Technology and Innovation in International Political Economy
Elliesun222
INR6205LecWK12TechnologyInnovation.pptxThe International Political Economy of Technology and Innovation
Dr Michael F. Keating
International Political Economy (INR 6205)
Richmond the American International University in London
Political Ideology
Micro-Analysis
Exogenous vs. Endogenous Innovation
Product vs. Process Innovation
Sequential vs. Disruptive Innovation
Business Innovation
The Valley of Death Problem
Meso-Analysis
National Innovation Systems
Knowledge Economies
Enhanced State Functions
Macro-Analysis
The Global Division of Labour
Developing States
Appropriate Technology
The Technostructure
Innovation and Technology
Neo-Realism
Technology operates within the States System, power
Neo-liberalism
Technology driven by markets and driving in turn, power
Marxism
Technology subservient to capital, power
Gramscian
Technology linked to ideological hegemony, power
Feminist
Technology reflecting patriarchal hierarchies, power
Potsmodernism
Technostructure and domination/control/discipline, power
Environmentalism
Light vs Dark Greens, power
Political Ideologyy
Prometheanism
Humans will solve their problems through technology
Technological determinism
Technical fixes
Cornucopians – Mother Earth will provide!
Science and technology ensure continued economic growth
New resources are created which reduce need for scarce resources
Hence a ‘reformist’ environmental agenda (ecological modernisation)
Neo-Malthusians – environmental limits
Economic growth is not limitless, resources will run out
(Soft) Limits to Growth
Technology a leading CAUSE of environmental degradation
Radical ecology opposed to ‘technical fixes’
Eco-Technological Ideology
Neo-classical economics views innovation as an interruption from outside the economic system (exogenous)
A given rate of technological change is assumed
Technology as a function of the historical development of markets
With regulation as an ‘economic cost’ and a sub-optimal distortion
Is social change driven by new technology?
Impact of demands, supplies, efficiency gains
Consequences for other sectors?
Issue-areas are not discrete
Economic, political, cultural, international
Exogenous Drivers
Neo-Schumpeterian economics views innovation as a response to incentives arising within the economic system (endogenous)
Institutions, policies and systems of governance affect technological change
Technology a function of state incentives (economic and legal)
With regulation discouraging/encouraging certain directions in innovation
Feedback loops for promoting efficiency and adaptation
New technologies being created driving global economic growth
States and companies seek ‘first mover advantage’ in technology markets
How does society shape technologies?
What are the political economic drivers?
The market as the key mechanism in promoting innovation
State policies, laws, norms, and institutions that guide behaviour
Endogenous Drivers
Product Innovation
Most well-understood
Marketing to Consumers
Whole product life cycle efficiency
Process Innovation
Metatechnologies
Machine tools
Microchips
Transforming systems of production
Just-in-Time
Outsourcing
Products remain the same but their (economic and social) costs are restructured
Bio-plastics
Innovation
Path Dependency/Historical Institutionalism
Co-evolution/ Incrementalism
Innovation reflects existing values, patterns, rules, laws and institutions
Leaves underlying technological framework intact
Change by adaptation of existing systems and reflections of system linkages
Economic; Regulatory; Related Industries
Technology ‘Lock-in’
Ensuring economies of scale and system resilience but can create problems
Embedded redundant technology (qwerty)
Sequential innovation insufficient to promote radical change
Sequential Innovation
Punctuated Equilibrium – radical disjunctures and discontinuities
Creative Destruction, non-linear technological change
Potentially involves heavy transaction costs against sunken costs and vested interests
Risk of vast stranded assets
Power of current technology lobby groups
New Technology as a threat to economic continuity and jobs
Where radical change is most needed it is least preferred?
Car Industry vs. Electric Cars
Toyota Prius
VW and German Diesel manufactures
US Car Industry vs. Tesla
Disruptive Innovation
Schumpeter (1912) concentrated economic power increase innovation
Monopolies for Innovation
Brains Trust
Higher risk-taking
Actually a mixed story
Large companies sometimes not a good source of technology innovation
Oil Company ‘Dinosaurs’ still producing ‘Dinosaur Juice’
High capital intensity of investment
Largely automated (anti-innovation)
Monopolies for Innovation?
