scale and scope advantages—marginalizing small-scale labor-intensive producers. Automated manufacturing machines like 3-D printing are also easing the cost and quality barriers in producing customized products at affordable prices.

With the success of labor-intensive export-oriented manufacturing in creating a large number of jobs in a relatively short span of time, many developing countries have ramped up borrowing from international lenders to build massive physical infrastructure.

There are many facts around us, supported by the underlying theories to predict the likely future. It’s time to pick them up and interpret them to understand the underlying dynamics. In China, in two cities alone, 2 million factory jobs were killed by robotics just over a span of two years. We need to know it well to figure out the way out, instead of just being scared. In the absence of smarter insights and actions, the success of leapfrogging in manufacturing job creation may be short-lived, leaving us behind in the age of smart machines.

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

Published by HT Digital Content Services with permission from The Financial Express. For any query with respect to this article or any other content requirement, please contact Editor at content.services@htlive.com.

Copyright 2017 The Financial Express. All Rights Reserved.

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