The first
industrial revolution dates back to the 1700s. This saw the transformation of
agriculture societies into industrialized and urban ones. Thomas
Newcomen’s design of the steam changed everything and allowed free
movement of goods and labor. Goods that had once been crafted by hand
started to be produced in mass quantities by machines in factories, thanks to
the introduction of new machines and techniques in textiles, iron making and
other industries.
Second Industrial
revolution was marked by rapid industrialization and standardization. This took
place between 1870 and 1914 and came with the expansion of the electronics,
steel and textile industry. These advancements enabled the wide spread of
technologies such as telegraph, railroad networks, water supply, sewage systems
and all. It was actually the telegraph and railroad lines that started the mass
movement of ideas and people leading to the first signs of globalization, a
prelude to today’s society.
We are presently in
the ending phase of the third industrial revolution better known as the digital
revolution. This has seen the advent of super computers and rapid advancements
in the internet that have further redefined how people and business transact.
It’s also safe to say that we are standing on the palisade of the forth
industrial revolution. Unlike the previous other iterations, this revolution
seeks to marry physical, digital, and biological spheres to foster an
inclusive, human-centered future. Another stark difference with the former
revolutions is the deep rooted desire to leverage technology to achieve the
greatest good for the most number of people possible.
Moving forward we
are expecting to see more prevalent use of technologies such as 3-D printing.
This phenomenon has brought down the costs of labor and material. Fifth
generation wireless technology (5G) capable of reaching 100Gbps is focused on
increasing bandwidth to be smarter and faster than ever before. It’s this
technology that will power the self-driving cars and internet of things (IoT)
just to mention a few.
Self-Driving Cars
Since
May of 2019 UPS has been using self-driving trucks to ship goods
between Phoenix and Tucson, Arizona. Recently Land O’ Lakes announced that
they delivered butter from Tulare, California, to Pennsylvania (almost
2,700miles) using self-driving trucks. These self-driving vehicles are designed
to optimize traffic and fuel. It’s been reported that 1.24 million people die
each year of collisions and this number is expected to reach 2.2 million in
2030 according to the World Health Organization (WHO), According to a
study by the Eno Centre for
Transportation, if about 90% of cars on American roads were autonomous, the
number of accidents would fall from six million a year to 1.3 million and
deaths would fall from 33,000 to 11,300.
Internet of Things
(IoT) devices are taking human interaction out of the equation.
Today, consumers are using the IoT to make restaurant reservations,
monitor their exercise progress and overall health, and receive coupons for a
store only by virtue of walking by the business in question. Take an example in
agriculture, devices using IoT technology can sense soil moisture and
nutrients, in conjunction with weather data, better control smart irrigation
and fertilizer systems. If the sprinkler systems dispense water only when
needed, for example, this prevents wasting a precious resource. In
manufacturing RFID and GPS technology can help a manufacturer track a product
from its start on the factory floor to its placement in the destination store,
the whole supply chain from start to finish. These sensors can gather
information on travel time, product condition, and environmental conditions
that the product was subjected to. According to a Cisco report,
the next decade will see IoT devices creating $14.4 trillion worth of value
across several industries.
The Ghana and South Korea Development Disparities
In 1957, Ghana was
the richest nation in sub-Saharan Africa with a per capita income of $490. That
was nearly the same as South Korea which had a per capita income of $491. By
the early 1980’s Ghana’s per capita income had been reduced to $400 while South
Korea’s per capita income had grown to a whopping $2,000. By 1990 South Korea’s
per capita income was ten times larger than Ghana ($4,832 versus $481). Today
South Korea’s GDP per capita stands at $26,761 while that of Ghana is $1,807.
So what happened here?
South Korea like many other Asian countries embraced innovation and creativity.
The first step was to revolutionize the education standard. With this we saw
the illiteracy rate falling from 80% to less than 10%. Towards the end of 1980s
37% of South Korean students had some form of higher education. South
Korea notched top scores worldwide for manufacturing value-added as well as for
tertiary efficiency - a measure that includes enrollment in higher education
and the concentration of science and engineering graduates," said a recent
Bloomberg report. Companies such as Samsung and LG have become global leaders
in the area of consumer electronics thanks to their cutting-edge technology and
innovative product designs.
Coupling with education, innovation and technology are the key factors
that have underpinned South Korean export competitiveness and fueled the
country’s remarkable economic rise over the past decades. The growth rate has
been so impressive that the East Asian nation went from being one of the
poorest countries in the 1960s to becoming the world’s 12th largest economy in
2019, according to the World Bank. South Korea’s $1.63T economy is bigger than
Saudi Arabia and Turkey combined. America’s global competitiveness is hinged on
her innovative capacity and atmosphere. We have seen how digital technologies
have been the vital factors of national security and economic growth.
Additionally, these technologies are at the root of many advancements in
complex sciences, healthcare, communications and industry to mention a few.
Innovation and technology are the key factors that have underpinned South
Korean export competitiveness and fueled the country’s remarkable economic rise
over the past decades.
There is a clear correlation between GDP growth and investment in innovation,
research and development. In the 15 years between 2000 and 2015 the US spend on
research and development almost doubled from $268.6 billion to $496.6
billion. In the same period the US GDP grew from $10.28T to $18.12T. In the
same time, India’s investment almost tripled while China’s increased tenfold
and the results are similar.
