World Economic History Synopsis

Intresting Video.

The Next Big Thing: A Fifth Industrial Revolution

Bhaskar Chakravorti

Senior Associate Dean, The Fletcher School, Tufts University

This article first appeared as an op-ed in my regular column in The Indian Express.

The Swiss mountain town of Davos has gone quiet. About a fortnight ago, however, it was abuzz with talk of the fourth industrial revolution: Robots, 3D-printed human organs, driverless cars. Soon it will be time to turn to another global confab, to celebrate India’s preparations to embrace the first industrial revolution; a Make in India extravaganza between February 13-18.

In case you were wondering, the doyen of Davos, Klaus Schwab, in a recent piece in Foreign Affairs, explained the fourth industrial revolution as one that is “building on the third, the digital revolution that has been occurring since the middle of the last century. It is characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” In other words, this sounds like an inflection point from where one could be launched into staggeringly many directions. Fortunately, we can plan our personal revolutionary itinerary thanks to the World Economic Forum September 2015 report, “Deep Shift”, which lines up the tipping points for key technologies in a most orderly way: Robots and automation (tipping point 2021); Internet of things, wearable Internet, 3D printing and manufacturing (tipping point 2022); supercomputers in our pockets (tipping point 2023); driverless cars (tipping point 2026). Betting on bitcoin? Sorry, you’ve got to wait it out till 2027. And if you are patient, there will be more technological fusion in the years to come: Nanotechnology, genomics, quantum computing, to name a few.

Putting aside our natural fascination with the next big things, the entire reason for getting excited about these industrial revolutions is that, purportedly, they make us better off. Certainly, the first (1760-1850) had set the precedent with dramatic increases in the GDP per capita in the industrialising countries, a trend that continued with the second (1850-1910) based on more complex technologies, such as the internal combustion engine and electricity. However, it should be noted that the take-off of the industrialised world went hand-in-hand with a marked divide between the West and the rest: The first two industrial revolutions gave rise to the industrial haves and have-nots.

Of course, we can look back and ask: Why were Britain and Europe the lucky ones? Why didn’t the revolution begin or even spread elsewhere? There is, of course, no end of theories. Was it Calvinism that encouraged rationality, pragmatism and material gain that promoted industriousness and entrepreneurship? Did Europe get an irreproducible benefit from centuries of colonial plunder at the expense of the have-not societies? Was it “open science”, the Renaissance, the decline of monarchy and inclusive governance? Was Jared Diamond right when he cited the advantage of geography, climate and natural resources? The real answer is probably a systemic one — some combination of many factors.

Regardless of the reasons for asymmetric development, the third revolution — the one based on digital technologies — was supposed to have been the redeemer of these past sins or systemic advantages; it was meant to be the first truly trickle-down revolution, if you will. Enthusiasts have talked excitedly about the benefits of the simple act of putting mobile phones in people’s hands.

Unfortunately, the third revolution is yet to deliver on its trickle-down promise. Our research on the state of the digital planet suggested that countries around the world are not only at very different stages of digital evolution, they are also moving at very different speeds. The World Bank’s World Development Report (January) confirms these asymmetries with some sobering statistics: 4.4 billion people have never been online, almost two billion are untouched by digital technologies and 400 million live outside the mobile cellular signal range. Eighty per cent of India has not been online; a little over 70 per cent of Africans have never been online. Even where digital technologies have reached, the economics makes it unreachable. One GB of mobile data in Botswana costs more than twice that of Germany, while fixed-line broadband is 35 times as expensive in Indonesia as it is in Germany.

The third industrial revolution may even have been a bit of a waste on the beneficiaries of the first two industrial revolutions. There are serious questions about how useful these technologies have been for increasing productivity in the industrialised world. According to economist Robert Gordon, the average growth of output per worker in the US was 2.3 per cent a year between 1891 and 1972, a rate matched only briefly between 1996 and 2004, before falling to 1.3 per cent between 2004 and 2012. Granted that not all benefits of digital technologies are captured by productivity statistics; yet, this data is quite damning. In contrast, in the have-not countries, the impact could look very different simply because digital technologies can help these nations play catch-up.

In sum, while the historian Arnold Toynbee may have started popularising the idea of the industrial revolution back in the 19th century, these revolutions — all three of them — are not widely distributed even in the 21st century. My suggestion to our world’s visionaries for the next Davos agenda: Let’s put more innovative energy against getting industrial revolutions, one through three, and their spread to the next six billion. If countries, such as India, with a hundred times the population of 19th century Britain, can get to the first industrial revolution, through Make in India or some other form of catch-up, double its GDP per capita in a tenth of the time that it took Britain and, simultaneously, manage the burgeoning disasters of urban pollution, water shortages and chronic diseases en route — that alone would be revolutionary. Rinse and repeat in other parts of the have-not world. Then we might have a fifth industrial revolution on our hands at a scale thousands of times that of the first. It might even eclipse the impact of the fourth that was all the rage at Davos this year.

The writer is senior associate dean of international business & finance at The Fletcher School at Tufts University and the founding executive director of Fletcher’s Institute for Business in the Global Context. He is author of ‘The Slow Pace of Fast Change’

- See more at: http://indianexpress.com/article/opinion/columns/world-economic-forum-davos-the-next-big-thing-2/#sthash.RyoZPksq.dpuf

WEF: THE WORLD'S FASTESTS GROWING CITIES

A video from the World Economic Forum with population statistics:

World Economic Forum Videos

Two important videos from the World Economic Forum.

