TECHNOLOGY, GLOBALIZATION AND SUSTAINABLE DEVELOPMENT:

Transforming the Industrial State

Nicholas A. AshfordProfessor of Technology & Policy

Massachusetts Institute of Technology

Copyright © 2010 Nicholas A. Ashford

Extractionindustries

ManufacturingAgriculture

TransportationEnergy

ServicesHousing

ICT

SOLUTIONSEducation & Human Resource Development

Industry InitiativesGovernment Intervention/Regulation

Stakeholder InvolvementFinancing Sustainable Development

Environmental InjusticeEconomic Inequity

Employment/Purchasing Power

Consumer Consumption

Commercial Consumption

Government ConsumptionPROBLEMS

Inadequate Goods & ServicesToxic PollutionClimate DisruptionResource DepletionBiodiversity/Ecosystem IntegrityEnvironmental InjusticeEmployment/Purchasing PowerEconomic Inequity

MAJOR SYSTEMIC PROBLEMS Fragmentation of the knowledge base Inequality of access to economic & political power Tendency towards ‘Gerontocracy’

» technological and political ‘lock-in’» usually, but not always, accompanied by concentration of economic and political

power Market imperfections -- prices don’t reflect real costs of goods and

services Limitations of perfectly-working markets

» Disparate time horizons - costs now, benefits later» Delay in recognizing problems (Limits to Growth)» Inappropriate production & consumption patterns

Failure to engage individuals in the society to realize their human potential ~ social exclusion

Corruption

Drivers of Economic Growth

Technological Innovation (Schumpeter’s ‘waves of creative destruction’)» exploiting innovative potential

Trade (Ricardo’s theory of comparative advantage)» exploiting excess capacity

Environment

Technological change &

globalization(trade)

Work Economy

Copyright © 2006 by Nicholas A. Ashford.

Technological change and globalization (trade) as drivers of change within and between three operationally-important

dimensions of sustainability

Cost

Performance

Current ExistingTechnology

Future Technology (Disrupting

Innovation)

C1

A B

CC2

P1 P2

Sustaining Innovation

New Sustaining Technology

The Efficient Frontier for Current and Future Technology Contrasting Sustaining and Disrupting Innovation

The Importance of Workand the Workplace

Work is combined with physical and natural capital to produce goods & services.

The workplace is the place where comparative advantage is exchanged - i.e., a marketplace.

Work is the main means of distributing wealth and creating purchasing power.

Work provides a means of engagement in the society. The workplace provides an important social environment and

mechanism for enhancing self esteem. Industrial & economic policy, trade policy, and environmental

policy have important consequences for employment and OH&S

Theoretical implications of decreasing labor content for employment and for the environment

Lower costs of goods and services Lower prices Increased demand and sale of goods and services

» in the original industry/market» in new markets (influenced by increases in disposable

income and producer-created demand) Are more workers hired than displaced?

» It depends on whether growth in production outstrips (capital) productiveness growth

May require or stimulate a continual throughput economy with increasing consumption» => adverse effects on environmental sustainability

Improving labor Productivity

increase worker skills» increase labor productiveness» rewards to workers are increased

use/develop better hardware, software, and manufacturing systems» increase capital productiveness» workers’ share of profits are decreased

better matching of labor with natural/physical capital, and with information & communication systems» increase joint labor and capital productiveness» rewards are increased for both owners and workers» human-centered knowledge-based work has the potential, if

designed properly

IIIIVV

Environment

Technological change &

globalization

Work Economy

Toxic PollutionClimate Change

Ecosystem DisruptionResource Depletion

● Skills● Wages● Purchasing Power● Job Security● Health and Safety● Job Satisfaction ● Number of Jobs

● Changing international division of labor

● Changes in the nature of work

● Development & environment (industrialization)● Investment & environment

● Trade & environment

● Improvements in competitiveness, productiveness, and the use of physical, natural, & human capital● Economic changes (arising from labor replacement & capital relocation● Financing growth and development

● Increased environmental footprint from the need to increase employment & industrial throughput

I

IIVI

● Regulation of Health, Safety & Environment Affects the Economyand Growth.

● Environmental/energy improvements create or change the nature of employment.

TRANSFORMATION PROCESSES REQUIRE● trans-disciplinary expertise

● the emergence of new ways to meet the basic needs of the society,

● re-conceptualizing the basis of the economy

● the avoidance of agenda and pathway capture or lock-in by incumbent actors and ideology

● technological displacement and substitution of new for old technology

● in some cases, the displacement of not only the dominant products and technologies, but also the incumbent firms and public institutions

● co-optimization: co-evolution of technological and social systems, institutions complementary and mutually-reinforcing technological, organizational, institutional, and social innovations

● system changes that cut across problem areas -- competitiveness, environment, and employment -- and therefore also cut across sectors and firm divisions, as well as government departments and missions.

Environmental Justice

Climate Change

Economic Inequality

Competitiveness (effective and efficient delivery of goods and

services)

Employment

Resource Depletion

Biodiversity/ Ecosystems

DOE

DOD/ DHSDOL/ED

USDA

DOC

DOC

Toxic Pollution

Government activity areas

Key:

Challenges confronting sustainable development

Peace and Security

Purchasing Power

(job creation) &

HHS/EPA

HUD