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TRANSCRIPT
The Next Production Revolution: Implications for Government and Business
Alistair Nolan, Senior Economist
Directorate for Science, Technology and Innovation
NAEC Seminar, September 12th, 2017
The NPR will be a confluence of new
technologies…..
Productivity growth has declined since the 1990s Annualised growth of labour productivity (output per hour worked)
Source: OECD estimations using OECD National Accounts database; OECD Productivity database; International Labour Organisation database. Statlink: http://dx.doi.org/10.1787/888933367500
The potential productivity benefits of NPR
technologies are urgently needed.
0
0.5
1
1.5
2
2.5
OECD USA Euro area Japan G20
1990-2000 2000-07 2007-14% %
NPR underpinned by digital
technologies.
Autonomous machines and
systems
Artificial Intelligence
Cloud computing
Human-Machine
integration
System integration
Internet of ThingsBig data
Simulations
Additive manufacturing(3D printing)
….underpinned by digital
technologies.
Autonomous machines and
systems
Artificial Intelligence
Cloud computing
Human-Machine
integration
System integration
Internet of ThingsBig data
Simulations
Additive manufacturing(3D printing)
-Output and productivity in US firms that adopt data-driven decision making are 5% to 6% higher than expected given those firms’ other investments in ICTs
- (Brynjolfsson, Hitt and Kim, 2011).
-The Internet of Things reduces costs among industrial adopters by 18% on average.
- (Vodafone, 2015). -Autonomous mine haulage trucks could increase output by 15-20%, lower fuel consumption by 10-15% and reduce maintenance costs by 8%.
- (Citigroup-Oxford Martin School, 2015).
‘Generative software’ combines with 3D printing
The expanding criticality of supercomputing
The expanding criticality of supercomputing
Two thirds of US-based companies that use High-Performance Computing say that: “increasing performance of computational models is a matter of competitive survival.” The Exascale Effect: the Benefits of Supercomputing for US Industry
The expanding criticality of supercomputing
The expanding criticality of supercomputing
Selected policy themes – digital
technologies
-Broadening access to critical ICT infrastructures. -Reducing barriers to diffusion, increasing interoperability. -Resolving issues of liability, transparency and ownership. -Managing digital security.
Selected Themes - 3D printing
Selected Themes - 3D printing
But how widespread will 3D-printing be in manufacturing ?
Much machining work is now replaced by 3D-printing : Boeing has replaced hundreds of parts. But machining is a small part of manufacturing (+/- 5% by value).
Selected Themes - 3D printing
Generalised cost-curve of 3D printing versus injection moulding
Selected Themes - 3D printing
Could have positive environmental effects
Selected Themes - 3D printing
Could have positive environmental effects E.g. It permits many materials to be shaped in ways previously possible only with plastics. E.g. 3D-printed parts can also lower the environmental impacts of some products (3D-printed nozzles in jet engines lower fuel consumption).
Selected Themes - 3D printing
Could have positive environmental effects E.g. It permits many materials to be shaped in ways previously possible only with plastics. E.g. 3D-printed parts can also lower the environmental impacts of some products (3D-printed nozzles in jet engines lower fuel consumption).
But will 3D-printing become widespread in manufacturing ?
Much machining is now replaced by 3D-printing – and Boeing has replaced hundreds of parts. But machining is a small share of all production (+/- 5% by value).
From a ‘green’ standpoint, policy challenges include:
• Create a voluntary certification system to label 3D
printers with different grades of sustainability; • Remove intellectual property barriers to enable 3D
printing of repair parts for products no longer in production.
• Target research - purity of required feedstock precludes using recycled materials.
