tag:theconversation.com,2011:/fr/topics/industrial-policy-18256/articlesIndustrial policy – The Conversation2024-03-22T16:20:58Ztag:theconversation.com,2011:article/2254062024-03-22T16:20:58Z2024-03-22T16:20:58ZIndustrialisation is still vital to economic development but some countries are struggling to reap its benefits<figure><img src="https://images.theconversation.com/files/581880/original/file-20240314-28-tax1ga.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5920%2C4642&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/industrial-worker-factory-welding-closeup-218715772">SvedOliver/Shutterstock</a></span></figcaption></figure><p>Alexander Hamilton, one of the founding fathers of the US, wrote a wealth of reports that served as building blocks for the country’s economic system. In 1791, during his time as secretary of the Treasury, Hamilton published one of his most important: the <a href="https://founders.archives.gov/documents/Hamilton/01-10-02-0001-0007">Report on the Subject of Manufactures</a>. </p>
<p>It argued that the US needed to develop its manufacturing sector through the use of industrial and trade policy to grow its economy, bolster its military, increase its productivity, and catch up with the industrial and technological powerhouse of the time, Great Britain. </p>
<p>Hamilton died in 1804. But US policymakers, led by Henry Clay, followed Hamilton’s advice. Throughout the 19th century, the US succeeded in its mission of catching up with Great Britain and eventually became the world’s technological superpower.</p>
<p>It’s important that we remember Hamilton’s report. It’s a reminder of how thinking and strategising for economic growth and international competitiveness was changing. It was changing to a mindset that national sovereignty, economic development, international competitiveness and productivity growth are achieved through industrialisation. </p>
<p>But this long-established relationship between economic prosperity and industrialisation is now starting to change. So-called “megatrends” (technological, economic, societal and ecological trends that have a global impact) are changing traditional ideas of technological progress and, as a result, the way countries look to develop their economies. </p>
<p>My book <a href="https://global.oup.com/academic/product/the-future-of-the-factory-9780198861584?cc=gb&lang=en#">The Future of the Factory</a> investigates how four megatrends are changing (and not changing) industrialisation and manufacturing-led growth. These megatrends are: the rise of services, digital automation technology, globalisation of production and ecological breakdown.</p>
<h2>Digital technology</h2>
<p>In some ways, megatrends are not changing or diminishing the importance of manufacturing-led development. </p>
<p>Digital services are increasingly seen as an alternative to manufacturing in boosting economic development. But they are not replacing the manufacturing sector as the engine of innovation and productivity growth. The manufacturing sector still scores <a href="https://documents.worldbank.org/en/publication/documents-reports/documentdetail/155731631771398616/at-your-service-the-promise-of-services-led-development">substantially higher</a> than the service sector on tradeability, innovation potential and spillovers to other parts of the economy.</p>
<p>Digital automation technology has also undoubtedly been disruptive in some sectors and countries. But they are not a significant threat to overall job displacement. This is primarily because automation technology tends to create more jobs than it displaces. </p>
<p>The introduction of the personal computer (PC) is a great example. In the US, the PC <a href="https://www.mckinsey.com/featured-insights/future-of-work/jobs-lost-jobs-gained-what-the-future-of-work-will-mean-for-jobs-skills-and-wages">created</a> 15.8 million more jobs than it displaced between 1980 and 2015. Research has also <a href="https://www.oecd.org/els/what-happened-to-jobs-at-high-risk-of-automation-10bc97f4-en.htm">found</a> that the countries who faced a higher overall automation risk in the early 2010s experienced higher employment growth than other countries in subsequent years. </p>
<p>It seems we are excessively hyping up the expected impact of new technology on economic organisation, as we have done so many times in the past. Industrialisation and factory-based production remain crucial for economic development and innovation.</p>
<figure class="align-center ">
<img alt="People sat at desks using computers in an office." src="https://images.theconversation.com/files/581762/original/file-20240313-16-fvu77.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/581762/original/file-20240313-16-fvu77.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/581762/original/file-20240313-16-fvu77.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/581762/original/file-20240313-16-fvu77.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/581762/original/file-20240313-16-fvu77.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/581762/original/file-20240313-16-fvu77.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/581762/original/file-20240313-16-fvu77.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The PC has created many more jobs than it has displaced.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/diverse-multiracial-workers-sitting-desk-working-1295892817">fizkes/Shutterstock</a></span>
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</figure>
<h2>Uneven opportunities</h2>
<p>Power asymmetries in the world economy are, however, creating uneven opportunities to reap the benefits from industrialisation. At worst, they are making it harder for developing countries to industrialise altogether. </p>
<p>Transnational corporations based in high-income countries are more powerful than ever. And they often use this power to prevent countries, firms and workers in developing countries from getting a fair share of profits in global production systems. </p>
<p>Apple, for example, doesn’t actually “make” the iPhone. It outsources the production of every single component. But Apple still somehow manages to walk away with over 50% of the final retail price.</p>
<p>By contrast, the firms and workers in developing countries who assemble the iPhone (the most labour intensive part of the process) get <a href="https://global.oup.com/academic/product/the-future-of-the-factory-9780198861584?cc=gb&lang=en#">less than 1.5%</a> of the final price. Large corporations like Apple also use their power to lobby for international trade agreements to work in their interests. </p>
<p>Additionally, high-income countries refuse to take their fair share of blame for ecological breakdown. They preach green industrial policy to developing countries before putting their own house in order. </p>
<p>A recent <a href="https://www.thelancet.com/journals/lanplh/article/PIIS2542-5196(22)00044-4/fulltext">study</a> found that high-income countries were responsible for 74% of global excess resource use between 1970 and 2017, despite accounting for only 15% of the world’s population. By contrast, low-income and lower-middle income countries, which make up around 50% of the world’s population, accounted for a mere 1% of global excess resource use over this period. </p>
<p>Given these developments, our system of international trade needs to be reformed so that it is fair rather than “free”. And developing countries should also have more ecological policy space in their implementation of industrial policy. The burden to deal with ecological breakdown should fall mainly on high-income countries, as these are the countries that got us into this mess.</p>
<h2>The return of industrial policy</h2>
<p>In many ways, Alexander Hamilton’s insights are still timely. Hamilton stressed the urgent need for policymakers to build up manufacturing capabilities to achieve economic growth and development. </p>
<p>This is what the US government is currently doing in an effort to re-industrialise its economy and especially to become more competitive with China. In July 2022, the US Senate <a href="https://www.nytimes.com/2022/07/27/us/politics/senate-chips-china.html">passed</a> a historic US$280 billion (£222 billion) industrial policy bill — the largest industrial policy bill in history. </p>
<p>And the US is not the only country actively revamping industrial policy. The global use of industrial policy is at an <a href="https://www.imf.org/en/Publications/WP/Issues/2023/12/23/The-Return-of-Industrial-Policy-in-Data-542828">all-time high</a> as the world grapples with geopolitical tension and shocks to global supply chains. Although megatrends are changing industrialisation in some ways, they are not changing its importance. </p>
<p>We can also use Hamilton’s insights to understand the nature of competition in the modern world economy. The world economy is vastly different today, but we need to understand, like Hamilton understood, that industrialisation is a competitive game that involves power, politics, dirty play – and even warfare. </p>
<p>If the playing field is level, competition isn’t all that bad. But the global playing field today certainly isn’t level when it comes to the distribution of industrial and technological capabilities. This is one of the main obstacles to economic development in the 21st century.</p><img src="https://counter.theconversation.com/content/225406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jostein Hauge does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In an era of transformation, manufacturing still matters.Jostein Hauge, Assistant Professor in Development Studies, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2054832023-05-15T11:47:05Z2023-05-15T11:47:05ZThe UK needs a new industrial strategy or it will lose the global green subsidy race<figure><img src="https://images.theconversation.com/files/525653/original/file-20230511-12302-f4puke.jpg?ixlib=rb-1.1.0&rect=17%2C11%2C980%2C652&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Making industry greener -- and stronger</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/concept-environmentally-friendly-production-pond-shaped-2044948658">petrmalinak/Shutterstock</a></span></figcaption></figure><p>UK businesses have criticised the government for the lack of a clear industrial policy. Industry body Make UK has warned the country “<a href="https://www.makeuk.org/insights/reports/industrial-strategy-a-manufacturing-ambition">risks being squeezed</a>” by US and EU green subsidy packages.</p>
<p>Outside the UK, industrial policy <a href="https://theconversation.com/industrial-policy-is-back-on-the-agenda-and-its-never-been-needed-more-than-it-is-now-119120">is back</a> – and in a big way. Around the world, there has been a noticeable shift towards greater government intervention in the economy. </p>
<p>Recent shocks such as the COVID pandemic and the energy price spike arising from the Ukrainian war, have <a href="https://www.weforum.org/agenda/2022/07/supply-chain-disruptions/">led to breakdowns in global supply chains</a> and high inflation. In Europe and the US they also exposed fragility and a lack of resilience – especially in key areas such as <a href="https://theconversation.com/energy-price-freezes-and-business-support-are-sticking-plasters-heres-how-to-protect-uk-families-and-companies-from-future-crises-189406">energy security</a> and the supply of <a href="https://www.somatechnology.com/blog/in-the-news/medical-supply-chain-challenges-and-its-effects-on-healthcare-industries/">medical equipment</a>.</p>
<p>These governments seem to recognise the role of industrial policy in supporting domestic manufacturing to safeguard against future crises, reduce reliance upon Chinese imports, and in dealing with the <a href="https://en.wikipedia.org/wiki/Climate_emergency_declaration">climate emergency</a>. They are also promoting industrial policies to enhance competitiveness, productivity and economic growth.</p>
<h2>New industrial policies</h2>
<p>The US has been the most prominent flag-bearer for these new industrial policies. President Joe Biden’s 2022 <a href="https://www.bbc.co.uk/news/world-us-canada-62457386">Inflation Reduction Act (IRA)</a> allocates <a href="https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_summary.pdf">almost US$700 billion (£555 billion) of federal funding over the next decade</a> to support US industries, particularly healthcare, renewables and clean-tech sectors. </p>
<p>This includes subsidies and tax breaks to US manufacturers and consumers to encourage investment in, and use of, low carbon technologies (such as electric vehicles, heat pumps and carbon capture), as well as semiconductors. There are also new rules to encourage the use of local supplies to support US manufacturing.</p>
<p>The US has also recently enacted the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/06/fact-sheet-the-bipartisan-infrastructure-deal/">Bipartisan Infrastructure Deal</a> and the <a href="https://www.ft.com/content/d1e5bb5d-da09-488b-8430-a05d8016a95f">Chips and Science Act</a> to boost transport and communication networks, and promote R&D, especially in regional high-tech hubs. Over the next decade, these three packages are expected to total over <a href="https://www.mckinsey.com/industries/public-and-social-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it">US$2 trillion of industrial policy</a> support for US businesses.</p>
<p>Yet, there are concerns that these interventions are protectionist and <a href="https://www.ft.com/content/de1ec769-a76c-474a-927c-b7e5aeff7d9e">violate rules set by the World Trade Organisation (WTO)</a> – the global body that oversees trade between countries – on procurement and subsidies by unduly favouring US firms. The EU has spoken out about the possible impact of the IRA on its own clean-tech industries, particularly in terms of harming its exports and diverting investment away from Europe. </p>
<p>The EU has also questioned <a href="https://www.ft.com/content/9bfe7e7e-83b7-47f2-8d59-e180215d534a">China’s industrial subsidies</a>, possible infringements of intellectual property rights by Chinese companies, and the difficulties European businesses face in operating in China. </p>
<p>To combat these issues, the EU announced its own €250 billion (£217 billion) <a href="https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan_en">Green Deal Industrial Plan</a> in February. This includes relaxing EU state aid rules to allow member states to fast-track investment in green sectors. The emphasis is on support for skills and supply chains, alongside smarter and simpler regulation. </p>
<p>A <a href="https://www.euractiv.com/section/economy-jobs/news/commission-president-eu-sovereignty-fund-will-be-proposed-in-summer/">European Sovereignty Fund</a> is also expected to offer subsidies for clean-tech innovation and infrastructure, while net-zero industry academies will train European workers for the green transition.</p>
<h2>What about the UK?</h2>
<p>One argument put forward for Brexit was that EU state aid rules <a href="https://ukandeu.ac.uk/state-aid-after-brexit/">stifle the ability of the UK to support its industries</a>. But, post-Brexit, how has the UK responded? Its <a href="https://www.independent.co.uk/independentpremium/news-analysis/industrial-strategy-council-government-b1814698.html">industrial strategy was scrapped</a> under the Johnson government. And so far, there has been no policy response to either the US or EU packages. </p>
<p>Indeed, the UK’s net zero initiatives to date have generally <a href="https://acss.org.uk/levelling-up-an-industrial-strategy-perspective/">lacked sufficient funding</a>. The <a href="https://green-alliance.org.uk/wp-content/uploads/2021/11/Getting_the_building_blocks_right.pdf">Green Alliance think tank</a> believes there is a £14.1 billion shortfall in low carbon infrastructure investment in the UK. </p>
<p>The UK’s haphazard approach to net zero has also sometimes conflicted with other policies. For instance, the <a href="https://www.theguardian.com/business/2023/jan/30/eu-plans-to-loosen-state-aid-rules-renewables-investment-tax-credits-biden-green-subsidy">windfall tax on North Sea oil and gas firms</a> applies to some wind and solar electricity generators, discouraging investment in renewables. </p>
<p>At the end of March, Jeremy Hunt said he would <a href="https://www.standard.co.uk/news/politics/government-uk-government-budget-climate-jeremy-hunt-b1070844.html">wait and see what the EU will do</a> on its green industrial policy. It seems the UK position has been to watch as the action unfolds elsewhere – for example on attracting investment to build <a href="https://ukandeu.ac.uk/the-race-for-electric-vehicle-battery-making-is-well-underway-and-the-uk-is-barely-off-the-starting-grid/">battery giga-factories</a>. This is in stark contrast to the US and EU.</p>
<p>The Labour Party has promised to invest £28 billion a year through a dedicated green investment fund and transition programme. This proposal has been <a href="https://www.theguardian.com/politics/2021/oct/01/climate-experts-give-cautious-welcome-to-labours-green-policies">cautiously welcomed by climate experts</a>. But doubts remain about whether the speed and nature of Labour’s proposals will be sufficient for a successful UK <a href="https://www.wwf.org.uk/green-transition">green transition</a>. </p>
<p>Labour has also discussed a <a href="https://www.independent.co.uk/business/labour-plan-to-buy-british-not-about-slapping-a-flag-on-procurement-reeves-b1877867.html">“Buy British” procurement</a> policy. But this approach is also likely to fall foul of existing WTO rules and possibly the <a href="https://commission.europa.eu/strategy-and-policy/relations-non-eu-countries/relations-united-kingdom/eu-uk-trade-and-cooperation-agreement_en#:%7E:text=The%20EU-UK%20Trade%20and%20Cooperation%20Agreement%20concluded%20between,matters%2C%20thematic%20cooperation%20and%20participation%20in%20Union%20programmes">EU-UK Trade and Co-operation Agreement</a>. </p>
<figure class="align-center ">
<img alt="Parcel Boxes with a flag of United Kingdom in a mini shopping cart on a laptop." src="https://images.theconversation.com/files/525654/original/file-20230511-17-a6vfh2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/525654/original/file-20230511-17-a6vfh2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/525654/original/file-20230511-17-a6vfh2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/525654/original/file-20230511-17-a6vfh2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/525654/original/file-20230511-17-a6vfh2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/525654/original/file-20230511-17-a6vfh2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/525654/original/file-20230511-17-a6vfh2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Encouraging British businesses to source parts and services domestically would boost UK industry.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/parcel-boxes-flag-united-kingdom-shopping-1298645047">Fevziie/Shutterstock</a></span>
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</figure>
<h2>The green subsidy race</h2>
<p>The UK needs to get serious about its own “<a href="https://neweconomics.org/about/our-missions/green-new-deal">Green New Deal</a>” if it is to meet its net zero commitments, build low-carbon resilience in its energy supply, and compete with the US, EU and China.</p>
<p>Both the US and EU subsidy schemes should help to accelerate a much needed green transition. They will help to reduce barriers to clean-tech investment and innovation, create new jobs and generate greener growth in those regions. At a global level, this should accelerate decarbonisation and the move to net-zero.</p>
<p>They could also create a <a href="https://www.weforum.org/agenda/2023/03/inflation-reduction-act-eu-green-deal-subsidy-race-consequences/">green subsidy race</a> – with UK not yet even at the starting line.
