Irrespective of greatness, all technology possibilities emerge in embryonic form, generating loss-making revenue. Besides, their possibility of being profitable means is uncertain. But once they are proven, often, they offer risk-free revenue. Such a reality raises questions about technology policy for development. Notably, it has been a burning issue for aspiring less developed countries aiming to reach high-income status.
Should less developed countries wait for the technologies to cross the threshold, generating profitable revenue? Such a reality creates technology policy for development debate. Should they favor the entry at the emerging state or wait for a proven state? It demands fresh thinking.
Technology offers economic benefits through five major means: (i) deriving economic benefits from the usages of technologies in Getting jobs done, (ii) converting natural resources into economic value, (iii) empowering low-skilled labor to contribute to productive activities, (iv) making copies of proven technology products, and (v) turning knowledge and ideas into economic value through advancing technologies and innovations.
For leveraging the first three means, the argument of opting for proven technologies appears to have substantial merit. As less developed countries do not have robust technology development capacity, their policies of importing proven technologies and taking advantage of them to create economic value from natural resources and labor appear logical. However, the role of knowledge and ideas in operating and repairing imported proven technologies has been eroding. As a result, the adoption of proven technologies for leveraging labor and natural resources has been narrowing the window of adding value through local production of knowledge and ideas. On the other hand, although emerging technologies are amenable to progression with an additional flow of knowledge and ideas, pursuing them is risky. Let’s look further to get clarity in dealing with technology policy for development, whether in favor of proven or emerging ones.
Technology Policy for Development for Benefiting from Usages:
The usage of technological products itself brings economic benefits. For example, adopting electrical vehicles (EVs) will likely reduce the import of fuel and ease pollution. But when should less developed countries take the policy to embrace EVs? As there is uncertainty about whether EVs will succeed in crossing the cost and performance threshold set by incumbent automobile technologies, so should they wait? Otherwise, setting charging stations and other infrastructure for unproven automobile technologies, whether powered by batteries or fuel cells, may lead to wast
age. For example, an Israeli company, Better Place, suffered significant losses due to prematurely setting up battery-swapping infrastructure for adopting EVs. Hence, as less developed countries rely on automobiles, policies for importing EVs once they prove their superiority could be argued as a prudent technology policy decision.
But for a less developed country like India, which has a sizeable labor-centric automobile industry, should it also behave like Bangladesh, waiting for EVs to prove their superiority? Besides, if Bangladesh aspires to create high-paying jobs for its growing number of STEM graduates, should it also wait until EVs verify their worth? Similarly, was it an intelligent technology policy for India to wait for renewable energy technologies to cross the threshold before it started adopting through import?
Technology Policy for Exploiting Natural Resources
Of course, technology plays a vital role in extracting economic benefits from natural resources. Technology is crucial in producing crops, discovering natural resource deposits, and harvesting fish stock in the ocean. As less developed countries are not at the edge, a dominant argument has been in favor of importing proven technologies for exploiting natural resources.
Yes, natural resource exploitation with imported proven technologies brings benefits. But should they keep relying on importing proven technologies? If they keep doing this, what will be the future of their growing graduates? Or, if they get into assembling and manufacturing proven technologies using natural resource exploitation proceeds, what would be the value-added?
Let us take an example from Canada. In the 1980s, Canada faced serious competitiveness issues of underground mining. The increasing depth of mines and growing supply of minerals from Russia led to continued profit margin erosion. To find a solution to this issue, they figured out that human-free telerobotic-based mining could arrest the cost escalation. But that technology was not available anywhere in the world. It was an emerging technology.
If Canada had relied only on proven technology, long ago, Canada would have had to close down many of their deep mines. However, Canada opted to advance that emerging technology. It was a risky proposition, though. However, the home-grown R&D program has given hope and created robust robotics technology and human capital base. Like Canada, Bangladesh may also make a technology policy decision to embark on advancing unproven precision agriculture to slow down the erosion of profitability of its agricultural sector. Hence, less developed countries should rethink their technology policy that relies on the import of proven technologies for deriving economic value from natural resources.
Empowering Low-skilled Labor to Contribute to Productive Activities
Like Bangladesh, many less developed countries have benefited from the import of proven technologies to enable their low-skilled workforce to contribute to the export-oriented manufacturing industry. As technology has automated Codified knowledge and skill, the Innate abilities of the skilled workforce have been good enough for their eligibility. But should they keep relying on importing proven manufacturing technologies? If they keep doing so, what would be the future of their low-skilled workforce? Due to the growing labor-saving role, should they reduce imports? Perhaps, no.
Instead of reducing the import of advanced manufacturing technologies, they should embark on advancing them. If they do, they will be lead users in reducing wastage, improving quality, and reducing cost. More importantly, they will succeed in creating high-paying knowledge and idea production jobs for their growing STEM graduates.
For example, Bangladesh’s ready-made garments industry wastes as high as 12 percent of its fabric. The lion’s share of this wastage takes place due to undetected defects. Due to share size, it has become an issue of sustainable development. Could technology be a solution for sustaining the development of RMG? If so, what technology policy should Bangladesh follow? However, emerging technologies like machine vision-based solutions offer the possibility of improving detection accuracy, resulting in lower wastage. Hence, a prudent technology policy for Bangladesh could have been to pursue the possibility of machine vision technology for RMG production by engaging their STEM graduates.
Making Copies of Proven Technology Products
As technologies keep reaching maturity, their market keeps growing along the way. At the matured stage, the market becomes attractive enough for less developed countries to pursue assembling and manufacturing products. Due to the immediate obsolescence of matured technologies, through the process, whatever knowledge and skill they acquire does not get translated into a sustainable base. Hence, pursuing a technology policy for replicating proven products does not scale up into technology competence uplifting.
Turning Knowledge and Ideas into Economic Value through Advancing Technologies and Innovations
Creating economic value out of knowledge and ideas is a highly scalable frontier of Wealth creation. Individuals, firms, and nations may even find exponential growth paths. Compared to using and making copies of technological products, advancing technologies through a flow of knowledge and ideas offers a far greater scope of prosperity. However, the technology core should be amenable to progression to benefit from such an opportunity.
Besides, the entry barrier should be low. As technologies have an S-curve-like life cycle, in the early stage, they remain highly amenable to progress. But once they cross the threshold and start producing profitable revenue, they show increasing rigidity. Besides, better-performing firms start gaining market power due to the race to improve quality and reduce costs. Hence, firms and nations intending to create economic value through ideas should enter the race early. Therefore, they should change their technology policy in favor of exploiting emerging possibilities.
Developing Risk Management
Despite the amenability of progression, at the early stage, the possibility of turning technology possibilities into profitable revenue suffers from high-level uncertainty. Hence, managing risk in turning R&D investment into profitable revenue down the road is highly important. For developing risk management capability, the focus should be on clarifying technology Innovation dynamics so that rational decisions can be taken amid uncertainty.
To get further clarity, let’s look into an example. Through early entry, Japan and China have successfully advanced electric vehicle (EV) batteries and traded them at a profit in the global market. As a result, EV technology has become a vehicle for creating economic value from knowledge and ideas for them. On the other hand, late entrants like India and Bangladesh find their role as users and assemblers of EVs, limiting the benefits from usage and labor supply. Therefore, to benefit from the opportunity to create economic value from knowledge and ideas in advancing emerging technologies, technology policy for development should favor emerging technologies.