Bio-based products are becoming
widespread and familiar
Automotive– Tyres– Bioplastics, interior paneling– Textiles- biobased surfactants and
lubricants
Consumer Goods– Enzymes in Detergents– Biobased Cosmetics– Biological Dental Care
– Biobased Packaging– Biobased Sweeteners– Enzymes as Additives
Health, Medical Tech.– Biological Coatings– Implants– Diagnostics
Building Industry– Biological Insulating Materials– Biobased Building Material– Biobased Construction Chemicals
Nutrition– Food Security– Healthy Diets and Additives– Biobased Flavourings
Medicine– Biopharmaceuticals– Antibiotics– Tissue Replacement
Energy– Biofuels– Bioenergy– Biogas
Source: Courtesy of BIOCOM AG, Germany
Bio-based products are becoming
widespread and familiar
Soy-bean oil to Graphene CSIRO, Australia, 2017
Bio-based production creates policy
challenges, for instance…
Automotive– Tyres– Bioplastics, interior paneling– Textiles- biobased surfactants and
lubricants
Consumer Goods– Enzymes in Detergents– Biobased Cosmetics– Biological Dental Care
– Biobased Packaging– Biobased Sweeteners– Enzymes as Additives
Health, Medical Tech.– Biological Coatings– Implants– Diagnostics
Building Industry– Biological Insulating Materials– Biobased Building Material– Biobased Construction Chemicals
Nutrition– Food Security– Healthy Diets and Additives– Biobased Flavourings
Medicine– Biopharmaceuticals– Antibiotics– Tissue Replacement
Energy– Biofuels– Bioenergy– Biogas
Source: Courtesy of BIOCOM AG, Germany
-Screening processes for manufacture and sale of synthetic DNA (avoid dubious customers); -Public-private investments in bio-refineries; -Improve regulation, e.g. -Boost the use of standards for bio-based products. -Improve waste regulation. - Develop interdisciplinary skills
Selected Themes – Nantoechnology
Electron microscope image of gold mesh. Each hole is 175 nanometers in diameter, smaller than the wavelength of light. Can increase efficiency of solar cells
175%.
Nanotechnology-enabled printing of solar cells (can move away from energy-intensive zone-melting processes used for traditional silicon solar cells).
Selected Themes - New materials
Selected Themes - New materials
New policy issues: cybersecurity risks. Older policy issues: Close collaboration needed between industry, universities, research funding agencies and public laboratories.
Some Cross-Cutting Issues
Sound science and R&D policies are essential
Sound science and R&D policies are essential
…but many countries have reduced public spending on R&D… Public R&D budgets 2008-2015 : G7,Korea
Index 2008 = 100
80
90
100
110
120
130
140
2008 2009 2010 2011 2012 2013 2014 2015
United States Italy
Germany
Korea
Japan
Canada
United Kingdom
France
Well designed institutions needed for technology diffusion and adoption
0
10
20
30
40
50
60
70
% All enterprises 10-49 50-249 250+
Source: OECD Science, Technology and Industry Scoreboard 2015.
Enterprises using cloud computing services by employment size class, 2014 As a percentage of enterprises in each employment size class
Well designed institutions needed for technology diffusion and adoption
0
10
20
30
40
50
60
70
% All enterprises 10-49 50-249 250+
Source: OECD Science, Technology and Industry Scoreboard 2015.
Enterprises using cloud computing services by employment size class, 2014 As a percentage of enterprises in each employment size class
0
10
20
30
40
50
60
70
% All enterprises 10-49 50-249 250+
Source: OECD Science, Technology and Industry Scoreboard 2015.
Enterprises using cloud computing services by employment size class, 2014 As a percentage of enterprises in each employment size class
”We have to execute quickly, otherwise those who are already leading in digital will snatch the industrial production from us.”
Angela Merkel, World Economic Forum 2015
We need well designed institutions for technology diffusion and adoption
0
10
20
30
40
50
60
70
% All enterprises 10-49 50-249 250+
Source: OECD Science, Technology and Industry Scoreboard 2015.
Enterprises using cloud computing services by employment size class, 2014 As a percentage of enterprises in each employment size class
”We have to execute quickly, otherwise those who are already leading in digital will snatch the industrial production from us.”
Angela Merkel, World Economic Forum 2015
- Just 18% of German companies familiar with the term ‘Industry 4.0’
- Only 4% of German businesses have implemented digitalised and networked production processes or have plans to begin doing so.
ZEW Mannnheim 2015 survey of 4,500 German businesses
We need well designed institutions for technology diffusion and adoption
Cross-country differences in resource flows to patenting firms Change in financial inputs associated with a 10% change in patent stock
(2003-2010)
Note: The black dot shows the country-specific point estimate while the grey bands denote the 90% confidence interval (note that the confidence intervals vary across countries due to differences in the number of observations). Source: Andrews, Criscuolo and Menon (2014) based on firm level data from the ORBIS-Patstat Database for the non-farm business sector
Governments must create an environment for business dynamism
Cross-country average
Source: ‘Cross-country Evidence on Business Dynamics over the Last Decade’ – DSTI/IND(2016)18
Business Entry and Exit rates
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Entry rate Exit rate
Source: David, P.A. (1990), ‘The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox’, American Economic Review, Volume 80, Issue 2, pp.355-361.