There is a risk these subsidy schemes will stifle competition, raise global trade tensions and reduce opportunities for developing economies to grow their own clean-tech sectors. </p>
<p>They will also challenge the existing <a href="https://www.wto.org/english/thewto_e/thewto_e.htm">WTO framework</a> and its rules to promote fair and free trade. This could lead to a major reset for the WTO. It may need to adopt a wider remit that aligns global co-operation on free and fair trade with that on climate action. Doing so would enhance the prospects of all countries in this race in delivering sustainable, inclusive and green growth.</p><img src="https://counter.theconversation.com/content/205483/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phil Tomlinson receives funding from the Engineering and Physical Sciences Research Council (EPSRC) for Made Smarter Innovation: Centre for People-Led Digitalisation, and the Economic and Social Research Council (ESRC) for an Interact project on UK co-working spaces and manufacturing.</span></em></p><p class="fine-print"><em><span>David Bailey receives funding from the ESRC’s UK in a Changing Europe programme.</span></em></p>Can UK business compete in an international green subsidy race?Phil Tomlinson, Professor of Industrial Strategy, Co-Director Centre for Governance, Regulation and Industrial Strategy (CGR&IS), University of BathDavid Bailey, Professor of Business Economics, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2021092023-03-24T00:15:12Z2023-03-24T00:15:12ZAI chatbots with Chinese characteristics: why Baidu’s ChatGPT rival may never measure up<figure><img src="https://images.theconversation.com/files/517119/original/file-20230323-16-9bbxv9.jpeg?ixlib=rb-1.1.0&rect=22%2C0%2C2973%2C1998&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Baidu's ERNIE Bot was launched to considerable disappointment.</span> <span class="attribution"><span class="source">Ng Han Guan / AP</span></span></figcaption></figure><p>On March 16, <a href="https://www.youtube.com/watch?v=ukvEUI3x0vI">Baidu</a> unveiled China’s latest rival to OpenAI’s ChatGPT – ERNIE Bot (short for “Enhanced Representation through kNowledge IntEgration”). The “multi-modal” AI-powered chatbot can generate text, images, audio and video from a text prompt. </p>
<p>However, ERNIE was poorly received by the public. Baidu’s Hong Kong-listed <a href="https://www.aljazeera.com/economy/2023/3/16/chinas-baidu-unveils-chatgpt-rival-ernie">shares</a> fell by 10% during the press conference, and the beta test is only open to a group of organisations approved by the company. </p>
<p>ERNIE Bot will not be a Chinese substitute for ChatGPT, but that might be how the Chinese state wants it. As earlier efforts to make Chinese AI chatbots have shown, the Chinese Communist Party prefers to maintain strict censorship rules and government steering of research – even at the cost of innovation. </p>
<h2>Digital sovereignty and ChatGPT</h2>
<p>ChatGPT is not directly accessible in China due to the country’s protectionist approach to <a href="https://www.cfr.org/blog/how-china-winning-battle-digital-sovereignty-review">digital sovereignty</a>. Chinese data are confined within China, and information that conflicts with government propaganda is censored. </p>
<p>Chinese tech companies including Baidu and Tencent prohibit third-party developers from plugging ChatGPT into their services. </p>
<p>However, the prominence of ChatGPT created a booming <a href="https://www.wired.co.uk/article/chinas-chatgpt-black-market-baidu">illicit market</a>. Until a crackdown, ChatGPT logins were sold on the ecommerce platform Taobao, and video tutorials were published on Chinese social media to demonstrate the abilities of the chatbot. </p>
<h2>XiaoIce and BabyQ</h2>
<p>Baidu isn’t the first or only tech company in China trialling a generative AI chatbot. </p>
<p>In March 2017, <a href="https://www.abc.net.au/news/2017-08-04/chinese-chatbots-deleted-after-questioning-communist-party/8773766">Tencent</a> launched two social chatbots, called XiaoIce and BabyQ, on the WeChat and QQ messaging apps respectively. </p>
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<a href="https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517120/original/file-20230323-18-zruol1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">The Microsoft-developed XiaoIce is a hugely popular ‘friend chatbot’.</span>
<span class="attribution"><span class="source">Microsoft</span></span>
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</figure>
<p><a href="https://www.euronews.com/next/2021/08/26/meet-xiaoice-the-ai-chatbot-lover-dispelling-the-loneliness-of-china-s-city-dwellers">XiaoIce</a> was developed by Microsoft, while BabyQ was created by a Beijing-based AI company called <a href="https://en.wikipedia.org/wiki/Turing_Robot">Turing Robot</a>. Within months, the two chatbots were <a href="https://www.reuters.com/article/us-china-robots/chinese-chatbots-apparently-re-educated-after-political-faux-pas-idUSKBN1AK0G1">taken down</a> to be attuned according to China’s censorship rules. </p>
<p>BabyQ never came back, but Microsoft’s XiaoIce returned and has been providing <a href="http://global.chinadaily.com.cn/a/202208/24/WS63056157a310fd2b29e73da0.html#:%7E:text=Xiaoice%20is%20an%20AI%2Dpowered,which%20has%20the%20same%20name.">AI companionship</a> services to millions of users on major platforms including WeChat, QQ and Weibo. </p>
<h2>Made in China 2025 and the push for AI</h2>
<p>China’s government would be on the defensive if China adopted only AI chatbots developed overseas. As chatbots run on human feedback, it would be impossible to prevent transnational flows of data and the political interests of the Chinese Communist Party may be threatened.</p>
<p>Since 2015, during the administration of former premier Li Keqiang, the <a href="https://www.cfr.org/backgrounder/made-china-2025-threat-global-trade">Made in China 2025</a> scheme has endeavoured to bolster the country’s technological capacities. AI is a major focus.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517122/original/file-20230323-24-6oa8u0.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">AI is a key area of focus under the Made In China 2025 plan.</span>
<span class="attribution"><span class="source">Ng Han Guan / AP</span></span>
</figcaption>
</figure>
<p>Since February 2023, <a href="https://www.wired.co.uk/article/chinas-chatgpt-black-market-baidu">Chinese tech companies</a> across AI, food delivery, e-commerce and gaming have scrambled to catch up with OpenAI and provide their own ChatGPT-like products to the market. </p>
<p>Beijing’s <a href="https://www.reuters.com/technology/beijing-city-will-support-key-firms-build-chatgpt-like-ai-models-2023-02-13/">Municipal Bureau of Economy and Information Technology</a> is supporting this ambition, but only for some leading tech companies. </p>
<h2>Censorship and culture</h2>
<p>We can expect China will witness the short-term proliferation of versions of ChatGPT services, many of which will vanish or be acquired by big tech companies. </p>
<p>Smaller companies, with little support from the government, are unlikely to be able to <a href="https://www.nytimes.com/2023/02/17/business/china-chatgpt-microsoft-openai.html">afford the costs of censorship</a>. </p>
<p>A small startup called YuanYu launched China’s <a href="https://www.scmp.com/tech/policy/article/3209795/chinese-tech-firms-take-heed-countrys-strict-online-moderation-they-rush-bring-their-chatgpt">first ChatGPT-style bot</a> in January. Dubbed ChatYuan, the bot ran as a “mini-program” inside WeChat. It was <a href="https://www.taiwannews.com.tw/en/news/4807319">suspended</a> within weeks after users posted <a href="https://www.reddit.com/r/ADVChina/comments/10xn74x/a_chinese_chatgpt_copycat_chatyuan_from_a_chinese/">screengrabs</a> of its answers to political questions online. </p>
<p>However, Chinese users are still interested in large language models based on the Han Chinese linguistic system.</p>
<p>ERNIE Bot, for example, claims to be more <a href="https://aimagazine.com/articles/baidus-ernie-doesnt-want-confrontation-with-united-states">culturally savvy</a> than <a href="https://www.scmp.com/tech/big-tech/article/3209510/chatgpt-users-china-test-ai-chatbots-limits-some-worry-about-future-job-security">ChatGPT</a>, with a better understanding of Chinese histories, classical literature, and dialects.</p>
<h2>Government steering</h2>
<p>Beijing has tightened its governance of the tech industry since a crackdown in 2021. </p>
<p>One upside for industry is a <a href="https://technode.com/2023/02/14/beijing-city-government-announces-plan-to-support-ai-development/">secure flow of funding</a> and talent support. The flip side is that resources are steered towards technologies that serve Beijing’s <a href="https://www.nature.com/articles/s41598-022-25714-0">immediate interests</a> in domestic governance and military defence. </p>
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<strong>
Read more:
<a href="https://theconversation.com/chinas-big-tech-problem-even-in-a-state-managed-economy-digital-companies-grow-too-powerful-186722">China's big tech problem: even in a state-managed economy, digital companies grow too powerful</a>
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<p>China’s ChatGPT imitators are more likely to be designed to benefit enterprises than individuals. For tech giants, the objective is to form a “full AI stack” by integrating generative AI products into every level of their business, from search engines and apps to industrial processes, digital devices, urban infrastructure and cloud computing. </p>
<h2>Emotional surveillance and disinformation</h2>
<p>AI-driven chatbots can also lead to adverse outcomes. Alongside the <a href="https://theconversation.com/generative-ai-like-chatgpt-reveal-deep-seated-systemic-issues-beyond-the-tech-industry-198579">universal concerns</a> around job security, copyright and academic integrity, in China there are also extra risks of emotional surveillance and disinformation. </p>
<p>Chatbots can identify users’ <a href="https://direct.mit.edu/coli/article/46/1/53/93380/The-Design-and-Implementation-of-XiaoIce-an">emotional status</a> through conversations. This emotion-reading ability extends the power of big data and AI to invade people’s privacy. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/chinas-surveillance-creep-how-big-data-covid-monitoring-could-be-used-to-control-people-post-pandemic-164788">China's 'surveillance creep': how big data COVID monitoring could be used to control people post-pandemic</a>
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<p>In China, such emotional surveillance could further establish “emotional authoritarianism”. Any sentiments that could threaten the leadership of the Chinese Communist Party, even if not directly stated, have the potential to attract punishment for the user. </p>
<p>AI-powered chatbots and search engines are also likely to legitimise Chinese state-organised propaganda and disinformation. Users will come to trust and depend on these services, but their inputs, outputs and internal processes will be heavily censored.</p>
<p>Chinese politics and leadership will not be up for discussion. When it comes to controversial events or histories, only the perspectives of the Chinese Communist Party will be presented.</p><img src="https://counter.theconversation.com/content/202109/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Fan Yang does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>AI chatbots are on the rise in China – but their abilities and purpose may be quite different from the products of US tech giants.Fan Yang, Research Associate at RMIT and Alfred Deakin Institute, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1981042023-01-19T16:26:27Z2023-01-19T16:26:27ZBritishvolt: more evidence UK is falling far behind in race to capture growing EV market<figure><img src="https://images.theconversation.com/files/505374/original/file-20230119-24-nk6n38.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4000%2C3000&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/stuttgart-germany-01222022-smartphone-logo-battery-2112275771">T. Schneider/Shutterstock</a></span></figcaption></figure><p>Britishvolt, the would-be electric vehicle (EV) battery maker that recently went into <a href="https://www.bbc.co.uk/news/business-64303149">administration</a>, always faced an <a href="https://www.wired.co.uk/article/the-collapse-of-britishvolt">uphill struggle</a>. The start-up had no track record developing technology and never confirmed how it would raise the <a href="https://www.expressandstar.com/news/uk-news/2023/01/17/britishvolt-faces-administration-after-failed-rescue-talks/">£3.8 billion</a> needed to start mass producing batteries, which reduces the average cost per battery. </p>
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<p><em>You can listen to more articles from The Conversation, narrated by Noa, <a href="https://theconversation.com/us/topics/audio-narrated-99682">here</a>.</em></p>
<hr>
<p>The proposed facility near Blyth, a coastal town in north-east England, was slated to contribute around a quarter of what the UK automotive industry needs, or enough for 330,000 battery packs a year. But with no major auto firms as customers, its business model always looked vulnerable. </p>
<p>This was despite <a href="https://twitter.com/borisjohnson/status/1484465521655521281">keen promotion</a> from Boris Johnson when he was prime minister and a pledge of <a href="https://www.theguardian.com/environment/2022/jan/21/britishvolt-electric-car-battery-uk-gigafactory-blyth-jobs">£100 million in public funding</a> if <a href="https://www.ft.com/content/adf3ee60-4734-4e0c-b27b-55842136d3f7">certain conditions</a> on the factory’s construction were met. They weren’t, and the government <a href="https://news.sky.com/story/britishvolt-on-the-brink-as-100m-of-government-funding-yet-to-materialise-source-12735018">kept the cash</a>. </p>
<p>There remains hope that new ownership could rescue the business and that batteries for EVs could still be assembled at the site. For now, though, Britishvolt’s woes raise wider questions about the future of the UK automotive industry as it transitions to making EVs, and whether the government is doing enough to support it.</p>
<p>For the UK to become a leader in EV manufacturing, it needs <a href="https://www.independent.co.uk/news/uk/home-news/electric-cars-batteries-factories-brexit-b1792315.html">large factories</a> (called gigafactories) making EV batteries and quickly, as demand for EVs is <a href="https://heycar.co.uk/blog/electric-cars-statistics-and-projections">taking off</a> ahead of <a href="https://www.gov.uk/government/consultations/consulting-on-ending-the-sale-of-new-petrol-diesel-and-hybrid-cars-and-vans/outcome/ending-the-sale-of-new-petrol-diesel-and-hybrid-cars-and-vans-government-response">a 2030 ban</a> on new petrol and diesel cars, and the requirement for all new cars to be fully zero emission by 2035. This is particularly urgent given the nature of the <a href="https://en.wikipedia.org/wiki/EU%E2%80%93UK_Trade_and_Cooperation_Agreement#:%7E:text=The%20EU%E2%80%93UK%20Trade%20and%20Cooperation%20Agreement%20%28%20TCA%29,Energy%20Community%20%28Euratom%29%20and%20the%20United%20Kingdom%20%28UK%29.">trade and cooperation agreement</a> (TCA) between the UK and the EU. </p>
<p>The TCA requires that batteries in EVs have to be assembled in the UK or the EU by the end of 2026 for vehicles traded between the two to avoid tariffs. The <a href="https://www.theguardian.com/business/2022/nov/04/uk-government-car-battery-industry-gigafactories">UK is lagging well behind</a> EU countries in attracting investment in battery-making, and Britshvolt’s collapse throws this into sharp relief.</p>
<p>Without a major effort to build a domestic supply chain that includes battery manufacturing, UK car assembly lines will increasingly be left producing obsolete internal combustion engine cars and dependent upon imported battery components from the EU to meet <a href="https://www.gov.uk/government/collections/rules-of-origin-for-goods-moving-between-the-uk-and-eu">rules of origin requirements</a>. That isn’t going to make much business sense.</p>
<h2>Follow the money</h2>
<p>In recent years, a lot of investment in battery <a href="https://www.investmentmonitor.ai/manufacturing/what-is-a-gigafactory-where-are-they-being-built/">gigafactories</a> has skirted the UK, partly because of uncertainty caused by Brexit. Tesla boss Elon Musk said as much in late 2019 when justifying <a href="https://ukandeu.ac.uk/brexit-uncertainty-means-tesla-choses-germany-for-european-for-new-factory/">his firm’s decision</a> to build its first major European gigafactory in <a href="https://www.tesla.com/giga-berlin">Germany</a>.</p>
<p>Along with Arrival’s decision to shift electric van production to the US and <a href="https://www.bbc.co.uk/news/business-64303149">Mini pulling the plug</a> on EV production in Oxford, for now at least, government hopes for the UK auto industry as an EV powerhouse seem stuck in neutral, if not reverse. The one piece of good news so far is that battery maker Envision has committed to <a href="https://www.electrive.com/2022/12/12/uk-envision-aesc-lays-foundation-for-sunderland-gigafactory/">a new gigfactory in Sunderland</a> that will come onstream in 2025 – the only confirmed investment in the UK.</p>
<p>In a good year, the UK makes between <a href="https://www.statista.com/statistics/298923/total-number-of-cars-produced-in-the-united-kingdom/">1.3 and 1.5 million cars</a>. As the industry seeks to supply UK and EU markets in which petrol or diesel vehicle sales are being phased out <a href="https://www.gov.uk/government/news/government-takes-historic-step-towards-net-zero-with-end-of-sale-of-new-petrol-and-diesel-cars-by-2030">from 2030</a>, maintaining a similar level of production will require a lot of batteries.</p>
<p>The UK has been slow to get government support lined up for such investment. So far, only £800 million has been <a href="https://www.bbc.co.uk/news/business-60066432">earmarked</a> for the mass production of EV batteries. Demand for EV batteries in the UK could reach as high as 130 gigawatt-hours (GWh) a year by 2040, equivalent to the output of eight gigafactories with a capacity of 15GWh each. Meeting this demand would require an investment of between £5 billion and £18 billion <a href="https://www.telegraph.co.uk/technology/2019/10/30/electric-vehicle-battery-production-could-saviour-uk-automotive/">by 2040</a> according to one estimate.</p>
<p>Meanwhile, there are at <a href="https://www.pv-magazine.com/2022/02/17/europes-gigafactory-boom-in-full-swing-with-another-plant-announcement/">least 35 gigafactories</a> up and running or under construction in the EU, including those by NorthVolt (in Sweden), Saft/Stellantis (in France and Germany), Samsung SDI (in Hungary), LG Chem (in Poland), and Tesla (in Germany).</p>
<p>The European Commission and <a href="https://eur03.safelinks.protection.outlook.com/?url=https://ec.europa.eu/growth/industry/policy/european-battery-alliance_en&data=04%257C01%257Cjohn-paul.salter@ukandeu.ac.uk%257C1569ec94a20a4184f54508d8c6a20be0%257C8370cf1416f34c16b83c724071654356%257C0%257C0%257C637477746577211157%257CUnknown%257CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0=%257C1000&sdata=sWTprmPmWOE4xXVe6hZnklmBelLB/rsOFnivoYds5EM=&reserved=0">seven member states</a> have allocated around <a href="https://www.manufacturing.net/automotive/news/21244485/eu-approves-funding-for-ev-battery-industry">€6 billion</a> (£5 billion) to help build up to 20 gigafactories and aim at having <a href="https://europe.autonews.com/suppliers/europe-targets-30-global-battery-cell-production#:%7E:text=FRANKFURT%20--%20Europe%20will%20need%20to%20produce%20nearly,maintain%20competitiveness%2C%20German%20Economy%20Minister%20Peter%20Altmaier%20said.">one-third</a> of the world’s EV batteries being made in the EU by 2030. This is expected to serve an estimated €250 billion-a-year market by that time. EU member states are simply doing more to attract investment in battery production than the UK, with heavy financial support and <a href="https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2020)646164">special economic zones</a> to woo manufacturers.</p>
<p>If the UK auto industry is to compete, it will need to produce <a href="https://www.electrichybridvehicletechnology.com/news/manufacturing/uk-must-urgently-build-ev-battery-gigafactories-or-risk-losing-its-car-production-report-claims.html">its own batteries at scale</a>. Domestic battery production will reduce supply chain costs and ease logistical difficulties. It should also help UK-based carmakers and battery manufacturers work more closely in areas such as battery cell technology and technician training – critical to the industry’s competitiveness. </p>
<p>For this to be possible, the government must think more creatively about how to target financial support for car and battery makers. And, in turn, the auto industry needs a more active <a href="https://theconversation.com/industrial-policy-is-back-on-the-agenda-and-its-never-been-needed-more-than-it-is-now-119120">industrial strategy</a> and closer partnerships with government, especially with regards to reorientating skills and the supply chain towards EVs. </p>
<p>This isn’t about picking winners – demand for EVs produced in the UK and internationally is forecast to be there. And <a href="https://nextgreencar.com/electric-cars/statistics/">increasing UK sales of EVs</a> indicate a growing domestic market for batteries. McKinsey consultants forecast that by 2040, battery demand for European EVs will reach 1,200GWh per year, <a href="https://www.mckinsey.com/industries/oil-and-gas/our-insights/recharging-economies-the-ev-battery-manufacturing-outlook-for-europe">or the output of 80 gigafactories</a> with an average capacity of 15GWh.</p>
<p>The UK risks missing out on new investment in a growing industry. If the UK wants to maintain its large automotive assembly capacity as it transitions to making EVs, then <a href="https://www.electrichybridvehicletechnology.com/news/manufacturing/uk-must-urgently-build-ev-battery-gigafactories-or-risk-losing-its-car-production-report-claims.html">it will need homemade batteries</a> and on a large scale. Only a revamped industrial strategy can help make this happen.</p>
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<img alt="Imagine weekly climate newsletter" src="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p class="fine-print"><em><span>David Bailey receives funding from the Economic and Social Research Council's (ESRC) UK in a Changing Europe programme under grant number ES/X005844/1.</span></em></p><p class="fine-print"><em><span>Phil Tomlinson receives funding from the Engineering and Physical Sciences Research Council (EPSRC) for Made Smarter Innovation: Centre for People-Led Digitalisation, and the Economic and Social Research Council (ESRC) for an Interact project on UK co-working spaces and manufacturing.</span></em></p>The UK needs an industrial strategy to counter the rise of EU battery manufacturing.David Bailey, Professor of Business Economics, University of BirminghamPhil Tomlinson, Professor of Industrial Strategy, Deputy Director Centre for Governance, Regulation and Industrial Strategy (CGR&IS), University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1880042022-08-15T08:30:51Z2022-08-15T08:30:51ZAuto manufacturing is changing: how South Africa can adjust to protect workers and jobs<figure><img src="https://images.theconversation.com/files/478912/original/file-20220812-18-ifj9vd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Employees work on manufacturing a car at a Volkswagen plant in Uitenhage, South Africa.</span> <span class="attribution"><span class="source">Photo by Michael Sheehan/picture alliance via Getty Images</span></span></figcaption></figure><p>Technological changes in industry have given rise to contending schools of thought about their impact on work and workers. Automation is rapidly deepening and widening, reaching new areas of work. What’s being produced is also changing. In the automotive manufacturing industry, for example, there is a global shift to vehicles that don’t produce emissions. </p>
