Confronting the ‘Inconvenient
Truths’ of Globalization
Beyond the ‘tiger’ model of economic
management: new forms of social
partnerships and global networking
Michael Best
Professor Emeritus
University of Massachusetts
and visitor, Center for Innovation and
Structural Change
National University of Ireland, Galway
New Growth Machine:
Globalization and Technologybased Industrial Strategies
• Establish an economic ‘mandarinate’ as an
executive industrial growth agency
• Form partnerships with global business
leaders to build, or leverage, an S&T
infrastructure and guide policy
• Goal: grow via strategic sectoral
transitions and introductions
• Invest heavily in skill formation
Evolution of Industrial Structure
PS 5
Knowledge intensive
(systems integration)
information, communication, instruments
future
PS 3,4
Complex-assembly intensive
(flow)
auto, consumer electronics
PS 2
Material-intensive
(flow)
steel, plastic
food processing
present
(Principle of production)
PS 1
Low technology, labour intensive
(interchangeability)
apparel, toys, furniture
M.Best, NCA
Strategic Technology Upgrading
Agencies
•
•
•
•
•
•
•
Japan: EPA, MITI
So. Korea: KIST
Taiwan: ITRA
Singapore: EDB
Ireland: IDA
Finland: TEKES
Sweden: Vinnova
Irish Economic Mandarinate
Business Models for Technology
Assimilation
• Japan: Indigenous WCM + tech licensing
• So. Korea: Indigenous WCM + equipment
suppliers
• Taiwan: Tech-based SMEs + Brain
circulation with SV
• Singapore: FDI-affiliates + GPN-hubs +
skill formation
• Ireland: High-tech FDI-affiliates + RTCs
• Nordic: Tech-based + NPD+SF
Growth in Engineering and
Science Graduates 1975-1995:
creation of a global ICT labor market
1975
NS&E
1975
M&CS
1995
1995
NS&E M&CS
706
NA
5456
NA
Singapore 702
NA
2965
NA
Ireland
S. Korea
10266 0
47277 12351
Taiwan
6700
15170 2818
1200
Ireland’s Strategic Assessment:
(what the IDA saw and acted on)
• The triumph of neo-liberalism and the
opening of global markets (EU, Eastern
Europe, ex-USSR, China, India, Brazil)
Inter-determinant with:
• Emergence of high-tech ‘industrial
districts’ in US (3000 companies in MA,
Silicon Valley, Austin) serially ‘spawning’
new sectors
MA: New Sector Creation
• Minicomputers
• Data Storage Systems (‘file cabinets of IT)
• Medical devices (US output grew 9 times
in 25 years to 2004; regionally specialized)
• Network Switching Equipment
• Mutual fund industry (asset management)
• Biotech
• Business software tools
• Defense systems
MA comparative advantage
• Technological innovation: Leadership in
emergence of new high-tech sectors via a
population of 3000 high tech companies
• A S&T infrastructure anchored in research
intensive universities
• Business development infrastructure: Grow
companies from small to medium to and leaders
to large size
• Legacy of technology capability and skills
(optics, systems engineering)
Opportunity: Ride High-tech Waves
• High tech companies have 2 parts:
platform development and production
• Production activities can be off-shored
• Ireland established a comparative
advantage as a remote management site
• Ireland’s business/education
partnership is attractive to US high-tech
companies
The demise of ‘social partnership’
in the US
• Triumph of neo-liberalism, the collapse of
the ‘New Deal” and attack on organized
labor
• The attack on public sector including
public education
• Decline of American manufacturing
capabilities (e.g. Ford v. Toyota)
Partnership with High-tech Leaders
• Information-communication technology: 7
of worlds top 10 including IBM, Intel, HP,
Dell, Oracle, Lotus, and Microsoft
• Medical technologies: 15 of world’s top 25
• Pharmaceuticals: 13 of world’s top 15 and
6 of world’s top 10 drugs produced in ROI
• Financial services: over half of world’s 50
largest banks and of world’s largest
insurance companies
Foreign Direct Investment: Ireland's Growth Driver
1985
2000
FDI inflows
$164 million
$24 billion
Exports to W. Europe
$10 billion
$76 billion
Foreign affiliates share of Exports
Source: UNCTAD, WIR 2002
90 percent
Elements of a new Irish, Niche
Strategy
• Localization capabilities for EMEA (diverse
languages, sensitivities to cultures…)
• Offer remote management to technologydriven companies concerned about IP
Rapid location and scale-up for plants
(skills and infrastructure) IDA
• International back-office and services hub
High Tech Remote Facilities for any
‘routine’ operations
Is Ireland a high-tech economy?