State subsidies needed
Basic research
Support technology making it to markets
BUT Government ‘push’ and Market ‘pull’ don’t meet…
R&D/Demonstrators phase 1-2 (push)
Niche markets/Commercial phase 4-5 (pull)
Pre-commercial phase (3) The Valley of Death
High returns and high risks
Non-technological barriers stronger than technological ones
Can the state ‘share risks’ with the private sector?
The Valley of Death Problem
Innovations must make it to market…
Efficient and profitable the ultimate challenge
Success determined after the fact
Strong state support while achieving economies of scale may be needed
SMEs may be more suited to innovation
But face high entry cost and lack economies of scale
Difficulties in accessing capital, may face regulatory barriers
Will be more reliant on the state as a result
The Valley of Death Problem
National Innovation Systems (NIS):
Actors (individuals and organisations)
Institutions (formal and informal rules, norms, laws and regulations regarding the interactions of Actors)
‘a melding of institutional capacities, coordination mechanisms, communication networks, and policy incentives that fosters innovation-led gains in economic productivity’ (World Bank 2009)
Even in globalized markets the source of innovation is national in character
Reflects distinct national technological capabilities
Entrenched in national institutional and social arrangements
Development based on an NIS approach therefore allows “...nationally specific patterns of industrial adjustment and economic development” (Zysman 1996) to emerge as states capitalize on their existing actors and institutional base.
National Innovation Systems
States are part of a global economy
But global sources of finance, governance may be insufficient
States must build on NIS to support innovation in a global context
Reducing trade/regulatory/technology barriers
Dissemination strategies needs to be global
Pilot schemes and demonstrators on global scale
Social acceptability may also need to be addressed
Social coalitions, technology as a non-technical problem
State Support for Innovation
Knowledge Economies occur when existing manufacturing and services sector (already integrated into the global division of labour) become increasingly based on high-tech, computerised, scientific and network-based processes related to the management of information.
The Tertiary sector is central to the promotion of knowledge economies
Meeting research needs undersupplied by the market
Forums for research and product/process innovation linkages with industry
Outsource centres for industrial R&D
Knowledge economies cause extreme structural differentiation
Resulting in coordination problems
Necessitating new forms of state intervention
Knowledge Economies
State adaptation to knowledge economies (the Regulatory State):
Governance
States must provide a policy environment supportive of systems of innovation
Coordination
States must coordinate investment and research
Develop ‘catalysts’ through tax breaks or subsidies
Make public investments in infrastructure or organisations for scientific research
Or ensure private sector investment
Networking
States must promote forms of connectivity that enable collective learning and innovation
Encourage networking between researchers and research organisations and the private sector
Create incentives for tertiary providers and industry to collaborate in developing technological capability
Institutions for disseminating and commercializing research outcomes
Enhanced State Functions
Linking innovators, businesses, scientists and universities
Contributing to national economy as well as to state capacity
Enabling technological diffusion and uptake, further competitive gains
Building an ‘industrial ecology’, synergies of Greentech production
Industrial centres themselves as location of product/process innovation
State: Finance, accelerators, collaborative institutional structure (science parks)
Creating secondary markets (waste streams, recycling)
NIS, Knowledge Economies and Enhance State Functions
In theory a good idea…
Human Capital the basis of any development strategy
Economic growth is increasingly tied to high levels of education and technical skills, and IT-dependent
Skills shortages in Developing States mean very high returns
Human capital investment promotes technological production that underpins knowledge economies
Transfers resources to more dynamic sectors of the economy
Promotes economic growth and global competitiveness
Enables states to adapt to knowledge economies
Knowledge Economics in Developing States
Innovation fits into existing global economic structures
Including structures of exclusion
Economic benefits of industrial manufacturing reduced in the global knowledge economy
Global cities – high-tech, infrastructure-heavy (capital intensive), high-skill (labour)
Rise of the BRICS? China/India renewables investment?