<p>The ongoing industrial revolution is defined by new work methods, ways of organising production, and advances in technology. </p>
<p>At the one extreme is the view that this is the end of work. <a href="https://www.researchgate.net/publication/322421669_Still_Think_Robots_Can't_Do_Your_Job_Essays_on_Automation_and_Technological_Unemployment">This argues</a> that the technological changes will lead to mass unemployment through retrenchments. At the other end are optimists who <a href="https://www.ilo.org/employment/Whatwedo/Publications/WCMS_553682/lang--en/index.htm">argue</a> that the changes will increase overall employment. Disrupted jobs will be replaced by others. </p>
<p>Evidence from my <a href="https://www.springerprofessional.de/en/collective-bargaining-during-and-after-apartheid-economic-and-so/19982518">research</a> on the <a href="https://www.amazon.in/Economic-Social-Upgrading-Global-Chains/dp/3030873196">automotive global production networks</a> in South Africa calls for a cautious approach anchored in sector specific realities.</p>
<p>After South Africa’s first democratic elections in 1994, employers in the automotive assembly sector <a href="https://www.econstor.eu/bitstream/10419/206728/1/1678476684.pdf">increased capital expenditure or investment</a> in new production technology. They also reduced their direct employment by thousands of jobs. They <a href="https://www.econstor.eu/bitstream/10419/206728/1/1678476684.pdf">benefited</a> from trade and industrial policy incentives offered by the state. </p>
<p>Meanwhile, the number of jobs in automotive component manufacturing increased. This wasn’t driven by new production technology but by increased demand for domestically produced components. Some of it was for export. </p>
<p>A key finding is that technology need not result in job losses if domestic production is high enough. </p>
<h2>Evolution of the sector</h2>
<p>There are seven lead firms that make up the automotive assembly sector in South Africa. Another 430 firms make up the automotive component manufacturing sector.</p>
<p>The automotive manufacturing lead firms significantly increased their capital expenditure from R0.8 billion in 1995 to R9.2 billion in 2020. Much of this went into automation in the form of new production machinery and plant equipment, including an increased population of production robots. </p>
<p>This was accompanied by workplace restructuring. Companies introduced new work methods and ways of organising and co-ordinating production. These followed company production systems introduced globally.</p>
<p>In 1995, <a href="https://www.econstor.eu/bitstream/10419/206728/1/1678476684.pdf">the automotive assembly sector</a> directly employed 38,600 workers who produced 388,442 motor vehicles. Following the changes in production technology, work methods and ways of organising and co-ordinating production, the seven lead firms gradually reduced their direct workforce. This <a href="https://naacam.org.za/wp-content/uploads/2021/04/AutomotiveExportManual2021.pdf">went down to 29,926 in 2020</a>. </p>
<p>However, the reduced assembly sector workforce produced more motor vehicles per annum. In 2019, for example, <a href="https://www.econstor.eu/handle/10419/206728">about 30,000 workers produced 631,983 motor vehicles</a>. Units per worker, referring to motor vehicles produced divided by the workforce, were 10.1 in 1995. This productivity indicator more than doubled. It reached approximately <a href="https://www.econstor.eu/handle/10419/206728">21 units per worker in 2019</a>.</p>
<p>The automotive component manufacturing sector <a href="https://www.econstor.eu/handle/10419/206728">increased</a> its direct employment from 60,000 workers in 1995 to 80,000 in 2019 to support increased domestic motor vehicle production and export programmes. </p>
<p>This illustrates its employment creating potential, which needs to be harnessed in policy direction. It also shows that it will be beneficial to job creation to raise the levels of automotive vehicle assembly localisation substantially, and to deepen and diversify domestic component manufacturing value addition.</p>
<p>The National Union of Metalworkers of South Africa put this forward in 2021. It followed the union’s rejection of a <a href="https://www.gov.za/sites/default/files/gcis_document/202105/44606gen308.pdf">Green Paper</a> on the advancement of new energy vehicles released by the Department of Trade, Industry and Competition.</p>
<p>The Green Paper proposed changes to the way in which components manufactured abroad for new energy vehicles should be handled. It proposed that these components, once imported for assembly in South Africa, should be deemed to have been manufactured domestically. The proposal sought to make these imported components eligible for industrial policy incentives meant for domestically produced components. </p>
<p>This went against the imperative of employment creation as a key element of social upgrading. </p>
<p>In rejecting the paper, the metalworkers union stressed the importance of securing a just transition in automotive manufacturing. The transition in the sector involves a shift from carbon dioxide emitting internal combustion engine vehicles to new energy vehicles. These include hybrid, electric, fuel cell electric and hydrogen vehicles.</p>
<p>The union’s action led to the department initiating a research-led inclusive consultative process on the transition to new energy vehicles.</p>
<h2>A just, versus unjust, transition</h2>
<p>It would be unjust for the transition in automotive manufacturing to occur without two ingredients. Firstly protecting existing employment. And secondly creating additional work to reduce unemployment. This is particularly true given that South Africa is ravaged by an unemployment crisis.</p>
<p>To achieve a just transition, it will be essential to localise and diversify domestic manufacturing value addition in new energy vehicle components. South Africa mustn’t go back to colonial-type assembly of imported components and mustn’t adopt strategies that can ruin employment creating opportunities in the components manufacturing sector.</p>
<p><em>The subject of workers’ power is essential to giving this process a direction from labour’s perspective. This is the focus the University of the Witwatersrand-based Southern Centre for Inequality Studies’ Future of Work(ers) Research Group policy dialogue on “<a href="https://www.wits.ac.za/scis/">Emerging forms of worker power in the digital economy</a>”.</em></p><img src="https://counter.theconversation.com/content/188004/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alex Mohubetswane Mashilo (PhD) is affiliated with the Southern Centre for Inequality Studies as a visiting researcher. </span></em></p>South Africa should ensure that changes to energy efficient vehicles is done in a way that creates jobs and protects workers.Alex Mohubetswane Mashilo, Visiting Researcher, Southern Centre for Inequality Studies, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1864912022-07-25T10:36:29Z2022-07-25T10:36:29ZIndustrial policy options for southern Africa: scenarios set out possibilities and risks<figure><img src="https://images.theconversation.com/files/474912/original/file-20220719-6817-g7hej2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Coal operations at one of South Africa's coal-fired power plants. Industrial policy needs to envisage less reliance on carbon.</span> <span class="attribution"><span class="source">Photo by Phill Magakoe /AFP via Getty Images)</span></span></figcaption></figure><p>There is a need to transform the underlying economic principles of the economies in southern African countries to address the persistent challenges of severe poverty and unemployment. </p>
<p>Two of the region’s strategies are the Southern African Development Community’s <a href="https://www.sadc.int/document/sadc-vision-2050">Vision 2050</a> and its <a href="https://www.sadc.int/pages/regional-indicative-strategic-development-plan-risdp">Regional Indicative Strategic Development Plan</a>. These highlight technology as a way to lead economic growth equitably and sustainably in a growing industrialised region.</p>
<p>But, in our view, these plans aren’t enough. Historical drivers – such as poor governance and the legacies of colonialism – have kept the region’s potential locked in negative cycles. It’s true that the desire for industrial transformation exists. But the practicalities are not connected with real buy-in from power brokers. The result is low levels of implementation. </p>
<p>The Southern African Development Community has set itself the goal of emulating the high-growth economies of the <a href="https://en.wikipedia.org/wiki/Four_Asian_Tigers">Asian Tigers</a>. These include Hong Kong, Singapore, South Korea and Taiwan. But to achieve this it needs to support infrastructure and economic diversification that takes economies away from primary commodities. </p>
<p>In our view, the co-incidence of two developments provides an opportunity for such a transformation. They are the emerging Fourth Industrial Revolution (4IR) and the green economy. The Fourth Industrial Revolution represents the possibility of fundamental change through technological and scientific advances. The green economy can be described as a low carbon, resource efficient and socially inclusive approach to economic development.</p>
<p>A recent <a href="https://saiia.org.za/research/sadc-industrialisation-futures-towards-economic-wellbeing/">study</a> by the <a href="https://saiia.org.za/programme/futures/">Futures Programme</a> at the South African Institute of International Affairs highlights a range of future scenarios for industrialisation in the region. These don’t predict the future. Rather they explore a range of uncertainties about regional industrialisation. They also identify challenges and opportunities.</p>
<p>The scenarios visualise how industrialisation in the region might evolve. They were mapped from the viewpoint that the green economy and Fourth Industrial Revolution hold significant promise. They have the potential to boost industrial activity, transform socio-economic development and advance transitions while alleviating unemployment and inequality.</p>
<p>The scenario analysis provides plausible and possible alternatives for industrialisation. It also alerts decision makers to undesired pathways. </p>
<p>The main four scenarios are called Do-it-Yourself (DIY), Leapfrog World, Green Monopolies and Colonialism Reloaded.</p>
<h2>Re-thinking industrialisation</h2>
<p>The Fourth Industrial Revolution paves the way for increased interconnectivity and smart automation. It does this by creating rapid and unprecedented changes to technology, industries and societal patterns. But there’s been little exploration of its impact on the emerging drivers of industrialisation. These include rapid urbanisation, population growth, rising incomes, energy decentralisation, climate change and reducing dependence on carbon.</p>
<p>The interplay of the 4IR and other drivers is key to understanding the potential impact of industrialisation. Changes to income, behaviour and perceptions shape consumption and in turn demand-and-supply responses. </p>
<p>The demand for reducing industry’s dependence on carbon and the 4IR has set a new trajectory in technological disruption. This has been accelerated by the COVID-19 pandemic. And this, in turn, has forced the rapid adoption of digital tools such as artificial intelligence, robotics and new modes of work.</p>
<p>For countries in the Southern African Development Community, 4IR can be viewed as a double-edged sword. On the one hand it presents opportunities. These include improvements in business productivity, banking the unbanked, formalising economies, creating new markets and improving public service access.</p>
<p>On the other hand it poses risks. These include automation at the expense of job creation and moving manufacturing operations to more advanced economies. </p>
<p>Aggressive adoption of 4IR could also deepen inequality by exposing the region’s unprepared skills base and outdated infrastructure to new technologies.</p>
<h2>The desirable and undesirable</h2>
<p>We called one of the desirable scenarios <strong>leapfrog world</strong>. In this scenario countries leapfrog over classical barriers to rapidly adopt new technologies. This is achieved when the 4IR is governed through effective democratic principles. </p>
<p>Some examples include investments in blockchain, waste tracking and mapping technologies. These would help reorganise, for example, mining and agricultural value chains. At the same time they would reduce negative effects on the environment. Blockchain can reduce barriers to entry. New competitors could come in – crucial for job creation.</p>
<p>A possible (undesirable) future would be <strong>colonialism reloaded</strong>.</p>
<p>In this scenario the benefits of the 4IR are concentrated among a few well-connected multinational companies. Many industry participants are excluded from the green economy. This would reinforce current challenges such as poor technology infrastructure and low skills levels.</p>
<p>To avoid this, investments in the skills base are necesssary to improve social and civic competencies. They must accompany investments in technology infrastructure to increase access to economic opportunities. This will turn the tide on the ever-increasing digital divide.</p>
<p>Another – quite probable – undesirable future we termed <strong>green monopolies</strong>.</p>
<p>In this scenario there is a sustainable regional economy, thanks to a democratised and empowering 4IR. But the associated industries remain unsustainable. The “green monopolised” industries dominate the economy. They use technology innovations to enhance their economic positions, spreading deep fakes at an unimaginable scale. This results in polarised communities, social unrest and unfavourable economic conditions. </p>
<p>Advancements in technology are in the hands of a few powerful monopolies without effective regulatory practices. This creates the ideal breeding ground for hacking, cybercrimes and corporate bullying tactics. Inequality deepens because profit is more important than people and the environment.</p>
<p>A green monopolies scenario will have the resources and political power to invest in technologies such as advanced robotics. This will create efficiencies and environmentally sustainable industries. But it will be at the expense of job creation. </p>
<p>Another probable future is the <strong>do-it-yourself (DIY)</strong> scenario.</p>
<p>This is achieved when technology empowers citizens. An example is 3D printing. These kinds of technologies can help create self-sustaining villages independent of the larger economies. The democratised process provides the tools to create new products, leading to new industries. But there are risks. These technologies also open the potential for counterfeit goods. And they can be harmful by emitting toxic particles.</p>
<h2>The way forward</h2>
<p>Industrialisation in southern Africa will demand concerted efforts in four domains. These are:</p>
<ul>
<li><p>skills development and technology infrastructure development</p></li>
<li><p>dynamic innovation ecosystems</p></li>
<li><p>circular economy principles</p></li>
<li><p>practical regulatory frameworks.</p></li>
</ul>
<p>If properly harnessed, industrialisation can provide new pathways to achieve personal and collective economic wellbeing. Inequality can be narrowed. And marginalised communities can be at the centre of industrial development.</p>
<p>The fusion of technology and investment into skills development and job creation is critical. This is particularly important for the region’s budding youth population.</p><img src="https://counter.theconversation.com/content/186491/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr Julius Gatune and SAIIA gratefully acknowledge the support and funding received from the Konrad Adenauer Stiftung for this
publication” </span></em></p><p class="fine-print"><em><span>Deon Cloete and SAIIA gratefully acknowledge the support and funding received from the Konrad Adenauer Stiftung for this
publication.</span></em></p>The scenarios provide plausible and possible alternatives for futures of industrialisation. They also alert decision makers to desired and undesired development pathways.Julius Gatune, Senior Project Consultant, Maastricht School of ManagementDeon Cloete, Head SAIIA Futures Programme, South African Institute of International AffairsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1694692022-02-18T08:33:59Z2022-02-18T08:33:59ZUganda needs a mind shift to address poor growth and persistent inequality<figure><img src="https://images.theconversation.com/files/445878/original/file-20220211-15-10qr8jm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Uganda is heavily reliant on foreign financial aid.</span> <span class="attribution"><span class="source">Godong/Universal Images Group via Getty Images</span></span></figcaption></figure><p>Uganda <a href="https://www.greengrowthknowledge.org/sites/default/files/downloads/policy-database/UGANDA%29%20Vision%202040.pdf">aspires</a> to become an upper-middle-income country by 2040. This is <a href="https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups">classified</a> by the World Bank as a country with Gross National Income per capita income above $4,096. That’s far and above Uganda’s latest figure of <a href="https://tradingeconomics.com/uganda/gdp-per-capita#:%7E:text=GDP%20per%20capita%20in%20Uganda%20is%20expected%20to%20reach%20897.00,according%20to%20our%20econometric%20models.">under $1,000</a>. </p>
<p>The main pillar of Uganda’s push is <a href="https://www.greengrowthknowledge.org/sites/default/files/downloads/policy-database/UGANDA%29%20Vision%202040.pdf">Vision 2040</a>. This is a strategic document drawn up in 2007. Its aim was to formalise Uganda’s aspiration to have a transformed Ugandan society “from a peasant to a modern and prosperous country in 30 years”. </p>
<p>The government also prioritised <a href="https://www.imf.org/external/NP/prsp/2000/Uga/01/#:%7E:text=Uganda's%20Poverty%20Eradication%20Action%20Plan%20(PEAP)%20is%20established%20on%20four,poor%20to%20raise%20their%20incomes">poverty eradication action plans</a> between 1997-2007. And since 2010, the <a href="https://twitter.com/NPA_UG?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">National Planning Authority</a> has developed five-year plans. </p>
<p>Yet all is still not well with Uganda’s economy. Inequality and multidimensional poverty remain <a href="https://www.unicef.org/esa/media/6146/file/UNICEF-Uganda-Multi-dimensional-child-poverty-2020.pdf">prevalent</a>. The Gini coefficient – the measure of the degree of income inequality – has remained largely <a href="https://data.worldbank.org/indicator/SI.POV.GINI?end=2016&locations=UG&start=1989&view=chart">constant</a> since 1996. The situation has <a href="https://preventepidemics.org/wp-content/uploads/2021/11/uganda_en_20211109_1056.pdf">worsened</a> with the COVID-19 pandemic. </p>
<p>Uganda’s inequality has been aggravated by uneven land distribution and the <a href="https://www.theigc.org/wp-content/uploads/2018/02/Hoza-2018-working-paper.pdf">complex land tenure system</a>. Other factors are household sizes, disparities in access to education, inequalities in employment opportunities, urbanisation and generational poverty. All hinder equitable access and resource distribution. </p>
<p>On top of this, Uganda’s government debt levels have risen so high as to <a href="https://www.monitor.co.ug/uganda/news/national/imf-warns-government-against-excessive-borrowing-1864278">alarm</a> multilateral lending institutions. </p>
<p>This is the backdrop against which I chaired a committee of economic experts convened to <a href="https://www.researchgate.net/publication/346714981_Mindset_Shifts_for_Ownership_of_Our_National_Development_The_Case_of_Domestic_Financing_in_Uganda">examine</a> the current approach to the financing of development. After reviewing the scientific evidence we recommended the way forward.</p>
<p>In short, we underlined the view that at the core of any sustainable development agenda is the nation’s collective mindset. When citizens feel that they own the development agenda and process, they become active participants in development. That’s currently lacking. </p>
<p>Government must encourage citizens to participate in the development. It must start by viewing citizens as agents of economic growth and development, not a burden to the government. Citizen involvement and participation in the development process will translate into country ownership. Greater country ownership will, in turn, advance the country’s national development agenda.</p>
<h2>Collective mindset</h2>
<p>Historically, top-down solutions have dominated debate over sustainable development in Uganda. Multilateral aid, <a href="https://www.imf.org/external/NP/prsp/2000/Uga/01/#:%7E:text=Uganda's%20Poverty%20Eradication%20Action%20Plan%20(PEAP)%20is%20established%20on%20four,poor%20to%20raise%20their%20incomes">poverty reduction plans</a> and <a href="https://www.iser-uganda.org/images/downloads/Ugandas_COVID-19_Economic_Stimulus_Package-Will_it_deliver.pdf">economic stimulus</a> packages are just some examples. </p>
<p>One of the more underappreciated aspects of any sustainable development agenda is the nation’s collective mindset. It’s individuals, communities, and institutions who build the necessary confidence to pursue complex and challenging solutions to their problems. </p>
<p>Another pressing concern that underpins the challenge of implementation is the approach to financing sustainable development. The current approach is to use public and private sector resources to improve development indicators. </p>
<p>But there is little focus on how leaders use these resources to shift the mindset of citizens towards their greater ownership of the development process. The report defines ownership as: </p>
<blockquote>
<p>leadership and participation, at all levels and in every sector of society to achieve a unified goal, in which individuals feel part of a common development agenda.</p>
</blockquote>
<p>Our committee identified Uganda’s four main challenges. These are:</p>
<ul>
<li><p>a focus on improving development indicators to the exclusion of mindset shifts that promote greater ownership of the national development agenda, </p></li>
<li><p>a lack of clarity on how to balance broader inclusion of stakeholders with competence and expertise in financial decision-making, </p></li>
<li><p>stricter oversight of public institutions as a means of building trust not having the desired effect and </p></li>
<li><p>the stifling of financial and overall innovation by current socio-economic-political conditions. </p></li>
</ul>
<p>Our report concluded that inclusive growth approaches should be at the forefront to increase economic growth rate and reduce inequality. Specifically, Uganda’s current monetary and fiscal policies need to be revised to meet the needs of various groups of people. </p>
<p>This calls for investment in the mechanisms that provide opportunities for citizens to achieve their development aspirations. These include expanding financial inclusion – the availability and equality of opportunities to access financial services. In addition, Uganda must invest in citizen level monitoring of development initiatives. The government must also actively address negative perceptions of taxation. </p>
<p>There is evidence of government encouraging citizen <a href="https://theconversation.com/does-bottom-up-monitoring-improve-public-services-what-we-found-in-uganda-154416">level monitoring</a> of government services. And the Uganda Revenue Authority has taxpayer associations. But these efforts have thus far yielded limited results.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/when-industrial-policy-meets-african-political-realities-lessons-from-uganda-172528">When industrial policy meets African political realities: lessons from Uganda</a>
</strong>
</em>
</p>
<hr>
<h2>Towards sustainable development</h2>