In addition, technological advances are helping to bring down the cost of
renewable energies, such as solar and
wind energy, handing them a greater role in the global economy’s energy mix,
with significant effects for both producers and consumers of fossil fuels. A
simple example of the benefits; in the developing countries a slight reduction
to the cost of gas at the pump brought about by technology can mean lowered
cost of transportation which means lower cost of food, cement, clothing just to
mention a few. This also means additional savings at the pump allowing one to
save more, invest in stocks and share just to mention a few. A new McKinsey
Global Institute report, Beyond the supercycle: How technology is
reshaping resources speaks to how technology can aide in the further
unlocking of $900B to $1.6T in savings globally by 2035. This is more than the
GDP of Spain.
What Can Africa Learn From South Korea?
In my humble opinion, most
African countries with a few exceptions like Rwanda have decided to first
become rich and then focus on people. This is the exact opposite of what
nations like Korea did and in line with what Rwanda’s Kagame is doing with
Presidential Scholars and other programs. It’s very true that we aren’t certain
how the economies of the future will look like. So investing in people is the
more ideal route to pursue.
South Korea is intent on joining the globes top 4 nations in artificial intelligence
(AI) have invested $2B in programs to ensure this vision is realized by 2022.
Some of the key initiatives include 6 new AI institutions that seek to churn
out more than 5,000 engineers.
Like South Korea, Africa has to look inwards and seek homegrown solutions that
work for Africa. South Korea resides in the same region with China and Japan.
China low labor costs. Japan was leading the way with high tech and capital
intensive industries. Today’s 10 youngest populations are all in Africa.
Average ages include Niger (14.8 years), Uganda (15.9 years) and Zambia (16.9
years). By 2034 Africa will have the youngest working age population.
Additionally, Times magazine has estimated Africa’s urbanization
rate to be at 37%. This is more than India’s and at par with China and is
expected to be the fasted between 2020 and 2050.
South Korea invested in
building national consensus in with regards to the direction of the major
economic policies. Concurrently, there was high level of government support of
the local entrepreneurs that helped them optimize the business opportunities
available. Above all, the key miracle of South Korea has been in the mindset of
the population that allows the population to successfully adopt to challenges
while minimizing risks.
The way forward
An IMF report released in
April, 2017 confirmed that oil-exporting countries and other resource-intensive
countries in Sub-Saharan Africa were showing the worst economic performance in
the region. Even those that enjoyed good governance were also experiencing
similar challenges. For long we as a continent have relied agriculture produce
that remain vulnerable the instability of international market prices.
Even a country like Botswana that enjoyed a reputation for good governance and
were regarded as models in Sub-Saharan Africa experienced problems related to a
commodity-dependent economy. Traditionally, African economies which are
primarily reliant on agricultural produce like cacao, coffee and tea have
experienced vulnerability with the fluctuation of international market prices.
While commodity prices have been recovering in 2018, various economic forecasts
point to rather sluggish growth for the resource-rich African countries.
The African Union has come up with agenda 2063 that is intended to inspire
nations to achieve a structurally transformed economy. This primarily leans on
an industrialized Africa. It’s evident that without proper investment in human
capital development and more in innovation and technology, this dream will
never be realized.
Stephen Hawking once famously
said, “Intelligence is the ability to adapt to change.” A decade ago terms such
as internet of things, machine learning and artificial intelligence weren’t
common phrases. When I graduated with my Bachelors from Purdue University in
2008 we were only then beginning to properly embrace nanotechnology and its
vast applications. Today, most labor intensive tasks have been taken away from
humans and are being dealt with purely by machines. The world is changing at
such a high pace that in a few decade most of these novel technologies will
also be obsolete. The only way to keep up is with heavy investment in human
capital and constant investment in research and development. Labor force must
be retrained, upskilled and transformed.
One way to achieve this would
be strategic partnerships between academia and private sector to allow the
effective transfer of knowledge. This allows university students to constantly
keep up with evolving trends of the real world. Curriculums will also need to
be constantly updated to this effect. A The McKinsey Global Institute’s report posited that
Artificial Intelligence (AI) alone has the potential to add up to $13trillion
to the current global GDP by 2030. Automation of labor alone is said to
contribute around $9trillion and innovation in products and services could
increase $6trillion.
The renown American economist Robert Shiller once said “you cannot wait until a
house burns down to buy fire insurance on it. We cannot wait until there are
massive dislocations in our society to prepare for the Fourth Industrial
Revolution”. Indeed the time for Africa to prepare herself for the fourth
industrial revolution is yesterday. African governments must also encourage
experimentation. Like venture capitalists do with their investment, African
governments should also take a portfolio approach to scripting policies. This
way success balances failure and models that work can be scaled up. A November
2019 World Bank article has show has the Ethiopian
government is developing “portfolio” of industrial parks as a means to making
Ethiopian the continent’s manufacturing hub. We have also seen the Liberian
government experiment with outsourcing school management to private sector
entities. A recent report from poverty action has shown that, this has actually
yielded positive results. After 3 years of this experiment these schools raised
their test scores by 0.21 standard deviations in math and 0.16 standard
deviations in English.
Conclusion
African
must shift focus to creating more adaptive governments.
African private sector should be the driver of the innovative change while the
government remains the enabler through creative adaptive governments as well as
appropriate allocation of resources.
Business leaders and entrepreneurs should remain focused on a few key consumer
behaviors:
Drive mass personalization of products and services
Focus on creating maximum value from a single
transaction by using Artificial Intelligence (AI) and other technologies to
best predict future needs and points of engagement.
There should be unwavering emphasis on collaboration
with multiple partners beyond one’s supply chain network.
Companies must embrace risk to foster growth as well as
providing the best value for the customers. Only in doing so will these
companies keep up with or stay ahead of the competition.
