1

Technology

The Engine of Change

Technology is a facilitating or enabling agentThe geography of technology change and knowledge exhibits both concentration and disperalTechnology change is a form of learning

Types of technological change

Incremental innovationsRadical innovationsChanges in the technology system

Impact on several existing parts of the economyChanges in the techno-economic paradigm

Large-scale revolutionary change

Short-term business cycles of growth and stagnation or recession occur in even the wealthiest countries. Growth and stagnation, or even decline, are considered to have a regular periodicity that is not too different from a circadian rhythm or generational reproduction.

2

some emphasis has been placed on the analysis of long-term cycles of economic upswing and downswing called Kondratieff waves. These long economic waves are named for the Russian economist who either discovered or invented them, depending upon one's point of view.

The waves supposedly can be found at both the global and national scales of analysis. They last about 50 years and are divided in half, with an initial period of strong growth, or upswing, followed by stagnation or downswing.

validation of the long-wave hypothesis is hampered in 2 ways.1) empirical evidence of the existence of long waves has been developed on a data base that is quite thin. Reasonably accurate measures of national income and industrial production simply are not available for measuring the earlier waves, especially at the global scale.

first Kondratieff wave lasted from 1790 to 1849. Basic innovations during the period affected machine tools and steam engines.second Kondratieff began in 1849 and ended in 1894. The dominant innovations during the second wave were in railroads and iron and steel production.

third Kondratieff, from 1894 to 1938, was a period of technological innovations in electrical engineering, chemicals, communications, and automotive transportation.fourth Kondratieff began in 1938 and is just coming to an end. This Kondratieff has been driven by innovations in plastics, communications, and electronics.

2) theoretical basis for the existence of Kondratieff waves is weak, and nonexistent for their regular periodicity.Monetary and financial contexts have been examined as theoretical bases for Kondratieff waves, but their existence is most frequently attributed, to waves of technological innovation.

3

Schumpeter suggested long waves of economic development are based on the diffusion of major technologies

Five successive technological revolutions in 230 years

Each brings a different growth potential and provokes a difficult transition

20??20??The age of bioThe age of bio--technology, nanotechnology and biotechnology, nanotechnology and bio--electronics?electronics?

17711771The The ““Industrial RevolutionIndustrial Revolution”” in Englandin England

18291829The age of railways, coal and the steam engineThe age of railways, coal and the steam engine

18187575The age of steel, electricity and transcontinental communicationThe age of steel, electricity and transcontinental communicationss

19081908The age of oil, automobile, air travel, petrochemicals and mass The age of oil, automobile, air travel, petrochemicals and mass productionproduction

19711971The age of information technology, knowledge and global telecommThe age of information technology, knowledge and global telecommunicationsunications

Techno-economic paradigm

Elaborates on Kondratieff cyclesEach cycle are labeled as particular TEPs

Each TEP is associated with Key industriesInfrastructuresNewly emerging industriesProductivity principlesLead economies

Each TEP is associated withNews forms of business organizationLabour relationsRegulationR&D organization

TEPs are associated with new location principles

4

TWO DIFFERENT PERIODS IN EACH GREAT SURGE

big-bang Nextbig-bang

Degreeof diffusion

of thetechnological

revolution

Time

TurningTurningPointPoint

Inst

itutio

nal

Inst

itutio

nal r

ecom

posi

tion

reco

mpo

sitio

nan

d ro

le

and

role

shi

ft

The diffusion of a technological revolution works always like this (so it seems):

INSTALLATION PERIODINSTALLATION PERIOD

‘Creativedestruction’Paradigm shift

DEPLOYMENT PERIODDEPLOYMENT PERIOD

Reaping of growth and social benefits from the prevailingparadigm

2O - 30 years 2O 2O -- 30 30 yearsyears???

Tech waves

Internet& Telecomsmania

1987-2001FRENZY

Rejuvenation of mass production

industries

ICT Revolutionand stagflation

1971-87IRRUPTION

1971Intel

Micro-processor

Redeployment of mature industries

to Third World;Brasil, Korea “miracles”

,Social unrestViet Nam war

1960-74MATURITY

Transistors; computers;analog instruments;numerical control

1920-29FRENZY

RoaringTwenties

Post warGolden Age

1943-59SYNERGY

THE CHANGING FACE OF THE TWENTIETH CENTURYTHE CHANGING FACE OF THE TWENTIETH CENTURY

Crash1929

Bretton WoodsWelfare StateMarshall Plan

Dep

ress

ion

1930

Dep

ress

ion

1930

’’ s a

nd W

WII

s an

d W

WII

Collapses AsiaNasdaq collapse;

draining stock markets

Cor

pora

te s

cand

als

Rec

essi

onC

orpo

rate

sca

ndal

s R

eces

sion

……??

???

?

???

