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Confronting the ‘Inconvenient Truths’ of Globalization

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

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Confronting the ‘Inconvenient Truths’ of Globalization

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  1. 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

  2. New Growth Machine: Globalization and Technology-based 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

  3. 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 PS 1 Low technology, labour intensive (interchangeability) apparel, toys, furniture (Principle of production) M.Best, NCA

  4. Strategic Technology Upgrading Agencies • Japan: EPA, MITI • So. Korea: KIST • Taiwan: ITRA • Singapore: EDB • Ireland: IDA • Finland: TEKES • Sweden: Vinnova

  5. Irish Economic Mandarinate

  6. 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

  7. Growth in Engineering and Science Graduates 1975-1995: creation of a global ICT labor market

  8. 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

  9. 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

  10. 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)

  11. 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

  12. 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)

  13. 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

  14. Elements of a new Irish, Niche Strategy • Localization capabilities for EMEA (diverse languages, sensitivities to cultures…) • Offer remote management to technology-driven companies concerned about IP Rapid location and scale-up for plants (skills and infrastructure) IDA • International back-office and services hub

  15. High Tech Remote Facilities for any ‘routine’ operations

  16. 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

  17. ‘inconvenient truths’

  18. Arctic Melt Unnerves the Experts

  19. Haiti

  20. Food

  21. Era of Cheap Resources • Oil for $10 a barrel in 1999; last week $117 • Food prices soaring • Basic metal prices soaring

  22. Intractable sectors to economic mandarinates • Energy • Urban transportation • Food • Depletable resources

  23. 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

  24. Urban Transportation • Social infrastructure of consumption • Democratic v. exclusive or oligarchic sectors

  25. Dubliners visit Copenhagen

  26. Cargo bike: SUV alternative

  27. Bridge over harbour

  28. I find out what the world needs, then I proceed to invent… --Thomas A. Edison

  29. coal Energy: democratic versus exclusive products Renewable Energies wind energy, hydropower, photovoltaics, etc. in per cent 80 traditional biomass 70 60 oil, gas 50 40 30 20 10 nuclear power 0 2100 2080 1860 1880 1900 1920 1940 1960 1980 2000 2020 2040 2060 Year

  30. Texas: $10 billion clean energy project with huge employment

  31. 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

  32. Cuchulainn’s energy

  33. Where is Cuchulainn? Dundalk’s alternative energy: no hulk

  34. 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)

  35. Transition sector strategies, including world-class technology-management based regulation, to reduce inflationary pressures • Energy • Transportation • Water • Raw materials

  36. 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

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