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IntelDigest
LAW – POLICY – FINANCE – MARKETS
INFORMATION FOR THE ENTERPRISE AND INVESTOR
JULY 12 , 2017
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We complete a series on “Technology and Connectivity” in this issue of IntelDigest. Last week, we looked at the China-led megaproject, “One Belt, One Road,” and the increasingly more distributed Global Economy. We posited that Globalization is more of an unstoppable force than a trend, and asserted that America should be leading the Global Economy into the future, NOT retreating from it.
In future issues, we will come back to specific topics in Technology, such as artificial intelligence, robotics, and cryptocurrencies. But, we will complete this series with a more general look at technological development.
How Technology Advances in the 21st Century
Over the centuries, scientific and technological advances came incrementally, from the days of Galileo and Gutenberg through the Industrial Revolution, and began to pick up speed in the late 1800s with discoveries in physics, chemistry, electricity, sound waves, and electromagnetic radiation (light).
Since World War II, growth in science and technology has come exponentially, occurring at breathtaking speed. And, the pace of change accelerates. We can look forward to life-changing advancements, in just a few more years, in nanotechnology, materials science, and additive manufacturing; battery technology and autonomous vehicles; biotechnology, gene-editing, and medicine.
These advancements will certainly be “disruptive,” and will radically transform the lives of most of the inhabitants of this planet. Emerging technologies in areas such as robotics and additive manufacturing, for example, are expected to be highly disruptive of labor markets around the world, inviting backlash from many workers.
However, technological changes do not affect all equally, because geopolitics plays a determining role in the diffusion and adoption of new technologies among cultures and societies.
Geopolitical Constraints
The ability of a society to prosper from developments in science and technology is dependent on numerous factors, from geography to natural resources, from infrastructure to defense strategy, from demographics to labor markets, from availability of capital to education policies. Determining factors can vary widely from one country to another, and will create significant differences in each country’s ability to accept and utilize the type of advancements which we can anticipate in the very near future.
For example, Israel is a country which can be expected to embrace new technologies. It has a highly-educated workforce, a culture which encourages education, and a history of advances in scientific and medical fields. And, because of the perils of living in a dangerous neighborhood, Israel is a leading developer of weaponry and defense systems.
In addition, because of its harsh geography and scarce water resources, Israel has been at the forefront of developments in conservation, reuse, and desalinization of water resources. Israel would most likely be among those countries which are early-adopters and beneficiaries of technological advancements.
Russia’s history has been dictated by military concerns. Russia (and the old Soviet republics) comprise a vast territory with substantially indefensible borders. The susceptibility to invasion has been a primary concern of the society for centuries. As a result, Russian priorities in science and technology have been devoted substantially to military and intelligence applications.
This is not to say that Russians are not interested in being early-adopters of new technologies. However, the state’s bastion-mentality tends to crowd out other interests, so that Russia tends to lag behind in technological fields (with the exception of cyber warfare, of course).
Japan is a country which shifted from a war-footing to leadership in consumer electronics in just a few decades. Then, recognizing a coming demographic disaster, it shifted again to become a world leader in robotics.
Japan faces a dwindling population and smaller workforce in the 21st Century. Its inflexible labor markets are designed to protect existing workers’ rights, limiting the country’s ability to adapt quickly to shifting labor requirements. So, Japan must be an early-adopter of new technologies … robotics and advanced manufacturing techniques … to compensate for an aging population and lost labor productivity.
The Japanese have had a historical aversion to immigration, so the social acceptance of humanoid robots, medical robots and related technologies is higher than most other countries. Japan is a likely early-adopter of new technologies for use in the service sector.
The development of the China economy over the last 25 years has been no less than astonishing. However, managing A Billion People over an enormous land mass is difficult and daunting. China’s financial system and inflexible labor markets tend to hold back China and much of its population from the benefits of scientific and technological advancements.
Chinese technology has matured over those 25 years, from importing products and processes … to reverse-engineering foreign designs and manufacturing in its own facilities, with the help of Western companies. The next step … mastering research, development, and manufacturing in home-grown industries which can compete in the Global Economy … will probably be accomplished over another 25 years.
Still, for a developing nation, China is relatively advanced in technologies that support national security initiatives, including aerospace, quantum-based technologies, biotechnology, and cyber security.
American Advantages
To this point in history, the U.S. has stood out as the unprecedented leader in the Global Economy. Starting with the blessings of geography and the foresight of the Founding Fathers in establishing the Rule of Law, our country could stand on that solid foundation and grow into the leadership position which we have enjoyed for most of our lifetimes.
Americans have amassed abundant capital over close to 200 years since the beginning of the Industrial Revolution, enabling our country to take the lead in technological innovation, development, and deployment over much of that time. Since World War II, the U.S. has stood at the forefront of research and development in almost all areas of science and technology. Our academic institutions attract researchers from around the world, and our labor markets and regulations are flexible enough to support the invention, development, and integration of new technologies.
As the most developed capital market on the planet, the U.S. is in a position to deploy substantial amounts of capital to research and development in many different fields. And, we have nurtured a startup and venture capital culture which drives innovation, particularly in the computer hardware and software industries.
Our national wealth exceeds 33 percent of global wealth … more than the next five countries combined … enabling the United States to continue to outspend our competitors in research and development. And, unlike much of the rest of the developed world, the population of the United States is expected to keep growing.
With all of these accomplishments, our country should be poised to extend our leadership of the Global Economy far into the future. But, we are in danger of taking backward steps … ceding dominance to others … because of the actions of short-sighted politicians.
It is in the best interests of our country, and the world at large, that our leadership in science, technology, and connectivity continue unabated into the future.