<p>Our study argues that certain conditions must be met before investments can become self-sustainable. Competitive advantage and the various ways a country creates, uses, and enhances its advantages, are critical to unleashing a self-sustaining condition of development.</p>
<p>Uganda is far from being self-sustainable in economic development. It continues to be <a href="https://data.worldbank.org/indicator/DT.ODA.ALLD.CD?locations=UG">heavily reliant on foreign aid</a>. The country received $2.1 billion in 2019, representing almost 43% of its government expenditures. This continues to <a href="https://www.bou.or.ug/bou/bouwebsite/bouwebsitecontent/publications/QuartelyStateofEconomy/publications/Quarterly-Economic-Reports/2021/Dec/SOE-report-December-2021.pdf">grow</a>. </p>
<p>There are signs that Uganda’s nascent industrial sector may be on the verge of a <a href="https://library.oapen.org/bitstream/id/df800d17-5cfe-48a1-b8f9-4a07c05cbf67/612770.pdf">breakthrough</a> in growth. But the country’s overall business competitiveness and the education system seem to be major restraints in seeing a more profound structural transformation. These stand in the way of Uganda’s ability to get to a self-sustaining condition of development.</p>
<p>To achieve this outcome, Uganda must address three key issues. </p>
<p>First, enhance the impact of domestic resources while making the economic environment more favourable to local industry. </p>
<p>Second, enhance the value of locally collected taxes on the development mindsets of citizens. </p>
<p>Third, expand access to finances at lower interest rates. This would give more citizens the perceived freedom to pursue their development aspirations.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-musevenis-priorities-must-be-if-uganda-is-to-become-middle-income-55253">What Museveni's priorities must be if Uganda is to become middle income</a>
</strong>
</em>
</p>
<hr>
<h2>Conclusion</h2>
<p>Economic growth is essential but improving the wellbeing of the entire population cannot be overstated. This ensures that all citizens gain equally from the benefits of growth and development. This is particularly true for poor and vulnerable groups.</p>
<p>Inclusive growth facilitates equitable access to economic opportunities. It provides equal access to vital services such as education and health. It also empowers the population through financial resources and skills development.</p>
<p>There have been substantial efforts by government to expand the impact of the industrial and manufacturing sectors. But they have seen <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Eastern_Africa%E2%80%99s_Manufacturing_Sector_-_Promoting_Technology_-Uganda_country_report_November_2014.pdf">limited growth</a>. In part, this reflects the lack of coherence in trade, technology and industrialisation policies. </p>
<p>The government often quite visibly courts foreign direct investment. <a href="https://theconversation.com/when-industrial-policy-meets-african-political-realities-lessons-from-uganda-172528">At the same time</a> it implements nationalistic policies. One example is <a href="https://www.pwc.com/ug/en/press-room/buy-uganda-build-uganda.html">Buy Uganda Build Uganda (BUBU)</a>. Each policy approach comes with potential benefits and drawbacks. But together, they create an environment of inconsistency and limit either’s potential benefits. </p>
<p>Inequality impedes sustainable socio-economic growth and development. And it hinders the majority of the population from participating in income-generating ventures. Persistent inequality also creates a fertile ground for political instability. This, in turn, is a threat to sustainable development.</p><img src="https://counter.theconversation.com/content/169469/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Ddumba-Ssentamu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It’s individuals, communities, and institutions who build the necessary confidence to pursue complex and challenging solutions to their problems.John Ddumba-Ssentamu, Professor of Economics, Makerere UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1761042022-02-17T13:59:05Z2022-02-17T13:59:05ZSouth Africa should design economic policy based on strengths of regions: here’s how<figure><img src="https://images.theconversation.com/files/445635/original/file-20220210-25-1oe278w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Getty images</span></span></figcaption></figure><p>Economists and policy-makers seem to have a blind spot when thinking about how the economy functions and what determines success. Analytical frameworks and government policies consistently neglect the role of space and geography in favour of national averages and sectoral plans. Yet growing evidence from around the world shows the importance of place and location for productivity, growth and development.</p>
<p>Intuitively, it is obvious that economic progress depends on the quality of local skills, capable public institutions, reliable infrastructure, and proximity to markets and suppliers. But just how important are these factors compared with the particular mix of local industries and macro-economic conditions?</p>
<p>In a <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/saje.12303">recent paper</a> we unpacked the economic performance of different provinces in South Africa to diagnose the significance of local factors and sectoral conditions. This is helpful in understanding why some provinces consistently outperform others. And what might be done to help lagging regions improve their competitiveness.</p>
<h2>Uneven development</h2>
<p>The starting point is to recognise the systemic differences in the size and performance of South Africa’s nine provinces:</p>
<p>Production is highly uneven across the country. The province of Gauteng generates a third of national GDP - more than double the output of the next province - but with less than 1.5% of the land. According to South African Revenue Service, individual taxpayers from Gauteng <a href="https://www.sars.gov.za/wp-content/uploads/Docs/TaxStats/2019/Tax-Stats-2019-Full-doc.pdf#page=60">contribute 47%</a> of the national total for this revenue source. Yet they only constitute 25.8% of the country’s population.</p>
<p>Some provinces are more productive than others. The Gauteng and Western Cape economies expanded at an average rate of almost 3% per annum between 1995 and 2018. This was a third faster than the rest of the country. </p>
<p>There is growing divergence between the largest and smallest provinces. Over the last two decades the share of national GDP in the three largest economies (Gauteng, KwaZulu-Natal and the Western Cape) increased, while the share in the three smallest (North West, Free State and Northern Cape) contracted. Spatial inequalities have been further <a href="https://www.tandfonline.com/doi/full/10.1080/23792949.2020.1851143">amplified </a> by the COVID-19 pandemic.</p>
<p>What lies behind the growing divergence between the best and worst performing regions? And what underpins the continuing growth and prosperity of Gauteng?</p>
<h2>Unpacking uneven development</h2>
<p>The performance of provinces is often attributed to their industrial structure: the problem with lagging regions is said to be their dependence on lagging sectors. Hence, the challenge for provinces such as Mpumalanga and the North West is their reliance on mining and related heavy industries because of rising energy costs and volatile commodity prices. </p>
<p>The usual policy prescription is to find the means to diversify and industrialise. </p>
<p>Yet industrialisation is unrealistic for many small towns. Bigger agglomerations have many advantages that make them more likely to benefit from spatially-blind national industrial policies. The unique strengths and limitations of each local eco-system need to be carefully considered as opposed to generic plans that gain little local traction.</p>
<p>There are several reasons why economies develop unevenly between places, including:</p>
<ul>
<li><p>The industrial structure and whether it is dominated by relatively dynamic or stagnant clusters of firms and their suppliers.</p></li>
<li><p>Natural resource endowments, including mineral reserves, soil quality and rainfall.</p></li>
<li><p>The quality of physical infrastructure, such as road, rail and harbours, as well as public utilities and municipal services.</p></li>
<li><p>The skills and capabilities of the local workforce, including basic education and tertiary institutions.</p></li>
<li><p>The quality of local institutions, including municipal leadership and technical competence. Also the efficacy of community-based organisations, business councils, industry associations and trade unions.</p></li>
</ul>
<p>These differences can be important, especially as the effects are cumulative and mutually reinforcing over time. There are potent implications for policy from this thinking. </p>
<h2>Different strokes</h2>
<p>Here are some examples.</p>
<p>To accelerate growth within the Eastern Cape, would it be best to incentivise key industries, such as the automotive sector? Or would public resources be better spent on improving the operating environment for a variety of businesses, such as through upgrading the infrastructure? </p>
<p>A third possibility could be to boost the quality and supply of particular skills that are in high demand by local firms.</p>
<p>It is difficult for policymakers to disentangle the multiple factors and forces underpinning regional growth and to pinpoint those with most potential to accelerate development. A sensible place to start is to disaggregate variables associated with national conditions from the distinctive circumstances prevailing within each region.</p>
<p><a href="https://economy.id.com.au/darwin/shift-share">Shift-share analysis</a> is a common technique for this purpose. This separates out the change in output for a region into three main components:</p>
<ul>
<li><p>growth arising from national industry trends (known as the industry-mix effect), </p></li>
<li><p>growth arising from cross-cutting productivity (known as the region effect), and </p></li>
<li><p>growth related to industry-specific locational advantages (known as the industry-place interaction effect).</p></li>
</ul>
<p>Our results demonstrate that national industry trends explain not more than half of the growth performance of provinces. </p>
<p>For instance, in Gauteng, a favourable industry-mix worked together with positive place-based factors to give it a significant growth advantage compared to the rest of the country. By contrast, the Eastern Cape was hamstrung by poor local productivity despite an advantageous industry composition. The Free State had the worst of both industry and regional factors and so was at a significant disadvantage. </p>
<p>In every case, regional factors were fundamental in explaining provincial economic outcomes.</p>
<h2>Conclusion</h2>
<p>It is vital that national growth plans pay careful attention to the unique features of each region if they are to succeed. One implication for policymakers is that targeting growth sectors cannot be the sole focus of industrial policy.</p>
<p>The findings call for more detailed analysis of the core features of each province to help them navigate structural change. This includes the performance of the metro economies. A more devolved approach to national economic policy could build on the strengths of every region. </p>
<p>The national economy is hamstrung if only some regions manage to grow.</p>
<p><em>This article was first published by <a href="https://www.econ3x3.org/about-econ3x3-forum">Econ3x3</a> under the heading, <a href="https://www.econ3x3.org/node/470">Place matters: National prosperity depends on every region performing better</a>.</em></p><img src="https://counter.theconversation.com/content/176104/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Justin Visagie receives funding from the South African National Research Foundation through the SARChI in City-Region Economies at the University of the Free State.</span></em></p><p class="fine-print"><em><span>Professor Ivan Turok receives funding from the South African National Research Foundation through the SARChI in City-Region Economies at the University of the Free State.</span></em></p>A more devolved approach to national economic policy could build on the strengths of every region.Justin Visagie, Senior Research Specialist, Human Sciences Research CouncilIvan Turok, Distinguished Research Fellow, Human Sciences Research CouncilLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1591872021-06-15T12:25:39Z2021-06-15T12:25:39ZArtisan robots with AI smarts will juggle tasks, choose tools, mix and match recipes and even order materials – all without human help<figure><img src="https://images.theconversation.com/files/406225/original/file-20210614-125373-qckcwc.jpg?ixlib=rb-1.1.0&rect=0%2C11%2C7988%2C4479&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Factory robots could soon acquire a range of skills, including the ability to choose how to make things.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/illustration/smart-industry-production-process-royalty-free-illustration/1282209924">studiostockart/DigitalVision Vectors via Getty Images</a></span></figcaption></figure><p>Failure of a machine in a factory can shut it down. Lost production can cost millions of dollars per day. Component failures can devastate factories, power plants and battlefield equipment. </p>
<p>To return to operation, skilled technicians use all the tools in their kit - machining, bending, welding and surface treating, making just the right part as quickly and as accurately as possible. But there’s a <a href="https://www2.deloitte.com/us/en/insights/industry/manufacturing/manufacturing-industry-diversity.html">declining number of technicians with the right skills</a>, and the quality of things made by hand is subject to the skills and mood of the artisan on the day the part is made. </p>
<p>Both problems could soon be solved by artificially intelligent robotic technicians. These systems can take measurements; shape, cut or weld parts using varied tools; pass parts to specialized equipment; and even purchase needed materials – all without human intervention. Known as hybrid autonomous manufacturing, this process involves automated systems that seamlessly use multiple tools and techniques to build high-quality components where and when they are needed.</p>
<p>I am a <a href="https://scholar.google.com/citations?user=KzTuzhkAAAAJ&hl=en">professor of metallurgical engineering</a>. My colleagues and I design the recipes to make materials and components with just the right internal structure to create properties like strength and fracture resistance. With a network of colleagues at Ohio State and other universities, I have been developing a plan to give birth to these autonomous artisans. </p>
<h2>How things are made</h2>
<p>Components are either mass-produced or custom-made.</p>
<p>Most things people touch daily have been mass-produced. Quality is assured by using well-honed processes based on testing and monitoring large numbers of parts and assuring the process is done the same way every time. </p>
<p>Custom fabrication – making components on demand – is often essential, sometimes to conform to a patient’s specific anatomy or to replace aircraft landing gear that was forged and is no longer being made. Processes for making metallic parts – material removal, deposition, deformation, transformation, inspection – can all be done with small tools, with incremental actions rather than the kind of bulk processes, usually with big tools and dies, used in mass production. </p>
<p>Automation has long been a part of mass production, which includes sophisticated robots that handle parts and weld on automobile assembly lines. Additive manufacturing, often referred to as 3D printing, is increasingly being used with a variety of materials <a href="https://www.spotlightmetal.com/where-does-additive-manufacturing-stand-in-2021-a-1003729/">to make components</a>. </p>
<p>Now in development are <a href="https://theconversation.com/robotic-blacksmithing-a-technology-that-could-revive-us-manufacturing-125428">robotic blacksmiths</a> – robots that can hammer metallic parts into shape instead of cutting, building up or molding them.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Robotic arms reach into the frame of a car being manufactured" src="https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/405991/original/file-20210611-19-ezdgpd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Robots have been building cars for decades, but they typically carry out simple, repetitive tasks that don’t require decision-making.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/jHZ70nRk7Ns">Lenny Kuhne/Unsplash</a></span>
</figcaption>
</figure>
<h2>Automated customization – not an oxymoron</h2>
<p>To automate custom fabrication, my colleagues and I are developing an automated suite of tools that can carry out all the steps for making a wide range of components, using multiple processes without human intervention. Sensors will also be central to hybrid autonomous manufacturing to control the processes and maintain and assure quality. </p>
<p>Such autonomous manufacturing systems will make the myriad decisions needed to create a component of the right strength, size and surface finish. Artificial intelligence will be required to handle the enormous number of choices of materials, machine settings and process sequences. Rather than finding a mass production recipe and never deviating, these autonomous manufacturing systems will choose from a very large set of possible recipes to create parts, and will have the intelligence to assure that the chosen path produces components with the appropriate material properties.</p>
<p>Robots could either position small tools on manufactured component or transfer the component from one piece of equipment to another. A fully autonomous system could manufacture a wide range of products with a versatile set of tools. The systems could source materials and possibly even send work out to specialized cutting and deformation tools, just like a human artisan. </p>
<p>The production rate of such systems would not rival those of mass production, but because robots can work continuously they can be more productive than human technicians are. Data from sensors provide a digital record of all the steps and processes with critical temperatures, machine settings and even images. This record can assure quality by, for example, making sure the material was deformed the right amount and cracks were not produced during the process and covered up. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="An X-ray of a knee shows elaborate hardware including four long screws in the lower bone and a series of staples near the hardware" src="https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=824&fit=crop&dpr=1 600w, https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=824&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=824&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1036&fit=crop&dpr=1 754w, https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1036&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/406223/original/file-20210614-125373-hkh0q6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1036&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Surgeons sometimes have to double as metalworkers when dealing with bad fractures.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/broken-leg-royalty-free-image/171586126">PEDRE/E+ via Getty Images</a></span>
</figcaption>
</figure>
<p>Manufacturing at or near the operating room is one example of a process that can be enabled with hybrid autonomous manufacturing. Often when patients with bone fractures undergo trauma surgery, metallic plates of varied shapes are required to hold bones together for healing. These are often created in the operating room, where the surgeon bends plates to fit the patient, sometimes using a 3D-printed model created from medical images of the patient as a form to bend the metal against. </p>
<p>Bending by hand is slow and imprecise, and stressing the plate in the wrong place can cause it to fracture. A robotic technician could cut and bend and finish a plate before surgery. Patients do better and save money if they spend less time in the hospital.</p>
<p>[<em>Over 106,000 readers rely on The Conversation’s newsletter to understand the world.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=100Ksignup">Sign up today</a>.]</p>
<h2>The road to robotic artisans</h2>
<p>Numerous companies are now showing the way forward in autonomous manufacturing, including three venture-funded startups. <a href="https://www.formlogic.com">FormLogic</a> is developing automated high-quality machine shops. <a href="https://www.path-robotics.com">Path Robotics</a> is putting the skills of a welder into a robot. And <a href="https://agilityprime.afwerxshowcase.com/exhibitor/machina-labs/">Machina Labs</a> is out to create robotic blacksmiths. Other companies are developing systems to automate design and logistics.</p>
<p>Hybridization – the ability to carry out different tasks in different ways with multiple tools – is the next step. The key pieces of hybrid autonomous manufacturing exist now, and fully autonomous systems could be common in a decade. Companies adopting this approach to custom fabrication will need to draw on a new generation of students with the skills to combine these technologies. </p>
<p>The investments proposed in the <a href="https://www.rpc.senate.gov/legislative-notices/s1260_the-united-states-innovation-and-competition-act">United States Innovation and Competition Act</a> <a href="https://www.usatoday.com/story/news/politics/2021/06/08/senate-passes-technology-research-bill-compete-china/7415962002/">passed by the Senate</a> on June 8, 2021, and those in the Biden administration’s proposed <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/">American Jobs Plan</a> could support the development of these kinds of advanced manufacturing technologies. Funds for the development of advanced manufacturing technologies and the associated skills base could <a href="https://theconversation.com/the-pandemic-has-revealed-the-cracks-in-us-manufacturing-heres-how-to-fix-them-143407">make U.S. manufacturing more competitive</a>.</p><img src="https://counter.theconversation.com/content/159187/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Glenn S. Daehn has received funding from the National Science Foundation and serves on the Advisory Board of FormLogic. </span></em></p>Custom fabrication involves taking measurements, choosing tools, deciding on sequences of steps and ordering from a menu of materials. AIs under development promise to take humans out of the loop.Glenn S. Daehn, Professor of Materials Science and Engineering, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1625282021-06-14T15:08:58Z2021-06-14T15:08:58ZCOVID-19 has worsened South Africa’s system of developing the skills of young people<figure><img src="https://images.theconversation.com/files/406110/original/file-20210614-72954-7tnkoy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A worker cut fabric panels from a material stack at a textile factory in Cape Town. Young South Africans aren't being given the skills they need.</span> <span class="attribution"><span class="source">Dwayne Senior/Bloomberg via Getty Images</span></span></figcaption></figure><p>The COVID-19 pandemic has affected not only how we live, think and work but also how we acquire skills. This is particularly crucial for young people, large numbers of whom are excluded from labour market. South Africa’s latest Quarterly Labour Force Survey showed joblessness for those aged between 15 and 34 <a href="http://www.statssa.gov.za/?p=14415">at 46,3%</a>.</p>
<p>To address the challenges of skills provision and acquisition, policy makers and researchers have set their sights on the vocational education and training system. But the view that this alone is the answer to solve existing labour market crises is flawed for three reasons. </p>
<p>First, it ignores the main problem – the lack of demand for labour. Second, it highlights a lack of understanding of how skills are developed, and that the nature of the economy shapes the nature of skills produced. And third, it disregards the fact that the existing weaknesses of the vocational and education training system are caused by lack of labour demand and insufficient analysis of the role of the economy in shaping skill formation.</p>