The Age of Information Technologyand Global Telecommunications

The Age of Steeland Heavy Engineering

1908Ford Model-T

1908-1920IRRUPTION

(USA)

Mass production

Oil and automobiles

The Age of Oil, Automobiles and Mass Production

5

Firm patent applications, 2005 Top R and D Companies

Canada’s total in 2004 was $24.487 billion CDN or $18.8 billion US

TNC foreign affiliates are increasingly important

6

R and D doesn’t always lead to innovation

Innovation means the introduction of new products, processes or services into the marketInnovations can be new to the user not necessarily to the world

7

The UNCTAD innovation Capability Index

IT: a key generic technologyIT: Key Technology

8

Shrinking space

Major transport innovationsJet air travelContainerization

Robotics

9

A Next Key Technology? Another key technology?

Nanotechnology is generally agreed to cover objects measuring from 1 to 100nm

Shrinking space

Major communications technologiesSatellitesFiber optics Cellular phones The InternetElectronic mass media

Satellite radio

Internet Bandwidth Hyderabad

10

11

from: Finance and Development, March 2002, pg 9

Price of computer and peripheral equipment in 1960 (Relative to GDP Deflator, 2000=1000)Price of equivalent computer in 2000

$1,869,004

$1,000

Cost of 3-minute telephone call from New York to London in 1960 (in 2000 US$)Cost of same call in 2000

$60.42

$0.40

Reduction in cost of ocean freight transport between 1920 and 1990Reduction of cost of air transport between 1930 and 1990

70%

84%

12

Digital Age

Convergence between computer and communication technologiesContinuing increases in the speed and capacity and declines in costIncreasing ease of interfaces with the internetGrowth of broadband technologiesGrowth of mobile telecommunications

Product life cycle3 ways to maintain or increase sales

Introduce a new product as the existing one becomes obsoleteExtend the cycle by making minor modifications or finding new uses for existing productMake changes in the production technology to make the product more competitive

Production process and technology

Technique of productionParticular technology used and how inputs are combined – some input substitution is usually possible

Scale of productionScale economies

Location of productionLocation affect both scale and technique

Flexible manufacturing

Manufacture: the collecting of labour into workshops and the division of the labourprocess into specific tasksMachinofacture: the application of mechanical processes and power through machinery in factories. Further division of labour

13

Scientific management (Taylorism): subjecting the work process to scientific study in the late 19th century. Further division of labour with increased control and supervisionFordism: the development of the assembly line

After-Fordism: development of new flexible production systems based upon application of information technologies

The development of the production process maps closely with long wavesFirst wave – manufacture to machinofactureSecond wave – TaylorismThird wave – base of FordismFourth wave - Fordism

Mass customization – the ability of producers to make products to suit individual needs –such as PC manufacturers

Flexible technology tendencies

Trend toward information intensity rather than energy or material intensity in productionChallenge of mass production

High volume of output no longer necessary for high productivityRapid technological change less costlyNew technologies allow for profits on segmented markets rather than mass markets

14

Change in labour requirements in terms of volume, type and quality of labourIncreasing fine degree of specializationIncreasing standardization and routinizationof individual operationsIncreasing flexibility in the production process

Japanese inspired after-Fordism

Flexible labour force organizationWork teamsJob rotation

Just in time systemsObsession with quality control

Diffusion of practice

Overseas expansion of Japanese firmsDemonstration effect fueled by management writers

15

Positive implications

Involves re-skilling of workers because of multi-task operationsProvides workers with substantial controlTeam working and self management reduce alienationIndividualized payment systems creates incentives for workersBased on long term employment contracts

Negative implications

Team-based workforce subject to strict managerial controlEmphasis on continuous improvement places great pressure on workersIndividual payment system used to divide and rule the workforceLong term contracts only apply to core workers in large companies

Geographies of innovation

Types of knowledgeExtreme Tacit

Local relationships necessaryTacit Explicit

Only initial contact is face-to-face to build trustExplicit Tacit

Less face-to-face, ie correspondence courseExtreme Explicit

No local relationship needed

Innovative milieu

Economic, social and political institutionsKnowledge which evolves over time in a specific contextThe conventions, the understood rules and routines between partners in different kinds of relationships defined by uncertainty

16

National innovation system

Regional/local innovation clustersLocalized patterns of communicationLocalized innovation search and scanningLocalized invention and learning patternsLocalized knowledge sharingLocalized patterns of innovation capabilities and performance

Operates across a variety of spatial scales

Creation: Generating new knowledge or significantly improving existing knowledge (e.g., through activities such as research);Diffusion: Sharing knowledge (e.g., through activities including collaboration, training and publishing); Transformation: Adopting or adapting knowledge for a specific purpose (e.g., developing new or significantly improved goods, processes or services);

17

Use: Delivering or implementing new or significantly improved goods, processes, programs or services (e.g., selling goods or services);Value: Social or economic value from transformed knowledge (e.g., wellness, clean air, GDP growth, organizational performance, profit); Environment: The overarching conditions that influence innovation (e.g., leadership, culture, brand recognition, entrepreneurship, risk tolerance, governance, the regulatory environment, taxation, physical infrastructure, transportation systems, communications systems, global market forces, availability of skilled workers)