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Innovation and the new production paradigm

By Federico Mazzella ,
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Academics, government officials, and members of international organizations and Latin American and global NGOs analyzed the current state of affairs for science and technology and their impact on labor markets.

How is Latin America preparing for global changes in society and institutions? Can science, technology, and innovation (STI) policies really bring about structural changes in Latin America? Are we prepared for the challenges posed by technological changes in the world of work? How will this affect education in our region?

The Interdisciplinary Center for Studies on Science, Technology, and Innovation (CIECTI) organized an international seminar titled “STI as the Core of New Production Paradigms: Current Challenges for Development in the Knowledge Society,” which took place on November 29 and 30, 2016, in the Cultural Center for Science at the City of Buenos Aires’s Science and Technology Hub.

The event was opened by Lino Barañao, Argentina’s minister of science, technology, and productive innovation, and Gustavo Lugones, president of the executive committee of CIECTI.

Mr. Barañao said that it was time to talk about what Argentina was going to do in the globalized economy of the future. He said that the country needed to offer innovative alternatives, sell its skills, and move toward knowledge-based integration. He stressed that what currently defines the wealth of nations has shifted toward the sustainable use of the environment and knowledge. In this sense, he said that Argentina has significant competitive advantages because it has irreplaceable assets that other countries do not have, such as ample sunlight, fertile land, drinking water, and, fundamentally, human resources.

He also said that all the investment the country has made in science, technology, innovation, and human resources in recent years has meant that Argentina’s academic supply far outstrips local enterprise’s capacity to absorb this. He thus argued that the country needs to seek more foreign investment and take advantage of the eagerness around innovative projects and human capital.

Mr. Lugones said that CIECTI’s mission is to contribute to the design, implementation, and evaluation of STI policies through interdisciplinary research and institutional and professional capacity-building. He called on those present to play an active part in the two-day seminar.

 

The Reconfiguration of Global Society and Institutions and Challenges for Development

The first panel at the event was moderated by Alberto Quevedo, director of the Latin American School of Social Sciences (FLACSO), and included Boike Rehbein, professor of society and transformation in Asia and Africa at Humboldt University, Berlin, and Fernando Calderón, coordinator of the Innovation, Development, and Multiculturalism Program at the National University of San Martín (UNSAM).

Mr. Rehbein presented the relationship between social structure and the division of labor with a focus on the social composition of Germany. He also discussed Brazil, Laos, and Vietnam. The results of his research reveal that the capitalist transformation of society has led to very low rates of social mobility (changes in social class) in all these regions, but especially in Germany. He also underlined the huge global concentration of capital, particularly in the northern hemisphere (United States and Europe): just 0.05% of the global population possesses 35% of global wealth. He also pointed out that the dominant class in each country has connections to the state to preserve its position and leverage its domestic power. Mr. Rehbein concluded by saying that if the least developed countries are to develop, there needs to be a global political framework that works against the dominant classes in dominant states.

Globalization is a field of power and conflict, argued Mr. Calderón, and we live in a cycle of accumulation in which information is organized into networks. He argued that financial capitalism sparked the global crisis that is also affecting the political sphere and even calling democracy itself into question in some places. He stressed that science and technology are in a state of constant growth and that labor is becoming more specialized and differentiated. The challenges to Latin American development that he outlined include the need for a transformation of production patterns to improve equality and the need to rethink development to contemplate care for the environment.

 

STI and Structural Change in Latin America

The moderator for the second panel was Fernando Porta, director of the PhD program in economic development at the University of Quilmes. In this part of the event, high-profile academics specializing in the industrial sector debated Latin American development models and technology policies.

The first presentation was from Gabriel Palma, emeritus senior lecturer at the Faculty of Economics at Cambridge University and professor of economics at the University of Santiago. He focused on the productivity gap as the main indicator of economic and technological development. He compared the meager advances in productivity in Latin America with the rapid growth of Asian countries. Although in recent decades Latin American economies did grow at Asian rates at certain points, they were unable to sustain this over time. Therein lies the challenge that lies ahead for the region, which needs to change cycle, shift gears, and re-engineer its economy to focus on industrialization.