<p>The relationships between education, poverty and inequality in South Africa are complex. Labour markets are a key determinant of inequality. But lack of demand for skilled labour outweighs lack of skilled workers. Nonetheless, building the skills of the workforce remains <a href="https://muse.jhu.edu/article/745637">a crucial part</a> of economic development and reconstruction. </p>
<p>In terms of skills development, a complex array of institutions and policies have been established since 1994 in an attempt to improve relationships between labour markets and education providers. Incentives have been created to encourage employers to provide training to their workers and pre-employed people. </p>
<p>However, these policies and institutions have met with many challenges. One is that the institutional environment <a href="https://www.jstor.org/stable/10.18772/22013037359?turn_away=true">is now</a> complex and expensive, without much visible improvement in the system. There’s little to show for years of reform, as well as an extensive range of donor initiatives to support projects, policy reforms, and institutional reform. </p>
<p>One example is the Technical and Vocational Education and Training system. This has been the subject of many reforms. But policy makers and industry continue to argue that the system <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9780429282447-11/vocational-education-inequalities-transitions-education-work-three-african-countries-stephanie-allais">remains weak</a> and that the colleges <a href="https://brill.com/view/book/edcoll/9789004430365/BP000023.xml;">don’t meet their needs</a>. </p>
<p>On top of this the qualifications system is enormously complex. Layers of new qualifications and ways of designing qualifications have been added, without removing the previous ones.</p>
<p>Against this backdrop, <a href="https://journals.co.za/doi/abs/10.10520/ejc-sare-v26-n1-a5">our research</a> set out to understand the impact of COVID-19 on skills formation in South Africa. </p>
<h2>Weaknesses</h2>
<p>The pandemic has heightened existing weaknesses in the system. Few vocational colleges have the necessary facilities for online learning. Also, few students have the prior educational background that makes online learning workable. </p>
<p>Only 10 out of 50 colleges had learner management systems enabling online teaching and learning. Some sought to make tutorials available on social media. However, often lecturers didn’t have their own data or even a quiet place to teach from. Learners faced the same problems. </p>
<p>The second area affected by the pandemic is workplace placements. As a result of the pandemic, companies have been unable to accommodate learners. This has similarly been a long standing challenge. </p>
<p>A third affected area is funding: the skills system has lost about R6.1 billion as a result of suspension of the skills levy during the lockdown and other factors. The levy was suspended as <a href="https://www.sanews.gov.za/south-africa/national-assembly-approves-covid-19-tax-relief-bills">part of tax relief</a> to companies during the pandemic. </p>
<p>A further issue affecting the skills development system is the qualification system. What’s lacking is a balance between shorter training programmes and long-term formal qualifications. The advocates of micro-credentials – these are industry aligned short courses which have a narrow focus on preparation for work – are suggesting them as the solution to this lack of balance. </p>
<h2>Changes</h2>
<p>The Quality Council on Trades and Occupations – established in 2010 to set standards for and quality assure qualifications linked to a trade or occupation – has recently reconfigured occupational qualifications. These include revisiting the formal requirement for workplace experience, which learners now simply cannot get (and most could not get before COVID-19). </p>
<p>It has also introduced new regulations to address the need for short programmes which can only be accredited as a “part qualification”, which is constituted by credits within a full qualification. Full qualifications are now defined in terms of number of credits. </p>
<p>This step sought to address the proliferation of part qualifications that didn’t lead to a full qualification, as well as qualifications of varied sizes. But it created the unintended consequence of negating the possibility that industry associations could determine the need for a short programme that is accredited and that enables the graduate to access a specific opportunity in the workplace. </p>
<p>Thus, the organising logic is based on where qualifications exist rather than on where demand is.</p>
<h2>Flawed logic</h2>
<p>The lack of success is partly due to the flawed idea that market mechanisms will ensure more responsive, agile, demand-led Technical and Vocational Education and Training, using qualifications, including “micro-credentials”, as a policy lever. </p>
<p>The focus is on the need for agility and short-term relevance. Reforms have emphasised employers specifying the skills or competences they require, and education and training institutions being given funding for courses that attempt to lead to these specific competences.</p>
<p>This should, according to advocates, enable educational institutions to provide only the required competences and thereby enable “consumers” – employers or individuals trying to equip themselves in labour markets – to purchase only the “bits” that they want without having to sit through long educational programmes. </p>
<p>In this magical world vocation and education training will ensure that:</p>
<ul>
<li><p>curricula are decentralised and therefore responsive, </p></li>
<li><p>employers can specify their needs, and </p></li>
<li><p>both public and private providers can be held accountable as their programmes can be measured against the competences delivered.</p></li>
</ul>
<p>But this is a simplistic supply and demand notion. Policy reforms based on it take no account of how skills are actually developed for work in the real economy. </p>
<p>The approach also works against building strong, robust, healthy institutions. </p>
<h2>Alternatives</h2>
<p>South Africa needs to focus on supporting institutions, building partnerships with employers, and ensuring that thinking about skills is incorporated into industrial policy processes.</p>
<p>Our research highlights the need to think about the quality of work and organisation of workplaces as well as skills development inside industrial policy and inside different economic sector strategies. This also requires having formal providers of vocational education and training to be embedded inside the industries. </p>
<p>One implication of this <a href="https://www.researchgate.net/publication/352320844_TVET_skills_and_company_transformation_and_growth_Insights_from_a_company_survey_in_three_manufacturing_sectors_in_South_Africa_Overview_of_Key_Findings.">is the need</a> for industry- or sector-specific and not general strategies for skills development. </p>
<p>In addition, education institutions should offer broad vocational and education training qualifications that include components of general education and components of locally needed skills. </p>
<p>At the same time, we need better funding mechanisms for shorter accredited programmes that are recognised by employers and professional associations, and
less formal, responsive short courses. </p>
<p>This requires deeper relationships between colleges and employers. It also requires more support for institutions providing the training and a set of qualifications that focus on occupational streams and clusters.</p>
<p>Finally and most importantly, skills policy needs to be in line with an economic recovery focused on jobs. Skills planning needs to be incorporated inside the industrial policy process instead of an add-on.</p><img src="https://counter.theconversation.com/content/162528/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephanie Allais receives funding from the South African National Research Foundation. </span></em></p>The pandemic has heightened existing weaknesses in South Africa’s skills training regime.Stephanie Allais, Faculty member, Centre for Researching Education and Labour, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1412922020-07-02T14:49:58Z2020-07-02T14:49:58ZTechnology is a powerful determinant of change, but labour can shape its direction<figure><img src="https://images.theconversation.com/files/343753/original/file-20200624-132951-zprsn7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Technology is a powerful determinant of change but so are trade unions and the state</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Technology is a product of human labour. The working class and society can therefore shape its direction. <a href="https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_553682.pdf">According to the International Labour Organisation</a> (ILO), long-term technological change has created more employment than it has destroyed, and has pushed overall living standards to new levels, notwithstanding the disruption that it inevitably brings. </p>
<p>What’s more, the ILO concludes in a <a href="https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_553682.pdf">2017 report</a>, there’s no “clear sense that this will be otherwise in the foreseeable future”.</p>
<p>The <a href="https://www.wits.ac.za/scis/">Southern Centre for Inequality Studies</a> has embarked on a research project comparing countries across the global South to explore, through global production networks, the impact of new technology on the future of work and workers. Global production networks have gained increased importance in global production organisation, co-ordination and associated international trade. Using global production networks to anchor an analytical framework enables a focus on the actors involved in the geographically dispersed, multi-scale, multi-dimensional, <a href="https://books.google.co.za/books?hl=en&lr=&id=b5UUDAAAQBAJ&oi=fnd&pg=PP1&dq=(Coe+%26+Yeung,+2015)&ots=4SmfX2nm04&sig=vpKYYxgiw5DXiCGa6ohUJfL_Hv0#v=onepage&q=(Coe%20%26%20Yeung%2C%202015)&f=false">globalised structures of production and trade</a>. </p>
<p>This includes a focus on workers. </p>
<p><a href="https://www.global-labour-university.org/fileadmin/GLU_Working_Papers/GLU_WP_No.58.pdf">My research</a> focuses on the automotive manufacturing sector – South Africa’s leading manufacturing sector. The research shows that, while technology is indeed a powerful determinant of change, it is important to recognise the role that worker organisation and the state, through its industrial policy, play in shaping the direction of change. </p>
<h2>Technological change and job disruption</h2>
<p>My findings indicate a decline in employment in the final vehicle assembly segment by 8,600 workers, from 38,600 in 1995 to 30,000 in 2017. </p>
<p>During the same period, investment by final vehicle companies, known as original equipment manufacturers, increased from R0.8 billion in 1995 to R8.2 billion in 2017. </p>
<p>Figure 1 below shows the relationship between the investment and employment trends. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/344730/original/file-20200630-103673-1k2yd5c.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/344730/original/file-20200630-103673-1k2yd5c.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=361&fit=crop&dpr=1 600w, https://images.theconversation.com/files/344730/original/file-20200630-103673-1k2yd5c.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=361&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/344730/original/file-20200630-103673-1k2yd5c.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=361&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/344730/original/file-20200630-103673-1k2yd5c.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=454&fit=crop&dpr=1 754w, https://images.theconversation.com/files/344730/original/file-20200630-103673-1k2yd5c.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=454&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/344730/original/file-20200630-103673-1k2yd5c.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=454&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Author’s own design.</span>
</figcaption>
</figure>
<p>The role of the state’s industrial policy through the Motor Industry Development Programme <a href="https://www.global-labour-university.org/fileadmin/GLU_Working_Papers/GLU_WP_No.58.pdf">played a key role</a> from September 1995 to December 2012 in attracting increased investment. The plan offered incentives, including import rebate credit certificates. The incentives gave automotive exporting companies reduced import duty, or duty-free imports, on the components that they did not source locally or vehicle models they did not produce in the country.</p>
<p>Increased automation of production, a key part of investment by original equipment manufacturers, wasn’t introduced in isolation. With it came global production systems, new methods of work and ways of co-ordinating production, all more effective than the previous ones. </p>
<p>The changes included rationalisation of vehicle model platforms, in certain instances down to single vehicle platform assembly plant operations. </p>
<p>From January 2013 <a href="https://www.global-labour-university.org/fileadmin/GLU_Working_Papers/GLU_WP_No.58.pdf">investment in the automotive manufacturing sector</a> was led by the Automotive Production and Development Programme. This was made up of several incentives. These included a cash grant of 25%–30% of the value of qualifying investment for the vehicle assembly segment and 25%–35% for the components manufacturing segment, payable over three years. </p>
<p>The global economic crisis of 2008 badly affected investment, production and employment in original equipment manufacturers. This is reflected in Figure 1 above, and Figure 2 below. </p>
<p>Yet these manufacturers achieved remarkable productivity from 1995, as a result of technological change and the accompanying work reorganisation and restructuring. </p>
<p>During the period 1995 to 2017, they gained double the capacity of output per worker. Figure 2 below shows their total production volumes divided by their total employment. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/344736/original/file-20200630-103636-1inh4m.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/344736/original/file-20200630-103636-1inh4m.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=366&fit=crop&dpr=1 600w, https://images.theconversation.com/files/344736/original/file-20200630-103636-1inh4m.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=366&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/344736/original/file-20200630-103636-1inh4m.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=366&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/344736/original/file-20200630-103636-1inh4m.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=460&fit=crop&dpr=1 754w, https://images.theconversation.com/files/344736/original/file-20200630-103636-1inh4m.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=460&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/344736/original/file-20200630-103636-1inh4m.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=460&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Author’s own design.</span>
</figcaption>
</figure>
<p>The 38,600 workers employed by the manufacturers in 1995 produced 388,442 vehicles, averaging an output of 10 vehicles per worker. The rise in production surpassed half a million, reaching a peak of 652,965 vehicles in 2008. These were produced by a reduced workforce of 35,900 workers – that is the 1995 workforce less 2,700 workers. </p>
<p>The average output per worker increased to about 16 vehicles in 2008. The increase reached double capacity in 2014 from that of 1995, to an average of 20 vehicles per worker. In 2014 the manufacturers’ workforce was reduced to 27,715 – that is the 1995 workforce less 10,885 workers. </p>
<p>The trends presented here reflect the original equipment manufacturers’ specific reality. The research findings show that there are production conditions that, if strong enough, can counteract the reduction in the workforce, and even result in an increase in the workforce, which is important for industrial policy. This is clearly demonstrated by the case of VW, highlighted below. </p>
<h2>Worker agency</h2>
<p>In 2015, VW decided to <a href="https://m.engineeringnews.co.za/article/auto-industry-2018-02-09/rep_id:4433">invest</a> R6.1 billion, including R564 million for 330 new robots, at its vehicle body construction plant in Uitenhage, Eastern Cape province. </p>
<p>About 600 robots, including the 300 new ones, <a href="https://www.businesslive.co.za/bt/business-and-economy/2018-02-03-more-robots-but-more-workers-too-as-vw-modernises-car-assembly/?&external">were expected to complete the structure of each vehicle</a> in a reduced time of one minute and 57 seconds.</p>
<p>The new robots resulted in 40 qualified fitters being declared redundant (not to speak of less skilled workers). VW served the National Union of Metalworkers of South Africa (NUMSA) with a retrenchment notice. The union challenged VW, resulting in an agreement for the retraining of the fitters as electricians. This paved the way for their jobs to be saved. </p>
<p>VW globally also allocated more production volumes to its Uitenhage plant. This helped save the jobs of (less skilled) production workers that could otherwise have been disrupted by the use of robots. And it resulted in an additional 300 production workers being required. </p>
<p>The plant’s production increased to 133,000 vehicles in 2018, of which 83,000 were for export markets. The 2018 output reflected an increase of 23,000 vehicles from 110,000 in 2017. In 2019 the plant reached its target of 160,000 vehicles, 27,000 more than in 2018. </p>
<h2>Conclusion</h2>
<p>The decline in overall manufacturers’ employment from 1995 to 2017 in the context of increased capital investment and productivity underlines the necessity of increasing local production to save jobs and create additional employment. This social upgrading through the targeting of employment creation is an important industrial policy consideration and can be linked with the investment incentives given by the state.</p>
<p>The VW case shows that increased production localisation in global production networks can benefit employment in two important ways, despite technological disruption. Firstly, it counteracts retrenchments consequent on the way new technology is adopted. Secondly, it creates additional employment. As the role played by NUMSA at VW indicates, organised labour can shape the direction of new technology and its impact on workers.</p><img src="https://counter.theconversation.com/content/141292/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mohubetswane Mashilo is a post-doctoral fellow with the Southern Centre for Inequality Studies (SCIS) at the University of the Witwatersrand, Johannesburg. He has previously received funding (research stipend) from the Hans-Böckler Foundation which supported the publication in 2019 of a Working Paper that he produced, titled 'Auto Production in South Africa and Components Manufacturing in Gauteng Province', as part of the project 'Global value chains, economic and social upgrading' at the Berlin School of Economics and Law. He is a member of the African National Congress and the South African Communist Party.</span></em></p>Increased capital investment and productivity need not result in job losses. Government can use industrial policy to link investment incentives to job preservation and even job creation.Alex Mohubetswane Mashilo, Postdoctoral Research Fellow, Southern Centre for Inequality Studies, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1201032019-07-10T15:07:25Z2019-07-10T15:07:25ZWhy South Africa should revert to greater protection for some of its industries<figure><img src="https://images.theconversation.com/files/283340/original/file-20190709-44497-1tcwcyv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The automobile sector has grown most strongly since 1994 behind tariff protection</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>After years of relative silence, debates about the pros and cons of tariffs in international trade have become a regular feature. The renewed interest has been sparked by the actions of US President Donald Trump, the first president since the Great Depression to impose, or threaten to impose, higher tariffs on imported goods.</p>
<p>In March this year, the US imposed <a href="https://www.china-briefing.com/news/the-us-china-trade-war-a-timeline/">tariffs</a> of 25% on Chinese imports worth $250 billion a year. Although the intended extension of the measures to all Chinese goods is presently on hold, the US has threatened <a href="https://www.bbc.com/news/topics/c9vwxgl4p0dt/trump-tariffs">similar steps</a> against the European Union.</p>
<p>The debate is important for countries that are struggling to diversify their economies, in South Africa’s case to build its capacity in medium and high technology-based industries. </p>
<p>South Africa’s manufacturing sector has been significantly affected by trade liberalisation policies dating back to the nineties. At the time, these were widely adopted as a means of stimulating national economies in developed countries that were characterised as being hamstrung by high input costs and stagnant local markets. It was <a href="https://www.oecd.org/trade/understanding-the-global-trading-system/why-open-markets-matter/">argued </a>that open markets would help create jobs, raise levels of productivity and competitiveness, and ultimately increase economic output.</p>
<p><a href="https://www.tandfonline.com/doi/full/10.1080/20421338.2019.1610250">Our study</a>, has shown that, relative to our peer group and stage of industrial development, South Africa’s industrial policy is too focused on supply-side instruments. These include tax allowances for research and development, and direct financial support for human resource development or capital investment. </p>
<p>The study began with two initial propositions: </p>
<ul>
<li><p>that the transition had been overdone; and that </p></li>
<li><p>the country’s more traditional manufacturing sectors, such as leather goods and footwear, metal products and clothing, had been slow to respond to the new policy framework. </p></li>
</ul>
<p>The study confirms both.</p>
<p>We conclude that the policy changes of the nineties were too extensive and South Africa’s industrial policy regime should be rebalanced as a means of growing employment and Gross Domestic Product (GDP). A combined approach of selective tariffs and better marketing to potential beneficiaries could rebuild the important contribution of manufacturing to the economy.</p>
<h2>The nineties</h2>
<p>In the nineties, South Africa was emerging from a period of heavy protection and isolation. It was partly self-imposed and partly the consequence of international sanctions. The lowering of tariffs was seen as a means to achieve two objectives. First, to <a href="http://forum.tips.org.za/images/Policy_mixes_as_a_means_of_overcoming_challenges_to_innovation_in_developing_countries_insights_from_a_mixed_methods_study_of_South_Africas_manufacturing_sector_v2.pdf">raise</a> the international competitiveness of its manufacturing base. And, second, to loosen the stranglehold of upstream industries, including manufacturers of basic chemicals, iron and steel, and paper. </p>
<p>In broad terms, the nineties can be characterised by the shift in the industrial policy regime reliant on market protection, high tariff levels and state procurement (collectively known as demand-side support) to a proliferation of instruments, such as research and development tax incentives and a focus on reducing the input costs of firms (known as supply-side support).</p>
<p>Between 1991 and 2001, <a href="https://www.ilo.org/global/publications/books/WCMS_242878/lang--en/index.htm">average tariff levels</a> fell from 27.5% in 1990 to about 8% in 2006 and 5% in 2016. </p>
