Is Industrialization Still A Useful Strategy For Developing Nations?

Last month, the Economist had an article titled “Arrested development: The model of development through industrialisation is on its way out” – well worth reading.

It started by describing how China successfully followed the previous model of industrialization by Japan and South Korea, among others.  In turn, many other emerging economies are now planning to follow the same road as China did – initiate a wealth-creating manufacturing sector that can export to the world.

However, the Economist offered a cautionary note about this strategy:

Governments across the emerging world dream of repeating China’s success, but the technological transformation now under way appears to be permanently changing the economics of development. China may be among the last economies to be able to ride industrialisation to middle-income status. Much of the emerging world is facing a problem that Dani Rodrik, of the Institute for Advanced Study in Princeton, New Jersey, calls “premature deindustrialisation”…

For most of recent economic history, “industrialised” meant rich. And indeed most countries that were highly industrialised were rich, and were rich because they were industrialised. Yet this relationship has broken down.

The article went on to point out that:

Another mechanism through which new technology is changing the process of development is the dematerialisation of economic activity. Consumption the world over is shifting from “stuff to fluff”


The Economist article, however, was not complete.  While it noted the impact of robots who can work cheaper than humans anywhere, it didn’t address the role 3D printing will have on manufacturing.

In my presentations to mayors of North American cities, I’ve emphasized that they cannot base their future on an old industrial era model of the economy.  The same is true for countries which haven’t industrialized yet.  In a global economy, even with vastly unequal positions of different nations, the same rules of the game apply. 

I won’t repeat here the themes of my other blog posts, but, to get into that game, communications and information technologies (ICT) are a requirement.

Of course, it is frequently argued that ICT has to take a back seat when a nation doesn’t have clean water, etc.  I understand this argument and sympathize to a degree, but I’d also note that in fact in many poor countries there are more people with mobile phones and access to the Internet than access to a bathroom.  Maybe they understand that you need, to use an old analogy, to spend some money to drain the swamp or you’ll forever be stuck fighting the alligators.

For them, ICT is a path out of poverty.  And, of course, from a public sector viewpoint, ICT can also help to manage and implement cleaner living conditions, sewer systems, etc.

The ultimately pessimistic view of the Economist article may not be justified, since these new rules and approaches to economic growth are beginning to be understood by a number of leaders in developing nations.  By ICT investments, experimentation and innovation, they are also beginning to create the new post-industrial template for growth.

© 2014 Norman Jacknis


Responses To The Revolution We’re Living Through?

I was recently reading Simon Winchester’s book, “The Men Who United the States: America’s Explorers, Inventors, Eccentrics and Mavericks, and the Creation of One Nation, Indivisible” which was published last year.  It’s an interesting exploration of important parts of American history that have gotten lost in the standard renditions or even the standard counter-renditions.

He spends a bit of time on New Harmony, Indiana, Robert Owen’s failed utopian experiment because its establishment enabled the growth of geology and geological exploration in the US, which was an important part of his story.


But the description of New Harmony raised a question in my mind.  For those of us who have studied even a basic history of the industrial revolution, we’re aware of various reactions over more than two hundred years. 

Just for a few examples … There were the Luddites who tried to stop it.  There were the utopian communities, like New Harmony, which hoped to offer an alternative to the way industrialization was occurring – sometimes even using industrial tools, but in new forms of society.  Along with that, the Romantic Movement in the arts and the Arts and Crafts movement in the US were a kind of a reaction to industrialization. 


The modern corporation was invented in response to the need to somehow manage and then build the industrial revolution’s manufacturing plants.

Marx, of course, developed his critique of capitalism which was the predominant form of economic organization that supported and was supported by the industrial revolution.  Later still, governments started to enact various laws to improve labor conditions, reduce monopolies, and provide for the more even distribution of the wealth created by the industrial revolution.

We’ve learned to understand these reactions, see them in context and know which failed and which succeeded.  That’s easy with the benefit of hindsight.

Although some parts of the world are still in an industrial transition, as I’ve written in various posts, the more economically advanced societies are now going through a transformation as great as the industrial revolution.  We are at the beginning of developing and emerging into a post-industrial society, a knowledge economy, a sharing economy, a digital economy, or something we haven’t coined a name for yet.

So here’s my first question: what responses and reactions to this new economy are we seeing now?

Thinking about the longer term:

  • Which responses will flame out the way New Harmony did? But what residual benefits will such short-lived responses leave for the rest of this century?
  • What new laws do we need and really expect to see?  Or even new forms of governance?
  • What new business arrangements do we really expect to see? Will we need to invent something as new in the same way corporations were invented?

Trying to look out over many decades into the future as this new economy develops, I only have some inklings and guesses – but no answers.  What are your guesses or boldly stated answers?

© 2014 Norman Jacknis