Mr. Palma stressed that manufacturing is a good driver for development and generates a carryover effect on other sectors, such as services. He also referred to the middle-income trap that the region is stuck in: “we are under the misguided impression that by doing the same thing, but doing it better, we are going to climb up the income ladder.” He underlined that unlike any other region, Latin America has the capacity to create employment on par with GDP growth, however, most of this job creation is within service sectors, which have low long-term productivity rates.

He concluded by criticizing the historically low levels of private investment and argued that the state needs to play a more active role as a regulator. As an example of this, he said that in Latin America only 10% of what the richest 10% take away is returned in the form of investment in production, which is extremely low in international terms.

The next speaker, Jorge Katz, professor at the University of Chile, described two distinct phases in Latin American development. During the first stage, growth is internal, while during the second, it is guided by the market and thus is characterized by a process of deindustrialization when the industrial model wears out, which has led to the current return to a model based on comparative natural advantages. He argued that the lack of long-term industrial policies and the commoditization of the productive structure have been constants in Latin American history.

Mr. Katz pointed out that although natural resources open up a window of opportunity, the region needs to rethink its productive structure in terms of the new global demand for technological knowledge which is rooted in science-based industry.

Mariano Laplane, president of Brazil’s Center for Strategic Studies and Management Science (CGEE) closed the panel with his analysis of the recent development of Brazilian industry. He argued that although the share of manufactures in Brazil’s GDP went down between 2002 and 2012, there was significant absolute growth in manufacturing exports, which went from US$33 billion in 2002 to US$90.7 billion in 2012.

Despite this process of de-industrialization, around 3 million jobs were created in Brazil over that decade, and in 2014 the country was the fifth-largest industrial employer in the world. However, this did not lead to changes in the productive structure despite increased spending on research and development.

Mr. Laplane finished his presentation by arguing that Latin America needs to launch a re-industrialization strategy: “if we want to have more powerful and legitimate policies, we need to think up STI strategies that are not about benefiting industry or scientists, but are instead about health, education, and improving people’s quality of life.”

 

The Future of Work and Technological Change: An Ongoing Debate

Miguel Lengyel, a researcher at FLACSO and the director of interinstitutional projects at CIECTI, moderated the third panel, which included Fabio Bertranou, director of the ILO’s Subregional Office for the Southern Cone of Latin America; Andrei Vazhnov, academic director at the Baikal Institute; and Laura Converso and Tomás Castagnino, from Accenture Argentina.

Mr. Bertranou presented the Future of Work Initiative as part of the ILO’s 2019 centenary activities and analyzed the current state of affairs in Latin America given the context of constant change that new technologies imply. He underlined that labor is not a commodity—instead, it is important because it is a mechanism for social inclusion and cohesion.

He argued that economies are not generating the quantity or quality of jobs they need to and stressed the importance of analyzing the impact of technological processes and digitalization on the organization of labor and production. He asked three questions about these processes: i) will more or fewer jobs be created than are lost because of these changes? ii) how will the quality and characteristics of the jobs that are destroyed balance out with those of the jobs that are created? and iii) what policy answers are needed to regulate work, training, and social protection?

He pointed out that the fragmentation of production is key to understanding today’s processes. He referred to new ways of organizing production, including outsourcing and offshoring, through which labor-intensive tasks have been relocated to emerging economies while products are designed in advanced economies.

He drew attention to the growth in atypical or nonstandard forms of employment such as temporary work, part-time work, work through agencies, subcontracting, freelancing, and ambiguous labor relations. Mr. Bertranou argued that these new forms of employment are transforming traditional labor relations and creating changes in the ways that companies organize and manage their assets and resources (for example, companies that work with online platforms are outsourcing services) while affecting social protection, education, and pension systems.

He said that one of the risks that digitalization poses to labor conditions is that the friendly, flexible, “anytime, anywhere” model can easily become an “always, everywhere” type trap, which leads to negative effects on psychosocial health. Digitalization, globalization, and the development of global supply chains with limited social upgrading have further polarized labor and income.

Mr. Bertranou ended his presentation by focusing on the need to rethink the provision of skills, shifting “from elementary to comprehensive e-skills” and developing factors that will allow people to be successful in the age of information.