New forms of business organisation : 2nd industrial revolution
Source: David, P.A. (1990), ‘The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox’, American Economic Review, Volume 80, Issue 2, pp.355-361.
New forms of business organisation : 2nd industrial revolution
Introduction begins in mid-1890s
Source: David, P.A. (1990), ‘The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox’, American Economic Review, Volume 80, Issue 2, pp.355-361.
New forms of business organisation : 2nd industrial revolution
Industrial productivity only rises in early 1920s
Mid-1890s
Typology of institutions for technology diffusion
Diffusion mechanisms Operational modes (primary) Examples
Dedicated field services Diagnostics, guidance, and mentoring Manufacturing Extension Partnership (US)
Technology-oriented business services
Advice linked with finance Capacity development
Industrial Research Assistance Program (Canada)
Applied technology centres Contract research, collaborative applied research, prototyping and standards
Fraunhofer Institutes (Germany) National Network for Manufacturing Innovation (US) Kohsetshushi Public Technology Centers (Japan)
Targeted R&D centres Advanced research on emerging technologies intertwined with commercialisation missions
Campus for Research Excellence and Technological Enterprise (Singapore)
Knowledge exchange and demand-based instruments
Technology community networking Knowledge transfer incentives
Knowledge Transfer Networks (UK) Innovation Vouchers (multiple countries)
Open technology mechanisms Shared technology library Virtual networking
BioBricks/Registry of Standard Biological Parts (US)
NPR will create new challenges for the intellectual property system
Copyrights, patents, trademarks, designs
T M
NPR will create new challenges for the intellectual property system
Copyrights, patents, trademarks, designs
T M
For example:
- We may need to rethink some aspects of IP rules in a world where machines can invent things.
- Will 3D printing create challenges for patent eligibility, for instance if printed human tissue improves on the original ?
Complex aspects of the work of software engineers can be performed by algorithms (Hoos, 2012).
A version of IBM’s Watson can act as a customer service agent (Rotman, 2013).
Computer-based managers are being trialled. These allocate work and schedules (Lorentz et al, 2015).
NPR may need changes to labour
market policies
The Quill programme writes analytic reports and Automated Insights can draft text from spreadsheets.
Recent softwares interpret some human emotion better than humans (Khatchadourian, 2015).
Other cross-cutting issues
Policy also needs long-term thinking.
Public attitudes have shaped regulation of new technologies in the recent past
Public acceptance might also be important.
Thank you
3D printing – another aspect of strategy Metals Additive Manufacturing (MAM)
Many applications
3D printing – another aspect of strategy Metals Additive Manufacturing (MAM)
But aviation demands extraordinary safety
standards, which MAM cannot yet meet.
Many applications
3D printing – another aspect of strategy Metals Additive Manufacturing (MAM)
But aviation demands extraordinary safety
standards, which MAM cannot yet meet.
Various applications
Government can
help
- Technical and institutional infrastructure (e.g. materials databases)
- Promote standards
- Forge data sharing agreements across industry, government labs and academia
Selected Themes - 3D printing
Could have positive environmental effects E.g. It permits many materials to be shaped in ways previously possible only with plastics. E.g. 3D-printed parts can also lower the environmental impacts of some products (3D-printed nozzles in jet engines lower fuel consumption).
Education and training systems needs constant attention
Two thirds of people surveyed lack the skills to succeed in technology-rich
environments
very low skills or optedout of the test
low skills
medium skills
solid skills
2 out of 3
people lack
skills for the digital
age
48
Education and training systems needs constant attention
Two thirds of people surveyed lack the skills to succeed in technology-rich
environments
very low skills or optedout of the test
low skills
medium skills
solid skills
2 out of 3
people lack
skills for the digital
age
49
-But it is not only about balancing skills supply and demand. -Increasing importance of inter-disciplinary education and research? -More interaction with industry as the knowledge content of production rises?