<p>Unfortunately, the promises of economic growth and job creation in the manufacturing sector as a consequence of trade liberalisation were not forthcoming. The reform led, instead, to many casualties, with firms in the vulnerable industries contracting and shedding jobs. </p>
<p>Although increasing by 50% from 1994 to 2006, the contribution of manufacturing to GDP has hardly changed since 2007, despite an overall 26% growth in the economy (2007 to 2018). As a result, the proportion that manufacturing contributed to the economy dropped from 21% in 1994 to 13.2% in 2018. </p>
<p>Several segments of the manufacturing sector have weakened considerably. In some cases, they have disappeared almost entirely. Output of the textiles, clothing, leather and footwear sub-sector has declined by 40%. Textile manufacturing has been the worst performer, with its economic output now less than 60% of its 1994 level.</p>
<h2>The exception - automobiles</h2>
<p>The automobile sector has grown most strongly since 1994. It is the one sub-sector which retained high tariff protection. These can be effective. But tariffs in support of the automobile sector have not been cheap. They came at a considerable <a href="http://www.tips.org.za/manufacturing-data/the-real-economy-bulletin/quarterly-bulletin/item/3584-the-real-economy-bulletin-fourth-quarter-2018">cost</a> to the economy, and in this case, also to government. It is estimated that the cost to the Department of Trade and Industry of the <a href="https://www.naacam.co.za/automotive-production">Automotive Production and Development Programme</a> has been R5 billion a year.</p>
<p>In terms of the policy focus, the data supported the view that supply-side measures are too dominant and the overall policy mix should be re-balanced to provide more demand-side support. The support can be principally in the form of tariff protection and a revision to the local content specifications for public procurement. This will be done to revitalise South Africa’s manufacturing sector in an approach analogous to the automobile sector.</p>
<p>Furthermore, the results of the study have shown that the traditional industries have failed to respond sufficiently to the post-1994 policy shift. They made little use of the new instruments. Policy changes invoke a similar set of responses. Traditional firms have been suspicious of the new instruments and reluctant to engage with them. On the other hand, the more open firms were enthusiastic about new possibilities that such policy changes may reveal. </p>
<p>The use of research and development tax incentives, a key component of the supply-side incentives, has been highly variable. The major beneficiaries have been the high-technology sub-sectors, which have strong absorptive capability, characterised by a willingess to identify and absorb useful external knowledge.</p>
<p>We recommend that more effort should be made to assist the traditional industries in understanding, and hence benefiting from, the new policy environment, rather than allowing them to disappear entirely. A wider re-balancing of innovation policy in favour of stronger demand-side instruments is also recommended.</p><img src="https://counter.theconversation.com/content/120103/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Richard Walwyn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>South Africa’s economic reforms of the 1990s were overdone, destroying some industries and thus impacting economic growth and job creation. A re-balancing of industrial policy is called for.David Richard Walwyn, Professor of Technology Management, University of PretoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1191202019-06-21T12:12:53Z2019-06-21T12:12:53ZIndustrial policy is back on the agenda – and it’s never been needed more than it is now<figure><img src="https://images.theconversation.com/files/280597/original/file-20190620-149814-1850ps7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/redcar-beach-sunset-north-east-coast-1113631013?src=axuYVReQ-tQ-KSXojSQrRQ-1-5&studio=1">Shutterstock/pauljrobinson</a></span></figcaption></figure><p>Trade tensions – and possible deals – are high on the political agenda in <a href="https://theconversation.com/brexit-what-has-to-happen-in-uk-and-eu-parliaments-to-ratify-withdrawal-and-future-trade-agreements-107127">Europe</a>, the <a href="https://theconversation.com/is-trumps-trade-war-saving-american-jobs-or-killing-them-117159">United States</a> and <a href="https://theconversation.com/us-china-trade-china-is-building-bridges-with-the-world-while-the-us-puts-up-walls-99038">China</a>. Perhaps that’s one reason why governments seem keen to get more involved in guiding their economies by targeting particular technologies and industries – using what’s known as “<a href="https://academic.oup.com/cjres/advance-article-abstract/doi/10.1093/cjres/rsz006/5490915?redirectedFrom=fulltext">industrial policy</a>”. </p>
<p>China has launched its <a href="http://www.chinadaily.com.cn/business/2017-10/12/content_33163772.htm">2025 programme</a> to gear up its industrial base for the next decade. Both the UK and the <a href="https://ec.europa.eu/commission/news/new-industrial-policy-strategy-2017-sep-18_en">EU</a> have recently unveiled industrial strategies designed to promote innovation and growth. This can involve government working collaboratively with business to discover knowledge and identify opportunities and challenges. </p>
<p>The UK government has always intervened to some extent in industry – famously “<a href="https://www.parliament.uk/business/committees/committees-a-z/commons-select/business-energy-industrial-strategy/news-parliament-2015/industrial-strategy-evidence1-16-17/">before breakfast, lunch, tea and dinner</a>” in the words of former UK trade and industry secretary Michael Heseltine. </p>
<p>But the <a href="https://www.gov.uk/government/topical-events/the-uks-industrial-strategy">current approach</a> in Britain still appears to suggest something of a shift in thinking. The question is whether we’ll see an improvement in policy design and implementation. On that, there are hopes that things may be different this time round. </p>
<p>We should recall that industrial policy in the UK fell out of favour back in the 1970s, when the <a href="https://politicalquarterly.blog/2018/10/24/dont-be-fooled-uk-industrial-strategy-has-a-long-history-of-picking-winners/">government was accused</a> of “picking winners” and supporting so-called “lame-duck” corporations. (Although some of those ducks included British Aerospace and Rolls Royce – now both highly successful companies.)</p>
<p>But after years of de-industrialisation – and a decade on from the <a href="https://theconversation.com/six-charts-that-show-how-much-the-world-has-changed-since-the-2007-08-financial-crisis-83477">global financial crisis</a> – questions still arise as to whether the UK needs rebalancing. And, if so, how? This is what brings industrial policy back on the agenda. </p>
<p>For example, the UK has the <a href="https://bit.ly/2WAtV3U">widest regional income and productivity disparities</a> in northern Europe. Some might say that growing regional disparity is a root cause of <a href="https://www.centreforcities.org/podcast/city-talks-revenge-places-dont-matter/">increasing populist politics</a>, which is especially prevalent in declining regions. </p>
<p>These spatial imbalances and the neglect of manufacturing (which is a big driver of productivity growth) have also slowed the UK’s national economic performance. British productivity falls well below that of other leading European nations such as <a href="https://www.theguardian.com/business/2016/nov/24/why-is-uks-productivity-still-behind-that-of-other-major-economies">Germany and France</a>. </p>
<p>Neglect aside, manufacturing is vitally important to a nation’s economic strength. In the UK, <a href="https://excellentnewspaper.com/uk-manufacturing-sector-far-larger-than-politicians-realise-the-guardian/">advanced manufacturing</a> capital-intensive industries such as aerospace, chemicals and energy generation provide highly skilled jobs and support supplier industries. Also, manufacturing sectors are especially important to the country’s regional hinterland, where they are key sources of innovation and growth. </p>
<p>So how can industrial policy revitalise manufacturing and promote inclusive and more balanced growth today? This question is especially topical given the scale of ongoing technological change. </p>
<p>New technologies such as artificial intelligence, machine learning, and automation – coming together in what is termed “<a href="https://www.birmingham.ac.uk/research/perspective/industry-4-and-what-to-expect-for-industry-policy.aspx">Industry 4.0</a>” – present big challenges and opportunities for industry. There are calls for a <a href="http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwjEvaDprPjiAhUhmVwKHcazAMsQFjAAegQIABAC&url=http%3A%2F%2Fwww.makers-rise.org%2Fwp-content%2Fuploads%2F2019%2F05%2FPolicy-Report-May-2019.pdf&usg=AOvVaw0tvmvDOgTrtxEVBpspNPMu">transformative industrial policy</a>
tackling issues such as skills, infrastructure, business access to new technologies, rebuilding of localised supply chains and much more. </p>
<p>So in contrast with the past, today’s industrial policy can play a key role in shaping the process of industrial transformation. Instead of picking winners, today’s industrial policy can focus upon building a stable of potentially successful innovative organisations.</p>
<h2>Innovation at the heart of industry</h2>
<p>A regional approach is essential to do this, however. It is often at a regional level that existing specialisms and capabilities are more apparent and have a better chance of connecting with emergent technologies in new ways. In that regard, industrial policy needs to bring together sectors, technologies and place in a genuinely “place-based” approach.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-to-make-a-place-based-industrial-strategy-work-98716">How to make a 'place-based' industrial strategy work</a>
</strong>
</em>
</p>
<hr>
<p>The Italian region of Emilia Romagna has long used this tactic to develop new specialisms, opening up markets in sectors including tiles, clothing, shoes, culinary machinery and its celebrated <a href="http://thepackagingvalley.com/web/">machine packaging industry</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/280598/original/file-20190620-149810-9bkbij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/280598/original/file-20190620-149810-9bkbij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/280598/original/file-20190620-149810-9bkbij.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/280598/original/file-20190620-149810-9bkbij.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/280598/original/file-20190620-149810-9bkbij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/280598/original/file-20190620-149810-9bkbij.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/280598/original/file-20190620-149810-9bkbij.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Emilia Romagna at work.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/industrial-plants-dusk-ferrara-emilia-romagna-1199658523?src=0s-D24jq8xwnAoh_Z-lXig-1-8&studio=1">Shutterstock/Giorgio Morara</a></span>
</figcaption>
</figure>
<p>In the US, a federal initiative which invests in new technology, the <a href="https://www.energy.gov/eere/amo/national-network-manufacturing-innovation">National Network of Manufacturing Institutes (NNMI)</a>, is trying to link technological development and industrial capacity with the aim of creating new jobs and innovations. </p>
<p>Likewise, well designed public-private collaborations can identify and support skills packages which can be tailored to circumstances in response to industry needs. Denmark’s <a href="https://denmark.dk/society-and-business/the-danish-labour-market">flexicurity model</a> protects workers from job losses during periods of technological change by using unemployment insurance-linked funds to sustain continuous learning. In so doing, it helps to avoid job loss and boosts worker retraining. </p>
<p>In the UK, a new “<a href="https://www.madesmarter.uk/">Made Smarter</a>” programme is currently being piloted in the North West. Its purpose is to test the most effective ways to engage with manufacturers to encourage them to adopt new technologies.</p>
<p>Although the Made Smarter programme is a promising initiative, there is a concern with the UK government’s commitment and the lack of scale. Beyond the pilot, there is only £121m for the UK as a whole for business to adopt new digital technologies. This isn’t going to go very far – and doesn’t compensate for the government’s <a href="https://www.business-live.co.uk/business/manufacturing/government-needs-rethink-decision-scrap-10784047">scrapping of the Manufacturing Advisory Service</a> a few years ago, which was a major policy blunder.</p>
<p>Critically, industrial policy can and should deal with the challenge of climate change. It can promote the development of <a href="https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/green_industrial_policy.pdf">renewable energy technologies</a>, through appropriate research and development grants and loans. </p>
<p>In short, industrial policy is back on the agenda – where it belongs. This time round, it should aim to build on existing expertise and capabilities and link them with radical new technologies. In doing so, it can help people, businesses, and places achieve their full potential.</p><img src="https://counter.theconversation.com/content/119120/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phil Tomlinson receives funding from the European Regional Development Fund to establish two business acceleration hubs in the South West of England. </span></em></p><p class="fine-print"><em><span>David Bailey receives funding from the Economic and Social Research Council's UK in a Changing Europe Initiative (grant reference: ES/T000848/1).</span></em></p><p class="fine-print"><em><span>Peter Tyler receives funding from The Engineering and Physical Sciences Research Council (EPSRC)
on a project entitled 'The Long term dynamics of interdependent infrastructure systems’.</span></em></p><p class="fine-print"><em><span>Amy Glasmeier does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Properly executed, government intervention can provide a real economic boost.Phil Tomlinson, Associate Professor in Business Economics, Deputy Director Centre for Governance, Regulation and Industrial Strategy (CGR&IS), University of BathAmy Glasmeier, Professor of Economic Geography and Regional Planning, Massachusetts Institute of Technology (MIT)David Bailey, Professor of Business Economics, University of BirminghamPeter Tyler, Professor in Urban and Regional Economics, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/977662018-06-15T10:45:47Z2018-06-15T10:45:47ZHow recycling more steel and aluminum could slash imports without a trade war<figure><img src="https://images.theconversation.com/files/222657/original/file-20180611-191951-t19imp.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A jumble of steel scrap</span> <span class="attribution"><span class="source">Daniel Cooper</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Many economists expect President Donald Trump’s <a href="https://www.bbc.com/news/world-us-canada-44320221">tariffs on imported steel and aluminum</a> to increase what American companies and consumers pay for those metals and the goods made from them. Dozens of companies have already said they will have to fire workers or even <a href="https://www.npr.org/2018/06/08/617200482/trumps-tariffs-worry-a-small-steel-city-in-pennsylvania">go out of business</a>. And, as the <a href="https://www.bbc.com/news/business-44345129">retaliatory tariffs</a> Canada, Japan, Mexico and other countries have announced underscore, the U.S. is heading for a <a href="https://theconversation.com/4-charts-showing-why-putting-tariffs-on-your-friends-is-a-bad-idea-97582">trade war</a> with the nation’s closest allies.</p>
<p>But having spent the last eight years researching how to make <a href="https://scholar.google.com/citations?user=4XQeuikAAAAJ&hl=en&oi=ao">the steel and aluminum industries more efficient</a>, I believe it’s possible for the U.S. to slash imports of these metals not by imposing duties but by boosting the reuse and recycling of old metal products.</p>
<p>Making far more of the nation’s discarded steel and aluminum scrap as good as new would have many advantages aside from its diplomatic dividends, such as <a href="http://www.mgg-recycling.com/wp-content/uploads/2013/06/BIR_CO2_report.pdf">cutting pollution</a> and <a href="http://recycling.world-aluminium.org/review/sustainability/">energy consumption</a>.</p>
<h2>The US market</h2>
<p>The U.S. makes most of its steel and aluminum by <a href="https://minerals.usgs.gov/minerals/pubs/commodity/iron_&_steel/mcs-2018-feste.pdf">recycling scrap metal from manufacturers and from discarded products</a> such as demolished buildings, old cars and thrown away cans. </p>
<p>The U.S. made <a href="https://minerals.usgs.gov/minerals/pubs/commodity/iron_&_steel/mcs-2018-feste.pdf">82 million metric tons of steel</a> in 2017, enough to form a continuous steel beam that could circle the globe eight times. Some 68 percent of that steel was made from scrap metal. </p>
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<p>The <a href="https://minerals.usgs.gov/minerals/pubs/commodity/aluminum/mis-201712-alumi.pdf">4.4 million metric tons of aluminum</a> the U.S. made in 2017 could be turned into a stack of soda cans tall enough to reach Mars. Some 83 percent of that aluminum was from recycled metal. </p>
<p>While this may sound like an impressive amount of recycling, I believe much more of America’s scrap metal could be recycled domestically. Researchers estimate that only <a href="http://www.dovetailinc.org/report_pdfs/2015/dovetailsteelrecycling0315.pdf">around 65 percent of old U.S. steel products</a> and <a href="https://www.sciencedirect.com/science/article/pii/S0921800912002339">between 40 and 65 percent of discarded American aluminum products</a> are collected for recycling. The rest of that metal ends up in landfills. </p>
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<p>The U.S. also exports much of the scrap metal that it does collect to countries like <a href="http://www.mylotrade.com/turkish-ferrous-scrap-imports-from-u-s.html">Turkey</a>, where it gets recycled.</p>
<p><a href="https://www.scrapmonster.com/news/us-aluminum-waste-and-scrap-exports-surged-20/1/66527">China has until now been</a> a leading importer of American scrap metal. But <a href="https://www.bloomberg.com/news/articles/2018-05-29/need-any-junk-scrap-metal-dealers-hunting-users-after-china-ban">it recently began to try to ward off scrap</a> metal imports <a href="http://www.waste360.com/metals/recycling-industry-responds-china-s-announcement-aluminum-scrap-tariffs">to retaliate against Trump’s tariffs</a> with stiff duties of its own.</p>
<h2>Trade deficits and surpluses</h2>
<p>The <a href="https://minerals.usgs.gov/minerals/pubs/commodity/iron_&_steel_scrap/mis-201712-fescr.pdf">U.S. exported 15 million metric tons of steel scrap and imported around 4 million metric tons of it</a> in 2017, running an 11 million metric ton trade surplus.</p>
<p>In the same year, the <a href="https://minerals.usgs.gov/minerals/pubs/commodity/aluminum/mis-201712-alumi.pdf">U.S. exported 1.6 million metric tons of aluminum scrap, and imported 700,000 metric tons</a>, running a 900,000 metric ton trade surplus.</p>
<p>Even though the U.S. exports and throws away tons of cheap scrap metal, America imports expensive new metals. It <a href="https://minerals.usgs.gov/minerals/pubs/commodity/iron_&_steel/mcs-2018-feste.pdf">exported 11 million metric tons of new steel and imported 36 million metric tons</a> of it in 2017 – running a 25 million metric ton trade deficit.</p>
<p>In the same year, the <a href="https://minerals.usgs.gov/minerals/pubs/commodity/aluminum/mis-201712-alumi.pdf">U.S. exported 1.3 million metric tons of new aluminum, and imported 6.2 metric tons</a> – a nearly 5 million metric ton trade deficit.</p>
<p>The <a href="http://www.politifact.com/truth-o-meter/statements/2018/mar/13/donald-trump/donald-trump-right-aluminum-steel-industries-have-/">Trump administration has deemed this valuable imported metal to be excessive</a> and a threat to American jobs and national security. Those concerns are what led to its decision to slap tariffs on imported steel and aluminum. </p>
<p>Regardless of whether those assertions are reasonable, I believe that these imports, nearly <a href="https://www.commerce.gov/file/effect-imports-aluminum-national-security-investigation-conducted-under-section-232-trade">two-thirds of the aluminum</a> and about <a href="https://www.trade.gov/steel/countries/pdfs/imports-us.pdf">one-third of the steel</a> the U.S. consumed in 2017, could be nearly entirely displaced if America were to step up its reuse of scrap metal. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=365&fit=crop&dpr=1 600w, https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=365&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=365&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=459&fit=crop&dpr=1 754w, https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=459&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/222459/original/file-20180609-191947-dqy9mg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=459&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Structural steel slated for reuse.</span>
<span class="attribution"><span class="source">Daniel Cooper</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>More sustainable</h2>
<p>As an already industrialized country, the U.S. needs <a href="https://pubs.acs.org/doi/abs/10.1021/es102273t">little new metal to meet domestic demand</a>.</p>
<p>This is because so many <a href="http://www.withbotheyesopen.com/">Americans already have all the cars, stoves, washing machines, offices and infrastructure</a> a society could need at a time when the <a href="http://www.worldometers.info/world-population/us-population/">U.S. population isn’t growing much</a>. The average per capita ownership of metal in the U.S. has remained flat for <a href="https://pubs.acs.org/doi/abs/10.1021/es102273t">nearly half a century at around 13 tons</a>.</p>
<p>Providing replacements for old cars and demolished buildings by reusing and recycling steel and aluminum is much <a href="http://www.withbotheyesopen.com/">more environmentally friendly than making metal from ore</a>. Mining iron ore and bauxite, the naturally occurring mineral containing aluminum, <a href="https://www.sciencedirect.com/science/article/pii/B9780128040409000048">destroys habitats and endangers plant and animal life</a>. </p>
<p>Converting these minerals into steel and aluminum <a href="https://www.bbc.com/news/world-europe-35428382">releases toxic byproducts</a> as well as <a href="https://pubs.acs.org/doi/abs/10.1021/es902909k">10 percent of all man-made greenhouse gas emissions</a>, according to the International Energy Agency.</p>
<p>Making <a href="http://www.withbotheyesopen.com/">steel from ore requires making iron first</a> using coke, a high-carbon fuel made by baking coal at over 1,000 degrees Celsius. Coke removes oxygen from the iron oxide in the ore, producing iron but inevitably creating carbon dioxide, a greenhouse gas then released to the atmosphere.</p>
<p>Between the bauxite mining, refining, smelting and casting processes, the aluminum industry is among the world’s <a href="http://climate.columbia.edu/files/2012/04/GNCS-Aluminum-Factsheet.pdf">most energy-intensive</a>. Despite some <a href="https://www.engineering.com/AdvancedManufacturing/ArticleID/16941/Revolutionary-Aluminum-Process-Eliminates-Emissions-Produces-Oxygen.aspx">promising technological breakthroughs</a>, the simplest way to make this flexible, durable and strong metal with less power and fewer emissions is by <a href="https://www.energy.gov/sites/prod/files/2013/11/f4/al_theoretical.pdf">recycling the metal</a>.</p>