Andrei Vazhnov argued that the most important technologies are the ones that fade into people’s daily lives. He claimed that the future is already upon us, but it is not fairly distributed. He said that the link between the Internet of Things and industrial activity will change not only the way that products are made, maintained, and sold, but will also affect the very nature of industry itself. The need for smart, online behavior to be included in all machinery and production processes will generate new competitive dynamics and oblige industrial companies to develop new knowledge in areas such as software and big data. He mentioned the online economy, citing Uber and Airbnb as two companies that have turned their respective industries on their head by eliminating spatial restrictions and cutting down on the delay between supply and demand.

Ms. Converso and Mr. Castagnino agreed with Mr. Vazhnov that “the future is here; it has already arrived.” Their presentation revolved around the challenges and opportunities of artificial intelligence, which they hope will strengthen and help our societies. This new paradigm will require interpersonal skills, creativity, and teamwork with both people and machines.

They drew attention to how over the last 30 years, highly cognitive, nonroutine jobs are the only segment that has continued to grow rapidly. Firms at the technological frontier become more productive than the rest, particularly service providers and top performers. The most productive manufacturing firms increased their labor productivity by an average annual 3.5% between 2001 and 2009, while the remainder only did so by 0.5%.

Ms. Converso and Mr. Castagnino argued that in the digital age, physical assets are becoming less important and the highest earning firms are those with intangible assets: innovation, design, algorithms, and creativity. The digital economy provides an opportunity to strengthen human labor through automation, digital innovation, and the transformation of the labor environment.

It is estimated that spending on cognitive systems (artificial intelligence) in Latin America will have increased sevenfold by 2020, reaching US$358 million. The best-positioned workers are those whose educations, specializations, and experience complement the use of new technologies. During their closing words, they argued that the digital era is an opportunity although cultural changes will be needed to foster the more active involvement of all players in the economy.

 

The Internet of Things and Challenges for Education

Inés Dussel, researcher at the Department of Educational Research at the Center for Research and Advanced Studies at the National Polytechnic Institute of Mexico (CINVESTAV-IPN), gave the first presentation of the final part of the program. She reflected on the latest technological advances in education and shared her concerns over the optimism around certain technologies. In connection with this, she argued that some perspectives on learning are reductionist.

She said that low levels of education and a lack of interest among students are two of the main problems that education is up against, and mentioned two technologies that may provide solutions to this: Clicker (a personal response system that is marketed as an effective tool to solve educational problems) and Q-sensor (which measures students’ emotional involvement with teachers’ educational strategies). However, she stressed that creativity should be at the core of educational development. She said that in Argentina over 65% of teachers have taken part in training courses on the use of technological devices in education. She also drew attention to some of the mass technology distribution programs that have been carried out in the region (Conectar Igualdad, Plan CEIBAL, and so on).

One of her final comments was that “classrooms are shrinking and expanding.” They are shrinking because class time is being spent on things that have little to do with traditional education and there are more distractions, such as cell phones; but they are expanding because technologies, social networks, and the Internet are contributing to learning outside the school environment.

The next speaker was Columbia University professor Nathan Holbert, who presented the results of his research on the democratization of computer literacy, which he defined as the use of computers as a tool to understand and communicate with the world. He described New York State’s CS4All initiative, an innovative computer science education program that provides equality, empowerment, and opportunities that maximize each student’s innate potential to transform their community, their country, and the world. The program has a budget of US$81 million and has trained 4,775 public school teachers.

The final speaker was Ángeles Soletic, the director of Argentina’s Center for Innovation in Technology and Education (CITEP), who asked how the digital world is changing the ways we teach and learn. The ways in which knowledge circulates through society have changed, and thus so must the way we teach. Ms. Soletic argued for the need to hybridize the knowledge acquired at universities.

She discussed three trends in new technologies that are beginning to affect university education: digital manufacturing, virtual reality, and the Internet of Things. She finished by pointing out the challenges that these technologies are posing and the need to transform learning accordingly: classrooms need to be connected with what is happening outside of them and they need to incorporate technology and tackle the risks that this may represent.

The closing words came from Pablo Angelelli, lead specialist at the Inter-American Development Bank’s Competitiveness, Technology, and Innovation Division in Santiago de Chile, who argued that we need to increase the efficiency of public STI initiatives by creatively combining subsidies and loans with innovative public procurement policies, and Ruth Ladenheim, managing director of CIECTI, whose thanked those present for all their hard work in putting the seminar program together.

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