It seems to live in an era of accelerated radical developments in technology. Not a day goes by without the announcement of some important innovations in artificial intelligence, biotechnology, digitization or automation.
However, those who should know where all this leads us can not decide . At one extreme are the techno-optimists, who believe that we are at the beginning of a new era in which the world’s standard of living will rise faster than ever. At the other extreme are the techno-pessimists, who consider the statistics on the disappointing productivity and argue that the benefits for the whole economy by the new technology will remain limited. Then there are those – the techno-apprehensive? – That I agree with the optimists about the scale and scope of innovations, but are concerned about the negative implications for employment and justice. What distinguishes these perspectives from one another is not so much disagreement about the rate of technological innovation.
After all, who can seriously doubt that innovation is progressing fast? The debate focuses on whether these innovations will remain bottled in some technology-intensive sectors, which employ professionals with the highest level of qualification and represent a relatively small share of GDP, or will spread in most of the economy.
the consequences of each innovation with regard to productivity, employment and equity depend, ultimately, on how fast it spreads through the markets of labor and products. Technology diffusion can be limited in the economy is on the demand side and the supply side. Consider, first, the demand side. In the rich economies, consumers spend most of their income on services such as health, education, transport, housing and retail goods. Technological innovation has so far had relatively little impact in many of these areas. Most of the evidence provided by the recent report “Digital America” the McKinsey Global Institute. In the United States the two areas that have experienced the fastest growth in productivity since 2005 ICT and the media industry, with a share of global GDP below 10 percent. On the contrary, public services and health care, which together produce more than a quarter of GDP, almost did not have a productivity growth.
The techno-optimists, like the authors of McKinsey, consider data such an opportunity: remains ample room for increased productivity derivable from the adoption of new technologies in the areas lagging behind in development. Pessimists, however, believe that differences of this kind may be a structural feature of the current economy.
Economic historian Robert Gordon argues that the innovations of today pale in comparison to previous technological revolutions in terms of their likely impact on the whole economy. electric power, automobile, airplane, air conditioning and appliances have dramatically changed the way ordinary people live. They went to affect all sectors of the economy. The digital revolution, however formidable, perhaps not be able to do the same.
On the supply side, the crucial question is whether the innovative sector can have access to capital and skills it needs to expand rapidly and continuously. In advanced countries, typically none of the two constraints is very strong. But when the technology requires high skills, its adoption and diffusion will tend to widen the gap between the salaries of low and high-skilled workers. Economic growth will be accompanied by growing inequalities, as happened in the nineties.
The problem on the supply side, faced by developing countries is more debilitating. The workforce is largely low-skilled. Historically, this has not been a handicap for countries with late industrialization, until the industrial process consisted of assembly operations with a high labor intensity, as in the garment and in the automotive industry. The farmers could be transformed into workers practically overnight, leading to significant productivity gains for the economy. The industry has traditionally been a rapid escalator towards higher income levels.
But once the industrial manufacturing operations become robotic and high skills requirements, the constraints on the supply side are starting to bite . Indeed, the countries of forgiveness developing their comparative advantage to the rich countries. Today we see the consequences in the “premature deindustrialization” of the world developing.
Ultimately, the consequences on the economic productivity of technological innovation, not innovation as such, that raise the standards of life. The innovation can coexist side by side with a low productivity (on the contrary, the growth of the productivity is sometimes possible in the absence of innovation, when the resources are moved to the most productive sectors). The techno-pessimists recognize this point; Optimists may not be wrong, but to enforce its position, it is necessary in order to focus attention on the outcomes of the effects of technology on the economy as a whole.
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