<p>Recycling also <a href="http://www.withbotheyesopen.com/">has a much-smaller carbon footprint</a>. The greenhouse gas emissions for recycling steel are around one-quarter of what they are for making new steel, and recycling aluminum <a href="https://www.elsevier.com/books/materials-and-the-environment/ashby/978-0-12-385971-6">cuts emissions by more than 80 percent</a>. </p>
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<h2>Recycling challenges</h2>
<p>Recycling steel and aluminum entails melting the metals in large <a href="https://en.wikipedia.org/wiki/Electric_arc_furnace">electric arc</a> or <a href="https://en.wikipedia.org/wiki/Reverberatory_furnace#Aluminium_melting">gas-fired</a> furnaces and casting new metal.</p>
<p>Having a mix of metals in the furnace can <a href="https://www.thebalancesmb.com/an-introduction-to-metal-recycling-4057469">lower the recycled metal’s quality</a>. Steel that contains <a href="https://pubs.acs.org/doi/abs/10.1021/acs.est.7b00997">just 0.1 percent copper contamination can be liable to crack</a> during manufacturing.</p>
<p>So recyclers will try to separate discarded old products into piles of different metals before adding any to their furnaces. For example, they shred old cars into small pieces with large mechanical shears before <a href="https://www.thebalancesmb.com/an-introduction-to-metal-recycling-4057469">ferreting out the steel they want to recycle with magnets</a>.</p>
<p>This is hard to do well, especially when it comes to, say, removing the <a href="https://www.tudelft.nl/en/ceg/about-faculty/departments/engineering-structures/sections-labs/resources-recycling/research/steel-scrap/">copper wiring found in car electronics</a> from shredded steel scrap or <a href="https://pubs.acs.org/doi/abs/10.1021/es405604g">taking the steel rivets out of aluminum car panels</a>. </p>
<p>Because <a href="https://www.newyorker.com/magazine/2008/01/14/american-scrap">there is little demand for contaminated metal</a>, U.S. scrap dealers often <a href="https://www.sciencedirect.com/science/article/pii/S0921344917301520">sell it to buyers in developing countries</a> where low-paid workers sort through the discarded metal by hand.</p>
<p>I believe that increased federal support for metal recycling, such as funding research that would facilitate better <a href="http://gesingconsultants.com/publications/TMS2016%20REWAS%20%20Mg%20Electrorefining%20Results.pdf">scrap metal refining</a> and <a href="http://www.calrecycle.ca.gov/business/incentives.htm">low-interest loans or tax breaks for recyclers investing in the latest sorting and refining technology</a>, would cost Americans far less than the <a href="https://www.brookings.edu/blog/the-avenue/2018/03/06/how-trumps-steel-and-aluminum-tariffs-could-affect-state-economies/">potential consequences of the new tariffs</a>. It would also slash new steel and aluminum imports while reducing pollution.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/222458/original/file-20180609-191943-1cgiycf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Aluminum cans destined for recycling.</span>
<span class="attribution"><span class="source">Daniel Cooper</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure><img src="https://counter.theconversation.com/content/97766/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Cooper does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>If the US were to stop dumping these valuable metals in landfills and to cease exporting them as cheap scrap, its imports could fall, and there would be less of these metals being made from scratch.Daniel Cooper, Assistant Professor of Mechanical Engineering, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/770242017-05-02T14:56:13Z2017-05-02T14:56:13ZWorld Economic Forum needs to move beyond spin if it’s going to help Africa<figure><img src="https://images.theconversation.com/files/167534/original/file-20170502-17275-156zf8c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Africa needs to improve governance, build infrastructure, and reduce trade barriers to achieve inclusive growth.</span> <span class="attribution"><span class="source">REUTERS/Mohamed Nureldin Abdallah</span></span></figcaption></figure><p>Set against the backdrop of low growth, dire unemployment figures, and a huge infrastructure deficit – the theme of this year’s African <a href="https://www.weforum.org/events/world-economic-forum-on-africa-2017">World Economic Forum</a> (WEF) is “inclusive and sustainable growth”. </p>
<p>This is a familiar subject for policymakers. On both the regional and global stage it’s natural to speak in terms of market integration among groupings of nations to stimulate economic growth. Reducing bottlenecks to trade often serves as the focal point, with Free Trade Agreements (FTAs) typically the formal means of implementing these initiatives.</p>
<p>The idea behind all of this is that connected markets provide a larger base of customers into which companies can sell their products and services. And that, for their part, customers benefit from greater product diversity and value. This in turn creates a virtuous cycle in which a growing economy makes investment in the region more bankable. With greater access to funding, investment in needed capital projects can be accelerated, in turn reducing Africa’s sizeable infrastructure gap and stimulating inclusive growth.</p>
<p>Admittedly, this orthodox take on markets and growth is not firmly embraced across Africa. Rather, what remains prevalent is an emphasises on government intervention and the role of the ‘developmental state’ as seen in South Africa’s <a href="http://www.poa.gov.za/news/Documents/NPC%20National%20Development%20Plan%20Vision%202030%20-lo-res.pdf">National Development Plan </a>.</p>
<p>What’s not in dispute is the continent’s <a href="http://ftp01.economist.com.hk/ECN_papers/Infrastructure-Africa">infrastructure gap</a>. Road and rail transport costs in Africa are estimated to be about 50% greater than comparable regions in other parts of the world. And over 600 million people across the continent lack access to electricity while even greater numbers make do with sub-standard levels of drinking water and sanitation. </p>
<p>Estimates suggest that the continent needs as much as <a href="http://ftp01.economist.com.hk/ECN_papers/Infrastructure-Africa">$1 trillion</a> in invested capital over the next ten years to close the infrastructure gap. </p>
<p>The question is whether the WEF gathering can make a dent in this problem. In reading background studies to this year’s meeting, the forum seems more attuned to the world it would like to see, rather than the one at hand. To move beyond the “spin” the forum should address impediments to inclusive growth.</p>
<h2>New solutions to old problems?</h2>
<p>The WEF is not the first to have focused on market integration as a way to promote economic growth. The African Union Summit has recently taken steps to establish a continental <a href="https://theconversation.com/if-africa-is-serious-about-a-free-trade-area-it-needs-to-act-quickly-and-differently-70234">Free-Trade Area (FTA)</a> that would include all 54 African countries. This is on top of an alphabet soup of long established sub-regional groupings such as the East African Community, West African Community, Southern African Development Community (SADC). A grouping of these three FTAs stands as a Tripartite Free Trade Area covering a combined population of almost 600 million people.</p>
<p>Yet <a href="http://www.worldbank.org/en/news/speech/2015/12/14/deepening-african-integration-intra-africa-trade-for-development-and-poverty-reduction">trade between African nations</a> still represents only 12% of the continent’s total trade. This is far below levels seen in North America (40%), Asia (50%) and Western Europe (70%), and is often cited as an impediment to Africa’s economic development.</p>
<p>SADC’s recent history provides a useful perspective to the successes and failures of African FTAs. SADC was established in its modern form in 1992, having a mandate to promote integration of economic development programmes among member states. At its 2003 <a href="http://www.sarpn.org/documents/d0000492/P462_SADC_Communique_082003.pdf">Dar es Salaam Summit</a> it adopted an ambitious 15 year programme in which a free trade arrangement, customs union, common market and ultimately a regional monetary union were to be established. </p>
<p>While piecemeal progress has been made since then, the plan’s more ambitious aspects have been largely set aside. <a href="http://www.kas.de/upload/auslandshomepages/namibia/MRI2010/MRI2010_chapter8.pdf">Post mortems</a> cite a range of protectionist measures that are defeating its objectives. These include the reluctance of member states to wind back tariffs on goods and services, provisions promoting local content, subsidised industry assistance and visa restrictions. </p>
<p>The <a href="https://www.weforum.org/reports/the-inclusive-growth-and-development-report-2017">WEF</a> has replaced the language of FTA’s and customs unions with the call for “connecting markets, revitalising manufacturing, and integrating innovation”. The practical side of this focuses on industrial corridors in transport, energy markets and financial services and e-commerce.</p>
<p>Here too the SADC was ahead of the curve in terms of planning and adopting a regional infrastructure master <a href="http://www.sadc.int/files/7513/5293/3530/Regional_Infrastructure_Development_Master_Plan_Executive_Summary.pdf">plan</a> in 2012. This sector based “corridor” approach to development is meant to be rolled out across energy, transport, water and telecommunications. </p>
<p>But where the SADC has been quick to plan – it has fallen down in implementation. </p>
<h2>Old problems stand in the way of new solutions</h2>
<p>A report by the <a href="http://www.tips.org.za/files/report_on_regional_infrastructure_development_in_africa_tips_-_ellen_hagerman.pdf">Development Bank of Southern Africa </a> concludes that few measures to facilitate trade have yielded measurable results. National interests have tended to override regional objectives. Local and global protectionist trends have only made this more pervasive.</p>
<p>The <a href="http://www.sadc.int/files/5413/5293/3528/Regional_Infrastructure_Development_Master_Plan_Energy_Sector_Plan.pdf">SADC Energy Plan</a> may become the next non-starter in infrastructure development. So far, it has identified power generation and transmission projects costing between US$ 90 billion to over US$ 200 billion. No doubt some development finance will be allocated to these projects, but the bulk of the required investment is unlikely to move beyond countless feasibility plans.</p>
<p>Obtaining the hundreds of billions needed in power markets alone will require improved standards of governance and regulation. But member states often struggle in these areas, and comprehensive reform across the region seems an unlikely outcome until these fundamental issues are addressed. </p>
<h2>Is rhetoric better than reality?</h2>
<p>It seems incongruous that the WEF talks about the region as the least competitive globally, but follows with the observation that “fortunately, there are <a href="https://www.weforum.org/events/world-economic-forum-on-africa-2017">regional clusters</a> of global manufacturing excellence”. </p>
<p>This is not to discount clusters of excellence. But the WEF’s reference to an African Outer Space Programme within the context of growing a manufacturing base, and pointing to drones as a solution to the continent’s transport woes, is, at best, naive. </p>
<p>Hopefully the meeting will rise above the spin, and make a meaningful attempt at addressing the dire economic conditions affecting the lives of hundreds of millions of people across Africa.</p><img src="https://counter.theconversation.com/content/77024/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr Labson has previously received funding from the US Department of Agriculture to carry out research on international trade policy. He has received no payment or funding for writing this article.</span></em></p>The need to connect African markets to aid development will once again be discussed at the World Economic Forum. The debate needs to move beyond the usual rhetoric.Stephen Labson, Director, Trans African Energy, and Senior Research Fellow, University of JohannesburgLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/575062016-04-11T15:11:46Z2016-04-11T15:11:46ZNine ways steel could build a greener economy<figure><img src="https://images.theconversation.com/files/118160/original/image-20160411-21986-1gfydsw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shestakov Dmytro / shutterstock</span></span></figcaption></figure><p>Steel might be the largest <a href="https://www.oecd.org/sti/ind/45010081.pdf">industrial carbon dioxide emitter</a>, but Britain’s troubled industry could be a big part of a cleaner, greener future.</p>
<p>By using steel to build new infrastructure for renewable energy, the UK could create a virtuous circle of improvement for its industry and growth.</p>
<p>Ignore calls to subsidise additional supply in a market where there is already too much steel to go round. Britain instead needs a <a href="https://theconversation.com/if-the-government-is-serious-about-reviving-british-industry-heres-what-needs-to-be-done-42019">proactive industrial strategy</a> to stimulate demand for its steel, and one that has <a href="http://www.theguardian.com/sustainable-business/2016/apr/07/tata-steel-port-talbot-build-uk-wind-turbines-green-economy">sustainability at its heart</a>.</p>
<p>Here are nine ways steel could be used in a clean industrial transformation:</p>
<h2>1. Build an enormous tidal power station</h2>
<p>This is the <a href="http://www.clickonwales.org/2016/04/beyond-the-drawing-board/">long-mooted plan</a> to build an enormous tidal power station across the Severn Estuary. Around 1.5m tonnes of steel would be required for turbines, embankments and to <a href="http://www.sciencedirect.com/science/article/pii/S0360544212004033">reinforce the concrete</a> – a good chunk of the UK’s current annual output of <a href="http://www.theguardian.com/business/2016/apr/02/port-talbot-struggles-see-life-beyond-steel-tata">10m tonnes</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/118162/original/image-20160411-21972-189pury.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118162/original/image-20160411-21972-189pury.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118162/original/image-20160411-21972-189pury.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118162/original/image-20160411-21972-189pury.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118162/original/image-20160411-21972-189pury.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118162/original/image-20160411-21972-189pury.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118162/original/image-20160411-21972-189pury.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The first of many Severn Barrage proposals. More modern designs are based on steel.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:ThomasFulljamesSevernBarrage01.jpg">Thomas Fulljames (1849)</a></span>
</figcaption>
</figure>
<h2>2. Make more wind turbines</h2>
<p>Anchoring wind turbines to the ground or seabed requires vast amounts of concrete reinforced with steel. Onshore wind uses an average of 160 tonnes of steel per megawatt, according to one <a href="https://www.worldsteel.org/dms/internetDocumentList/bookshop/Sustainable-steel-at-the-core-of-a-green-economy/document/Sustainable-steel-at-the-core-of-a-green-economy.pdf">2011 estimate</a>, while offshore the figure rises to 450 tonnes. </p>
<p>Although <a href="http://fhr.nuc.berkeley.edu/wp-content/uploads/2014/10/05-001-A_Material_input.pdf">fossil fuel and nuclear power station</a> require much less, they still rely on other finite resources. If the UK is serious about exploiting its <a href="http://publicinterest.org.uk/offshore/">fantastic wind resources</a> it will need a lot of steel for the domestic market, with a view to eventually exporting turbine technology to other nations.</p>
<h2>3. Expand high speed rail</h2>
<p>Better rail links would mean people taking trains instead of cars or carbon-intensive domestic flights. But, again, this will require lots of steel.</p>
<p>Every kilometre of new high speed railway requires <a href="http://www.networkrail.co.uk/5878_Comparingenvironmentalimpactofconventionalandhighspeedrail.pdf">282 tonnes of steel</a> for the rails themselves. <a href="http://www.bathnes.gov.uk/sites/default/files/sitedocuments/Planning-and-Building-Control/Planning/nr_a_guide_to_overhead_electrification.pdf">Overhead line equipment</a> – the masts, gantries and overhead wires – add a further <a href="http://www.networkrail.co.uk/5878_Comparingenvironmentalimpactofconventionalandhighspeedrail.pdf">500 tonnes per km</a>, and tunnels and bridges also need reinforcing. Conventional electrified rail will also require new rolling stock – an average train is around <a href="http://www.networkrail.co.uk/5878_Comparingenvironmentalimpactofconventionalandhighspeedrail.pdf">57% steel, or 27 tonnes</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=281&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=281&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=281&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=353&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=353&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118176/original/image-20160411-21989-mib6md.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=353&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Steel everywhere.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/mattbuck007/3687049201/">Matt Buck</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>There are proposals for an <a href="http://www.railmagazine.com/infrastructure/new-railways/hs2/now-we-need-hs2-hs3-and-hs4">HS3 line to Newcastle</a> along with an <a href="http://www.bristolpost.co.uk/Opinion-South-West-needs-HS4-Peter-Musgrove/story-26005474-detail/story.html">HS4 to connect Bristol and the West Country with London</a>. A Severn Barrage could also create a new transport corridor into Wales as Brunel’s tunnel is already at capacity. These hundreds of kilometres of new line could transform regional economies, rebalance the UK – and boost demand for steel.</p>
<h2>4. Turn steel into solar panels</h2>
<p>Steel can be “sprayed” with <a href="http://www.steelpv.eu/">photovoltaic material</a> to create roofs and facades that can harvest solar energy. Researchers are evaluating thin film silicon, chalcopyrite and <a href="https://theconversation.com/how-trillions-of-tiny-solar-panels-could-power-the-internet-of-things-50023">organic solar</a> to find the best solution.</p>
<p>It won’t overtake regular solar panels just yet but, given roofs cover <a href="http://ukerc.rl.ac.uk/cgi-bin/ercri7.pl?GChoose=gecatsum&GRN=EP/I019278/1&GSumCat=03-01-02&GCatSum=4&HTC=1B1FABE1&SHTC=768B4EB&SSHTC=64164CB&SSSHTC=39515B">1.8% of the UK’s land</a>, the potential is enormous.</p>
<h2>5. Heat your home – directly</h2>
<p>Academics at <a href="http://sbed.cardiff.ac.uk/transpired-solar-collectors/">Cardiff University</a> have been working on a neat way to keep your home warm, using profiled perforated steel mounted on the south-facing walls of buildings. It is specially-treated to absorb as much solar energy as possible. The sun creates a warm boundary layer of air around the steel sheet, which a fan then distributes through the building.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=305&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=305&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=305&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=383&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=383&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118171/original/image-20160411-21959-1fp9uqz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=383&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">These heating systems are known as Transpired Solar Collectors.</span>
<span class="attribution"><a class="source" href="http://sbed.cardiff.ac.uk/transpired-solar-collectors/">Cardiff Uni / SBED</a></span>
</figcaption>
</figure>
<h2>6. Build big solar farms</h2>
<p>Large-scale solar plants can also use <a href="http://www.solarsteel.co.uk/">mounting systems made from steel</a>. Government subsidy cuts have caused the UK solar industry to <a href="http://www.solarpowerportal.co.uk/news/feed_in_tariff_solar_deployment_continues_to_falter_under_new_rates_1404">falter</a>, but past performance has shown its potential. </p>
<h2>7. Next generation pylons</h2>
<p>The pylons familiar to most British people were <a href="http://www.theguardian.com/commentisfree/2015/apr/13/electricity-pylons-britain-duller-place-national-grid-t-pylon-design">designed in 1928</a>. Demand from electric vehicles will soon grow massively, heating is becoming electric rather than gas-powered, and small-scale wind and solar generation all needs to be linked up.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/118174/original/image-20160411-21965-15iqra8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118174/original/image-20160411-21965-15iqra8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118174/original/image-20160411-21965-15iqra8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118174/original/image-20160411-21965-15iqra8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118174/original/image-20160411-21965-15iqra8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118174/original/image-20160411-21965-15iqra8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118174/original/image-20160411-21965-15iqra8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Upgrade needed.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/karen_roe/4457531355/">Karen Roe</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>This new electricity infrastructure will require new plyons, which may be welcome news for the <a href="http://www.pylons.org/">Pylon Appreciation Society</a>. In Iceland, pylons have been elevated to an art form that <a href="http://www.dailymail.co.uk/news/article-3248509/Not-blot-landscape-Icelandic-architects-create-series-designs-statue-like-electricity-pylons-shaped-like-humans.html">adds to the landscape</a>.</p>
<h2>8. Lightweight futuristic electric cars</h2>
<p>Tesla has gone back to steel for its latest car, the Model 3. After initially using composites, the company said the <a href="http://www.thecountrycaller.com/87813-tesla-tsla-model-3-balances-steel-use-by-cutting-weight-global-equities/">cost and mass production advantages</a> of steel were too strong to ignore. </p>
<p>Yet steel doesn’t have to mean bulky and inefficient. The <a href="https://www.worldsteel.org/dms/internetDocumentList/bookshop/Sustainable-steel-at-the-core-of-a-green-economy/document/Sustainable-steel-at-the-core-of-a-green-economy.pdf">Future Steel Vehicle</a> concept achieves body mass savings of 35% compared to standard vehicles, and shows weight reduction is possible without ditching steel. </p>
<h2>9. Steel plants can keep us warm</h2>
<p>The huge furnaces found at steel plants could be connected to local heating networks. At present, steel producers consider all that heat a costly byproduct. They even have to cool the water used in the manufacturing process between each use, which requires lots of energy. However, in harnessing the waste heat and selling it to consumers, they could even turn a profit.</p>
