Industrial Development - a Conclusion
Industries… that is what it is about.
What were the industries of the past, and what are the industries of the
future? Industrial Development as we know it today began in the 19th
century with the Industrial Revolution. Methods of mass production, as well as
more advanced transportation such as the train, made it so that products and
services could now be available to a wider spectrum of consumers, first
locally, and then worldwide. Consider the described industries only as
examples, but there could be many more. Aerospace, Navy and Defense also
developed significantly in the 20th century, but they required a
much higher level of government intervention. Only superpowers that invent a
large part of the budgets in government development (such as the US or the
ex-USSR) have been support long term development in therese fields.
Now consider the whole concept of
Industrial Development. How is it achieved? At a higher level of government
intervention. Only superpowers that invent a large part of the budgets in government
development (such as the US or the ex-USSR) have been support long term
development in these fields. Now consider the whole concept of Industrial
Development. How is it achieved? At a higher level, it is impossible not to
consider the impact of government intervention on industrial development. A
country wants to develop a Navy industry, what does it need? Infrastructure, a
tax frame, investments, a long term strategy, international contacts, are all
things that must be provided by the government. However, the most important of
all and a concept not understood by the majority of the population is that it
is only through entrepreneurial spirit that industries can be developed. The
government creates the conditions to favor or to stance industrial development,
but it is the entrepreneurs who are creative enough to come up with great
inventions. How many patents does a country have? Does the government have any
concrete measures or plans to encourage patent development? One of the
biggest areas of opportunities for most countries is to establish a stronger
link between the private and the public sector. Universities should act as true
innovation houses, producing scientific knowledge but also building the bonds
with the private sector. The government has the long term perspective that the
private sector does not. Companies must earn money fast, to have a positive
cash flow. A certain amount of the budget is always allocated by R&D, but
innovation at a very high level can only be accomplished in collaboration with
the government. In “The Entrepreneurial State: debunking public vs. private
sector myths”[74] focuses on the complementary view between a dynamic,
innovative private sector. The author reveals that every technology that makes
the iPhone so “smart” was government funded: The Internet, GPS, it’s
touch-screen display and the voice-activated Siri. Apple based itself in these
discoveries, and leveraged on them. And that is how it should be. Scientists
should work on the long term and get good salaries, and their discoveries
should be picked up by the private sector to work innovatively. Consider the
impact of each individual industry since the industrial revolution in the 19th
century. Coal has served as fuel for transportation for steam engines and
trains. In the beginning mine workers worked under bad conditions, but eventually
their rights were recognized through unions. A 100 years ago coal was the main
source for energy, but today it is moving towards 25%. Wood, one of the most
historical resources, evolved into an industry with the appearance of mass
production. Amazing advances have been found in wood, especially when it comes
to the establishment of factories for paper processing. It is an industry that
creates thousands of jobs, and very lucrative for the countries that are
blesses with this exquisite natural resource.
The Utilities Sector has historically
not been lucrative, but more of a service sector both for public and public
use. Water, Electricity and Gas distribution are usually subsidized by a
government and taking a loss. They are the most necessary industries and have
huge growth potential in underdeveloped countries. However, they are not the
most lucrative. Oil, even if available for centuries, began as an industry with
the advent of WW1. It constitutes today the world’s main fuel. It is used for
cars, but also trucks, planes, lubricants. Regardless of the oversupply due to
the Shale Oil Revolution, the world will still have high demand for oil.
Alternative energies though, such as wind, solar, etc, will slowly compliment
and replace it. When and up to which level remains to be seen.
The Railroad came to replace horses and
became a cheaper and faster transport medium. It became the most popular and
cost-effective way of transporting merchandise. Subway trains and electric
rails followed, concluding in high-speed rail running at speeds above 200 km/h.
The Aviation Industry changed the way
people travel, Intercontinental flights making it easier to establish
international business routes. WW2 saw the development of jet, rocket
propulsion and radar technology. Aircraft manufacturing became an industry of
it’s own, developed countries producing from passenger planes such as the
Boeing 747, the Supersonic Concorde Jet and the Airbus, to sophisticated war
machines such as the F-117 such as the Stealthfighter.
The Software Industry, which I consider
the Industry of the Future, was developed quite recently. Whereas the concept
of Computer was developed much earlier, it began to popularize in the 1950s.
Software was incorporated in the 1960s, when low-priced microcomputers were
incorporated into the market. The personal computer was introduced in the 1970s,
when desktop computing was introduced for workers at the office, with the introduction of the AS/400
screen. In the 1980s, programming became a full time job, introducing Graphical
User Interfaces and coding in C and Delphi. In the 1990s, the Internet changed
the way we communicate and the global communication landscape including
electronic mail, instant messaging, voice over Internet Protocol (VoIP)
telephone calls, two-way interactive video calls, and the World Wide Web with
it’s discussion forums, blogs, social networking, and online shopping sites.
The 21st century has seen the rise for hosted software, called SaaS or software-as-a-service
were the software is licensed on a subscription basis and is centrally hosted
(also called “on-demand software”. In today’s world, having the strongest IT
industry is key to a country’s supremacy.
Robotics has also been one of the stars
in modern societies. Whereas robots have existed since the beginning of modern
civilization, the 20th century saw the blossoming of robotization. The first
industrial robots implied a giant robotic arm for the automotive industry and
were installed in General Motors in the 1960s. Advancements in the Robotics
field led to Artificial Intelligence by automating activities that previously
done by people. An example is the assembly line that handles all of it’s
production. The Swedish-Swiss group ABB represents an example of a global
player specialized in robotics. The industry has seen many advances and
promises to extrapolate it’s influence in the near future.
Telecommunications has developed itself
as an industry since the 19th century. The telegraph, an invention that can
read electrical signals, had wires that extended across over miles. The first
telephone was used to transmit voices over shared party-lines. WW2 saw advances
in telecommunications such as the handy talky and that was created to
communicate to other radio wave devices. Networks were developed to share the
processing power of one computer with multiple users. The mobile phone was
invented in the 1970s, and evolved rapidly until today’s smart phone.
Satellites made it so that TV signals and phone-calls now had global coverage.
GPS uses satellite as a reference point to calculate geographical positions,
and to pinpoint any ship, or submarine in the Ocean, and to even measure mount
Everest. Telecommunications appear as one of the main areas of development for
strategic position at a national level, and is surely one of the areas that
will be key for development in the near future.
I have shown you how industrial
development has evolved significantly in the last century and a half. These are
new industries that didn’t exist before, but were based on pre-existing
conditions. Natural resources for fuel such as Coal, Oil & Gas will still
be important but will not play such a big role in a country’s economy. Water
and electricity distribution are crucial, but are usually subsidized and
represent a loss for a country’s finance. Consider the example of Gold &
Silver. In the past, precious metals were a symbol of a country’s riches.
Today, even if still valuable, they do not represent such a big portion of a
country’s economy. Same for wood, which still creates thousands of jobs. The
Railroad, which 100 years ago represented one of the major industries in the Dow
Jones Index in the US, today is almost inexistent. The Plane industry, which
was only experimental in the beginning of the 20th Century, has evolved into
the Aerospace industry and is a constant driver for innovation. Finally,
Software, Robotics and Telecommunications appear as the key to success for any
economy in the future. They should be the main focus of any economy, and will
represent a larger share in world commerce. The NASDAQ Index, founded in 1971,
is composed by the top technological companies in the US. Who will create the
new Apple, Google and Facebooks? In the past, Natural Resources and Transport
were the most important industries. In the future, the big bet should be on
Technology. The countries that understand this will position themselves in the
top charts. Who will succeed NeXT?
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