Knowledge economies therefore reflect the Global Division of Labour
Phase 1: research, design, engineering (Tier 1)
Phase 2: production, manufacturing (Tier 2)
Phase 3: marketing, services, standard-generation (Tier 1)
Tier 1 States: OECD countries
Tier 2 States: Industrialising Developing States (Industrial Asia)
Tier 3 States: Non-Industrialised Developing States
Exclusion from Knowledge Economies
Integrated into the global division of labour as producers of cheap primary commodities
Knowledge Economies and the Global Division of Labour
DEEPLY problematic in non-industrialised developing states
No industry base or private sector to collaborate with weak tertiary sector
Lack of state finance and of private finance
Dissemination functions problematic
Problems with coordinated investments (‘regional cooperation’)
National Systems of Innovation (NIS)
If the national configuration of resources, capital and institutions is weak, then the governance/coordination/networking capacity to emerge from the NIS will also be weak
NIS and Enhanced State Functions in Developing States?
East and South East Asia
Well integrated in Phase 2 of Knowledge Economies
With Japan/South Korea phases 1/3
Benefitting from regional economic structures, expertise and tech transfer
Sub-Saharan Africa
Excluded from all phases of Knowledge Economies in the GDL
Primary commodity production (minerals/agriculture)
Vulnerable to commodity markets, secondary manufactures imports
Lacking capital (financial, physical, human) for innovation
But weaknesses can be opportunities
Lack of vested interests/sunken costs
Decentralised technologies
Promoting technology transfer or supporting sustainable livelihoods?
Developing States
Leftwich (2000) ‘technicist fallacy’
Social and political causes and constraints of policy problems mean “technical solutions” cause more problems than they solve
Technological solution should avoid being technical solutions
Criticisms of Schumacher’s promoting “intermediate technologies” (1973)
Promoting second rate development for the third world
Promoting technical solutions to political problems
Hence “appropriate”, implying social and cultural as well as technological constraints
Small scale, low-cost or easy to finance, organisational simplicity
Easy to manufacture, easy to use, and easy to maintain and repair
Direct benefits accrue to local communities – training, employment, capabilities
Reflecting existing cultural and social environments, friendly to local environmental resources
Emphasising what works well in local conditions
Appropriate Technology
Appropriate technology preferred to technology transfer for developing states
A dynamic strategy for raising productivity and promoting further developmental changes
Emphasizing Labour/human capital given this abundant factor of production
Capital-intensive development strategies can’t deliver benefits to domestic social coalitions of labour/land
Capital-intensive development strategies driving urbanisation, hence poverty
Technological appropriateness easier in rural areas
The ability of the state to engage in development strategies will be better served by appropriate technologies than on technology transfer
However successful technologies may have been in OECD contexts
“A system of permanent innovation in appropriate technology in the long run should engender domestic capacity to absorb and generate needed capital and technology” (Akubue 2000).
Appropriate technology can lead to “self-adaptive development in dynamic conditions” (Sianipar et al. 2013).
Appropriate Technology
Local materials and skills need to match the resources, demand and technology (Garniati et al. 2014)
‘…technological independence from international supply chains’
‘…regard for indigenous characteristics in knowledge transfer’
Local community rights over the technical and management aspects
Future design improvement based on local knowledge generation
Technology can be cutting edge and high-tech and still be highly adaptable to developing state contexts
Telecommunications & Mobile Banking
Capital-intensive but low-cost to consumers
Credits can be bought in small units in a widely available and competitive market
Many apps are free
Creative recharging possibilities
Small, portable technologies
Small infrastructure costs – piggybacking on satellites, no need for wiring
Lack of sunk costs, vested interests, or large and effective monopoly providers
Privatisation, competition and free markets have been successful
Appropriate Technology
The Technostructure
Intellectual Property
Genetics, Patenting, Cloning
Dr Frankenstein, Dr Moreau
Seed Movements
Biopolitics
The technology of control
Panopticon
Tapping
Hoodies
Big Data
Consumerism
Advertising
Information
Elections
Privacy
The Privacy Economy
The Great Firewall of China