•
•
•
•
•
•
•
Yes, affiliates of high tech companies
Yes, higher education skill formation
No, GER&D/GDP
No, activities of affiliates
No, new sector creation
No, technology platform development
No, establishment of distinctive regional
technological capabilities
Indicators of New Technology Development
R&D Intensity
Patent intensity
Ireland
1.2
2
Massachusetts
5.3
14
Finland
3.4
9
R&D intensity = R&D to GSP/GDP, 2003
Patent intensity = USPTO patents awarded GSP/GDP, average of 1999, 2001, 2003
Source: The John Adams Innovation Institute
‘inconvenient truths’
Arctic Melt Unnerves the Experts
Haiti
Food
Era of Cheap Resources
• Oil for $10 a barrel in 1999; last week
$117
• Food prices soaring
• Basic metal prices soaring
Economic Damage Caused by Climate
Change in Billion Euros
600
500
400
300
200
100
0
1950-59 1960-69 1970-79 1980-89 1990-99 19942004
Source: Munich Re (Topicsgeo Annual Review: Natural Catastrophies
2004)
Intractable sectors to economic
mandarinates
• Energy
• Urban transportation
• Food
• Depletable resources
Facing the Inconvenient Truths:
Towards a Sustainable Model of
Economic Governance
• Extend the social partnership to account
for social infrastructures of consumption.
Example: Nordic model of urban
transportation
• Focus technology research, assimilation
and development on clean technologies.
Example: Texas and renewable energy
Urban Transportation
• Social infrastructure of consumption
• Democratic v. exclusive or oligarchic
sectors
Dubliners visit Copenhagen
Cargo bike: SUV alternative
Bridge over harbour
I find out what the world
needs, then I proceed to
invent…
--Thomas A. Edison
Energy: democratic versus exclusive products
Renewable
Energies
wind energy,
hydropower,
photovoltaics
, etc.
in per cent
80
traditional biomass
70
coal
60
oil, gas
50
40
30
20
10
nuclear power
0
1860
1880
1900
1920
1940
1960
1980
Year
2000
2020
2040
2060
2080
2100
Texas: $10 billion clean energy
project with huge employment
Clearwater, Nolan County, Texas:
from oil to renewables with scale
• Today, Nolan County (pop: 18K) produces
more wind power than UK, France and CA
on 3 large wind farms. Wind West
• T Boone Pickens 4 year plan: 4000 MW,
2700 turbines across 200,000 acres—150
miles across Panhandle (1 million homes)
• Master scheme: Army of wind farms North
to South Great Plains and West to CA
solar energy corridor
Cuchulainn’s energy
Where is Cuchulainn? Dundalk’s
alternative energy: no hulk
New Deal Strategy: investment
priorities
• Focus on clean technology/renewable
energy (from high-tech to clean tech)
• Research and source world for leading,
fast growing companies (basic industries)
• Develop complementary capabilities to
Basic Research: TR + DR + AR and match
to Skill Formation (global partnerships)
• Transition to post-carbon products and
processes sector by sector (toxic use
reduction extension services; energy
efficiency)
Transition sector strategies,
including world-class technologymanagement based regulation, to
reduce inflationary pressures
•
•
•
•
Energy
Transportation
Water
Raw materials
Clean Tech: well-known technologies
•
•
•
•
•
•
•
•
Solar power
Wind power
Green buildings
Personal transportation
The smart grid
Bio-based plastics
Advanced lithium-ion batteries
Water filtration
Clean Tech: Emerging Technologies
•
•
•
•
•
Tidal power
Silicon-based fuel cells
Distributed hydrogen generation
Plug-in hybrid vehicles
Nano-technology-based materials
Clean technology are products and
services that:
• Harness renewable materials and energy
sources or reduce use of natural
resources by increased productivity
• Cut or eliminate pollution and toxic waste
• Deliver equal or superior performance
• Provide investors, companies, and
customers with promise of increased
returns, lower costs, and reduced prices
• Create quality jobs in management,
production and deployment
From TQM to LCA, sector by sector
How? Benchmark economic
governance models
• Nordic countries, US cities and states, European
industrial districts
• Envision a post-carbon age economy
• Leverage skills and capabilities developed in
high growth years
• Extend mandate of the economic mandarinate to
the ‘intractable’ sectors
• Address the social infrastructure of consumption
with democratic goods
• Social partnerships for socially rational products
Sources and Acknowledgements
• Elephant in the Room, Guy Harrison, Google Images
• G8 Renewable Energy Task Force
• Google Images for fox, pollution, and clean technology
images
• Waves of Innovation, The Natural Edge Project;
Hargroves, K. and Smith, M.H. (2005) The Natural
Advantage of Nations: Business Opportunities,
Innovation and Governance in the 21st Century,
Earthscan, London, p 17.
• Ron Pernick and Clint Wilder, The Clean Tech
Revolution, HarperCollins, 2007.
• http://www.copenhagenize.com/2007_10_01_archive.ht
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