<p>Such a scheme already exists in <a href="https://www.theengineer.co.uk/excess-heat-from-steel-plants-could-be-used-to-heat-sheffield/">Sheffield</a> and could be extended to other steel towns such as Scunthorpe or Port Talbot.</p><img src="https://counter.theconversation.com/content/57506/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gavin D. J. Harper does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The industry itself is a big polluter, but lots of environmentally important technologies depend on steel.Gavin D. J. Harper, Visiting Researcher, Centre for Solar Energy Research at Glyndwr University, and Energy Development Manager, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/559392016-03-14T05:50:51Z2016-03-14T05:50:51ZFactCheck Q&A: can foreign seafarers be paid $2 an hour to work in Australian waters, under laws passed by Labor?<figure><img src="https://images.theconversation.com/files/114832/original/image-20160311-11264-twnp47.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Employment Minister Michaelia Cash and the opposition's Penny Wong appearing on Q&A with host Tony Jones.</span> <span class="attribution"><span class="source">Q&A</span></span></figcaption></figure><p><strong>The Conversation is fact-checking claims made on Q&A, broadcast Mondays on the ABC at 9:35pm. Thank you to everyone who sent us quotes for checking via <a href="http://www.twitter.com/conversationEDU">Twitter</a> using hashtags #FactCheck and #QandA, on <a href="http://www.facebook.com/conversationEDU">Facebook</a> or by <a href="mailto:checkit@theconversation.edu.au">email</a>.</strong></p>
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<figcaption><span class="caption">Excerpt from Q&A, March 7, 2016.</span></figcaption>
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<blockquote>
<p>MATTHEW LAWRENCE (audience member): I’m an unemployed Australian merchant seafarer. Why would any government in their right mind replace tax paying Australian seafarers with exploited foreign seafarers working on 457 visas, working for as low as $2 an hour?</p>
<p>… MICHAELIA CASH: Thank you very much for the question. Just to be sort of sure here, everything that you are referring to is currently happening under the legislation that the Labor Party brought in, in 2012…<strong>– Federal Minister for Employment and Women, Michaelia Cash, responding to audience member Matthew Lawrence <a href="http://www.abc.net.au/tv/qanda/txt/s4405538.htm">on Q&A</a>, March 7, 2016.</strong></p>
</blockquote>
<p>For Australian miners, manufacturers or other firms, it can be cheaper to send cargo by sea – from one Australian port to another – than sending it by road or rail.</p>
<p>On Q&A, an unemployed merchant seafarer said Australian seafarers could replaced by foreign seafarers working on 457 visas, working for as little as $2 an hour. </p>
<p>The question came after <a href="http://www.mua.org.au/noise_outside_garners_q_a_attention">the Maritime Union of Australia</a> (MUA) had spent weeks trying to get a question put to the panel on seafaring jobs. According to the MUA, audience member <a href="http://www.mua.org.au/mua_member_matt_lawrence_on_abc_qanda">Matthew Lawrence</a> is a union member.</p>
<p>This has been a controversial issue for months, after the government granted aluminium producer Alcoa a <a href="http://www.alcoa.com/australia/en/news/releases/2016_01_13_moves_to_end_illegal_industrial_action.asp">temporary licence</a> in 2015 to use a ship crewed by foreign workers <a href="http://www.abc.net.au/news/2015-11-13/alcoa-under-fire-for-hiring-foreign-ship-crew-to-move-cargo/6937030">to transport alumina</a> between Western Australia and Victoria. The firm wanted to use the foreign-manned vessel for the domestic route after selling its own ship, the ageing MV Portland.</p>
<p>The union protested the granting of the temporary licence, saying <a href="https://d3n8a8pro7vhmx.cloudfront.net/muanational/pages/3455/attachments/original/1447048738/MV_Portland_Crew_Statement.pdf?1447048738">Australian workers may have been able to do the job</a>. Alcoa <a href="http://www.alcoa.com/australia/en/news/releases/2016_01_13_moves_to_end_illegal_industrial_action.asp">said</a> it sought a quote for the job from a company with Australian-flagged ships, but received no reply.</p>
<p>The <a href="https://www.legislation.gov.au/Details/C2012A00055/Html/Text#_Toc327452028'">Federal Court ruled in 2015</a> that while there were problems with the way the government notified interested parties about Alcoa’s application, the licence remained valid.</p>
<p>The issue was debated at length on Q&A and you can read the comments in context in the <a href="http://www.abc.net.au/tv/qanda/txt/s4405538.htm">transcript here</a>.</p>
<p>This FactCheck aims to answer two key questions about what’s allowed under Australian law: </p>
<ul>
<li>Can foreign seafarers on as little as $2 an hour work on domestic shipping routes in Australian waters?</li>
<li>And was Employment Minister Michaelia Cash right that this is allowed under legislation passed by Labor in 2012?</li>
</ul>
<h2>Can foreign seafarers on $2 an hour work on domestic shipping routes in Australian waters?</h2>
<p>It is true foreign crew on roughly US$2 an hour can work on domestic shipping routes in Australian waters – though only under certain conditions. </p>
<p>But it is wrong to say this can happen using 457 visas. </p>
<p>The <a href="https://www.legislation.gov.au/Details/C2012A00055/Html/Text#_Toc327452028">Coastal Trading (Revitalising Australian Shipping) Act 2012</a>, passed by the Gillard government (and <a href="http://www.mua.org.au/shipping_reform_passing_parliament_will_save_australia_s_shipping_industry">supported by the Maritime Union of Australia</a>), allows for the granting of temporary licences, subject to certain conditions.</p>
<p>These temporary licences allow companies to use foreign ships and foreign crews working under a <a href="https://www.border.gov.au/Trav/Visa-1/Spec">special purpose visa</a> to transport goods between Australian ports.</p>
<p>These foreign workers can be paid under “existing international arrangements” for the first two domestic voyages in Australian coastal waters.</p>
<p>What’s that mean in wage terms? Brandt Wagner, head of the Transport and Maritime Unit at the International Labour Organisation, an agency of the United Nations in Geneva, told The Conversation by email that:</p>
<blockquote>
<p>The <a href="http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---sector/documents/meetingdocument/wcms_250409.pdf">current minimum monthly basic pay or wage figure for able seafarers</a>, which became effective on January 1, 2016, is currently US$614. The International Labour Organisation does not refer to an hourly figure but only the monthly figure.</p>
</blockquote>
<p>The International Transport Workers’ Federation says a typical able seafarer may work around <a href="http://www.itfseafarers.org/files/seealsodocs/33560/itfuniformtcccba20122014.pdf">around 263 hours a month</a> (40 hours a week plus 103 hours of overtime). </p>
<p>That gets you an average hourly rate of around US$2.33 (roughly A$3.11 in Australian dollars). A little over, but not far off the figure cited by Matthew Lawrence on Q&A. This rate is well below the Australian award wage.</p>
<p>Dean Summers, an inspector with the <a href="http://www.itfglobal.org/en/transport-sectors/seafarers/">International Transport Workers’ Federation</a> (ITF), said the ITF was aware of a foreign-flagged vessel working in Australian waters that paid close to $US2 an hour for foreign seafarers working on the vessel.</p>
<blockquote>
<p>The already paltry wage is not a requirement and there are many ships trading on our coast that are not paying the US$2.10 figure as it is not regulated… The reality is that there are zero minimum wages for international seafarers. The international shipping lobbyists quote an International Labor Organisation minimum rate of US$1000 per month but that is a voluntary figure and completely unenforceable in any jurisdiction.</p>
</blockquote>
<p>You can read his full response <a href="https://theconversation.com/full-response-from-the-international-transport-workers-federation-and-maritime-union-of-australia-56270">here</a>. </p>
<p>Under the law, however, a temporary licence holder is allowed to use foreign crews paid under existing international arrangements for only the first two domestic voyages per temporary licence granted. </p>
<p>A spokesman for Employment Minister Michaelia Cash told The Conversation by email that:</p>
<blockquote>
<p>The true situation on foreign worker wages is that when a foreign vessel operates domestically (which can only happen under a temporary licence), the crew are paid under whatever existing international arrangements apply on that vessel for the first two domestic voyages only. From the third domestic voyage onwards, crew on foreign vessels must be paid no less than the Australian Award. The Australian Award (set by the Fair Work Commission) expressly includes pay rates for workers on foreign vessels … Any suggestion that temporary licences are being used to engage a foreign crew on $2 an hour as a permanent replacement for Australian crew is wrong and nothing more than a scare campaign of misinformation being run by the MUA and Labor.</p>
</blockquote>
<p>You can read the spokesman’s full response <a href="http://theconversation.com/full-response-from-a-spokesman-for-michaelia-cash-and-penny-wong-56131">here</a>, as well as a comment from a spokeswoman for Opposition Senate Leader Penny Wong, who was part of the same Q&A discussion.</p>
<p>So yes, foreign seafarers working for roughly US$2 an hour can work on ships moving cargo between Australian ports, as long as it’s on a foreign vessel operating under a temporary licence. But this can only happen on the first two domestic voyages.</p>
<h2>Was the minister right that this is allowed under legislation passed by Labor in 2012?</h2>
<p>The short answer is yes, Senator Cash is right. </p>
<p>As established above, the <a href="https://www.legislation.gov.au/Details/C2012A00055/Html/Text#_Toc327452028">Coastal Trading (Revitalising Australian Shipping) Act 2012</a> passed by the Gillard government expressly allows for companies to apply for a temporary licence to use a foreign ship with a foreign crew moving material from one part of coastal Australia to another.</p>
<p>Among the objects of the Act is promotion of a viable shipping industry that contributes to the broader Australian economy and facilitation of the long term growth of the Australian shipping industry.</p>
<p>The work must first be advertised locally to give local ships an opportunity to respond to the work.</p>
<p>So why is this even up for debate? It’s because in the MV Portland case, the Maritime Union of Australia <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCAFC/2015/187.html?stem=0&synonyms=0&query=%22Ms%20JD%20Williams%22">argued in court</a> that problems with the way Alcoa’s application for a temporary licence was advertised may have put local operators at a disadvantage.</p>
<p>The Federal Court <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCAFC/2015/187.html?stem=0&synonyms=0&query=%22Ms%20JD%20Williams%22">decided</a> while the government didn’t publish the notice in compliance with the law, the temporary licence was still valid.</p>
<h2>Verdict</h2>
<p>Foreign seafarers working for roughly US$2 an hour <em>can</em> work on ships moving cargo between Australian ports, as long as it’s on a foreign vessel operating under a temporary licence. But this can only happen on the first two domestic voyages. </p>
<p>It is wrong to say this can happen using 457 visas. </p>
<p>The minister was right to say those foreign seafarer and temporary licence rules are covered by the legislation passed by the Labor government in 2012. <strong>– Joanna Howe</strong></p>
<hr>
<h2>Review</h2>
<p>This is a sound analysis. The author correctly notes that the current law, passed under the last Labor government in 2012, does allow for firms to apply for and be granted temporary licences that allow the use of foreign-manned vessels to transport goods from one Australian port to another. This is subject to conditions, including that the work be advertised locally first and that the licence holder use foreign workers for no more than the first two domestic voyages undertaken under the licence. </p>
<p>Given the International Labour Organisation puts the minimum wage for able seafarers at US$614 a month, and given that a standard month of work would be around 260 hours, it is fair to say this works out at an average wage of between US$2 and US$3 an hour. <strong>– Tess Hardy</strong></p>
<hr>
<p><em>UPDATE: This story was updated at 11.04am AEST on March 15 to include quotes from a spokesman from the International Transport Workers Federation, and a link to his full response <a href="https://theconversation.com/full-response-from-the-international-transport-workers-federation-and-maritime-union-of-australia-56270">here</a>.</em></p>
<p><div class="callout"> Have you ever seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/55939/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tess Hardy has previously received ARC Linkage funds and separate funding from the Fair Work Ombudsman.</span></em></p><p class="fine-print"><em><span>Joanna Howe does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>On Q&A, an unemployed merchant seafarer said Australian seafarers could replaced by foreign seafarers working on 457 visas, working for as little as $2 an hour. We check the facts.Joanna Howe, Senior Lecturer in Law, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/438732015-07-02T04:19:53Z2015-07-02T04:19:53ZHow Africa can overcome being marginalised in the global economy<figure><img src="https://images.theconversation.com/files/86497/original/image-20150626-18214-1a0e7ml.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Asymmetries in the regulation of global trade in goods and services as well as finance have serious implications for Africa.</span> <span class="attribution"><span class="source">Reuters/Toby Melville</span></span></figcaption></figure><p>One of the challenges facing African countries is that the global environment is rather unfriendly. This hampers their efforts to gainfully tap into global markets.</p>
<p>Additionally, African economies are hindered by them still depending heavily on external assistance. Domestic revenue mobilisation is substantially below potential and progress in this area is very slow. </p>
<p>How to handle these challenges has typically focused on what African countries should do to improve their positions, and what their development partners or donors should do to improve the continent’s economic fate. </p>
<p>Much less attention has been given to the role of global governance. This is important because features of the global governance architecture are holding back efforts at the national, bilateral and multilateral levels, undermining national policy and international co-operation.</p>
<p>Global governance has become more relevant in the context of increasing global economic interdependence. This is because globalisation is characterised by important asymmetries that have substantial implications for African economies.</p>
<h2>Financial flows are outstripping trade growth</h2>
<p>Take the governance of trade and finance.</p>
<p>Financial flows have expanded rapidly in recent decades. This has included foreign direct investment, portfolio flows and cross-border mergers and acquisitions. This expansion has been facilitated by financial liberalisation and deregulation at the national level, as well as the proliferation and rapid growth of offshore finance.</p>
<p>Finance has outpaced <a href="http://unctad.org/en/Pages/Statistics.aspx">trade</a> in goods in size, scope, and sophistication over the past decades. Between 1980 and 2012, capital flows grew five times faster than exports. </p>
<p>Substantial efforts have been made to establish and strengthen global frameworks to regulate trade in goods. But no equivalent structure exists for global finance.</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/86502/original/image-20150626-18218-zcg3uf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/86502/original/image-20150626-18218-zcg3uf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/86502/original/image-20150626-18218-zcg3uf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/86502/original/image-20150626-18218-zcg3uf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/86502/original/image-20150626-18218-zcg3uf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/86502/original/image-20150626-18218-zcg3uf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/86502/original/image-20150626-18218-zcg3uf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Unregulated finance has facilitated the expansion of capital flight and illicit financial flows from African countries.</span>
<span class="attribution"><span class="source">Reuters/Carlo Allegri</span></span>
</figcaption>
</figure>
<p>Quite the opposite. There has been an increasing deregulation of finance. This has serious implications. Unregulated financial flows increase the fragility of national and regional financial systems through higher contagion across the globe. </p>
<p>Globalisation and unregulated finance have also facilitated the expansion of capital flight and illicit financial flows from African countries. In the four decades to 2010, Africa lost about US$1.3 trillion through capital <a href="http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_351-400/WP363.pdf">flight</a>, or US$1.7 trillion including interest earnings. This vastly exceeds the continent’s liabilities to the rest of the world. Ironically, this has made the most capital-starved continent a net creditor to the rest of the world. </p>
<p>Regulating global finance requires addressing weaknesses and systemic issues. At the national level the key issues to tackle are transparency and accountability in trade and capital account transactions. This includes looking at import and export mis-invoicing, an important channel of capital flight. </p>
<h2>Capital can move easily – labour can’t</h2>
<p>There is also a mismatch between the movement of labour and capital. Globalisation has been accompanied by increasing capital mobility. Comparatively, labour is more strictly regulated. </p>
<p>This means that the tax burden falls disproportionately on labour compared to capital. Increased capital mobility favours capital owners relative to workers and large companies relative to small and medium enterprises. </p>
<p>The taxes paid by workers and small and medium enterprises are used in part to cover the tax holidays that large foreign investors enjoy. As a result income inequalities deepen, while the provision of public infrastructure and social services is held back. Workers are affected more than capitalists who can afford private services in or outside the country.</p>
<h2>Domestic resources need to mobilised</h2>
<p>Traditionally the focus has been on efforts to increase official development aid and facilitate access to markets for African countries. But we now know now that aid volumes will not increase meaningfully in the foreseeable future.</p>
<p>It is time to shift the focus towards helping African countries to mobilise more of their own domestic resources.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/86871/original/image-20150630-5864-1ykz74f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/86871/original/image-20150630-5864-1ykz74f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/86871/original/image-20150630-5864-1ykz74f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/86871/original/image-20150630-5864-1ykz74f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/86871/original/image-20150630-5864-1ykz74f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/86871/original/image-20150630-5864-1ykz74f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/86871/original/image-20150630-5864-1ykz74f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">It is time African countries mobilised own domestic resources, including bringing the growing urban real estate sector into the tax net.</span>
<span class="attribution"><span class="source">Reuters/Akintunde Akinleye</span></span>
</figcaption>
</figure>
<p>This involves helping countries expand their tax base, including bringing the growing urban real estate sector into the tax net. It also involves increasing the transparency and user friendliness of tax systems and building investigative skills to track and prosecute evasion. </p>
<p>Also, national development policies need to be geared towards building stronger productive capacities. For this to happen greater country ownership is needed. Two important dimensions stand out.</p>
<p>African countries need to move away from the “do no harm” approach to macroeconomic policy. They need to consider using it beyond the confines of macroeconomic stabilisation to actively supporting national development strategies.</p>
<p>Countries have been trapped into a minimalist approach that confines the role of macroeconomic policy to keeping inflation at low single digit levels, explicitly at a magic 5%. This rewards the few occasional stellar performers able to bring down inflation regardless of progress in real development. This is a rather cynical view of policy making. Governments can do better.</p>
<p>The second dimension is the need to embrace industrial policy as the cornerstone of national development policies. This requires a philosophical and ideological shift to overcome the negative view of goverenment’s role in economic development.</p>
<h2>Africa needs a unified voice in the global arena</h2>
<p>Up to now the global governance architecture has been founded on a very simple principle: economic size. Representation is determined by the size of a country’s economy. Given that this principle was established a long time ago it naturally favours old economies such as Europe and North America.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/86504/original/image-20150626-18257-1sm4j29.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/86504/original/image-20150626-18257-1sm4j29.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=409&fit=crop&dpr=1 600w, https://images.theconversation.com/files/86504/original/image-20150626-18257-1sm4j29.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=409&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/86504/original/image-20150626-18257-1sm4j29.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=409&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/86504/original/image-20150626-18257-1sm4j29.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=514&fit=crop&dpr=1 754w, https://images.theconversation.com/files/86504/original/image-20150626-18257-1sm4j29.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=514&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/86504/original/image-20150626-18257-1sm4j29.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=514&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Africa is inadequately represented in institutions such as the World Bank and the IMF.</span>
<span class="attribution"><span class="source">Reuters/Gary Cameron</span></span>
</figcaption>
</figure>
<p>Global governance is gradually shifting towards elite multilateralism where deliberations on vital issues are held in small clubs of large economies. This is marginalising more representative bodies such as the United Nations and its affiliated organisations.</p>
<p>What options does Africa have to address this? The large African economies, namely South Africa, Nigeria, Algeria, and Egypt can embrace their leadership destiny and champion a unified African voice in the global arena. </p>
<p>The consolidation of regional integration is also a powerful strategy for increasing Africa’s voice. Integration would enable the continent to develop larger regional markets and build capacity to initiate African solutions to Africa’s economic and political problems. </p>
<p>The combination of these two options is Africa’s winning strategy in an increasingly integrated yet marginalising global economy. </p>
<hr>
<p><em>This article is based on the author’s paper published in a Yale Center for the Study of Globalization’s <a href="http://www.ycsg.yale.edu/assets/downloads/africa.pdf">book</a>, Africa at a Fork in the Road: Taking Off or Disappointment Once Again?</em></p><img src="https://counter.theconversation.com/content/43873/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Léonce Ndikumana does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Efforts to address Africa’s developmental challenges are hampered by features of the global governance architecture that undermine national policy and international cooperation.Léonce Ndikumana, Professor of Economics & Director of the Africa Policy Program, PERI, UMass AmherstLicensed as Creative Commons – attribution, no derivatives.