The first one "The Global Competitiveness Report 2016-2017" presents through facts the institutions that make an economy competitive.

The second one shows facts on the 4th Industrial Revolution which takes place today.

The Economist: Why Europe became rich

Article from The Economist on Joel Mokyr's A culture of Growth.

Wall Street Journal: Joel Mokyr

An Article from Wall Street Journal on Joel Mokyr's A culture of Growth. 

 

The Genesis of Prosperity

What brought about the Great Enrichment? And why did it start in England? It had a culture that embraced change and scientific inquiry.

By

Richard Vedder

Nov. 10, 2016 7:19 p.m. ET

Life is “solitary, poor, nasty, brutish and short” Thomas Hobbes proclaimed in 1651, and it had been that way ever since humans had inhabited the Earth. At the time Hobbes wrote those words, life expectancy averaged about 30 years old in his native England and income per person typically was around $5 a day (in 2016 dollars). Thanks to the Industrial Revolution and the Great Enrichment that followed, the typical subject of Queen Elizabeth II lives to almost 80 and has an income of over $100 a day. Perhaps more impressively, most people in the world today face the prospect of living at least that well within a generation or two.
What brought about the Great Enrichment? And why did it all start in England? Joel Mokyr, in his fine book, attributes it to the unique and productive culture that evolved there. It was a culture that welcomed change and favored scientific inquiry that spurred radical technological improvements. To Mr. Mokyr, the forming of physical capital and the expansion of the division of labor through trade—sometimes called Smithian growth after Adam Smith—was not in itself adequate to get more than a modest increase in output. Critical were new ways of doing things, new products and new techniques.

A Culture of Growth

By Joel Mokyr
Princeton, 403 pages, $35

In Europe around 1500 the body of accepted knowledge had largely been created by ancient scholars, giants like Aristotle in philosophy and Galen in medicine, and there was a high level of intolerance toward those who saw the world differently. Galileo was not unique in being persecuted for having heretical but accurate ideas. Nonetheless, an openness to new ideas slowly emerged during the Enlightenment. Francis Bacon, a mediocre scientist but great expositor of the modern methodology of science based on experimentation, measurement and replication, was especially important in making scientific inquiry respectable. So were the age’s great scientists, like Isaac Newton.
According to Mr. Mokyr, three factors led to the ultimate triumph of the new modern search for scientific truth over the largely inaccurate “science” of the ancients. First, Europe’s fractured political environment was a blessing: Scientists who were banned or ostracized in one political jurisdiction fled to other locales more tolerant of their views. The controversial Franciscan monk, Bernardino Ochino (1487-1564), for example, was often in trouble and moving to evade authorities, leading him to flee from Italy to Switzerland and later, England, Poland and Moravia. Second, the invention of Gutenberg’s printing press around 1440 enormously lowered the cost of widely disseminating knowledge over large areas. Third, an extraordinary intellectual community evolved—Voltaire and others called the Republic of Letters—that made the dissemination of new information (through letters to fellow scientists) obligatory for anyone who wanted to gain respect in the growing international community of scientists.
The author further observes that while a lively intellectual environment was present elsewhere, notably China, it lacked the favorable conditions prevailing in Europe. Confucian philosophy still dominated Chinese thinking and the content of the all-important civil service examination, so modern scientific scholars seldom became members of that civil service. Moreover, there were no alternative political parties or jurisdictions for innovative thinkers to flee to. In short, the country’s monopolistic government bureaucracy stifled innovation.
While “A Culture of Growth” makes an important contribution to our understanding of this crucial period, the book’s almost single-minded emphasis on intellectual ferment and scientific advancement as the prime determinants of economic growth is somewhat overstated. The scientific revolution that Mr. Mokyr describes occurred a century or more before the Industrial Revolution would raise the incomes of Britons. Bacon died in 1626—nearly 150 years before the spinning jenny of James Hargreaves or the steam engine of James Watt. Newton published his Principia in 1687. Bacon was dead almost 200 years before it was finally clear that incomes in England were breaking out of the economic gravitational pull that had previously restrained them.
The spinning jenny, the use of coke in iron smelting, and the steam engine did not need Newton’s calculus, Harvey’s theory of the circulation of the blood, the heliocentric approach to astronomy or other scientific advances of the day. Deirdre McCloskey’s great “Bourgeois Equality” (2016) suggests it was ultimately liberty that made England’s leap forward so unique. Middle-class folks could increasingly engage in entrepreneurial activities without being stifled by the aristocracy or the state. It became first acceptable, then profitable, to have bourgeois virtues of thrift, hard work, ingenuity and even a bit of greed. Smart craftsmen invented simple but highly productive machines in this environment of freedom and the rule of law. That said, after the Industrial Revolution had passed (say after 1870), more sophisticated technological advances required the scientific foundation that Mr. Mokyr emphasizes.
Mr. Mokyr’s book, while excellent, suffers from one common malady of many academics: He uses lots of obscure foreign and English words unknown to most relatively literate readers. He never talks about followers or imitators, but rather “epigones.” Instead of “middle-class treachery,” he talks of trahison de la bourgeoisie. That said, to engage in a bit of rhetorical overkill of my own, during this annus mirabilis, one of our country’s great economic historians has helped us better understand the greatest transformation in human welfare our planet has ever seen.
Mr. Vedder teaches economic history at Ohio University and is an adjunct scholar at the American Enterprise Institute.


©Wall Street Journal 2016 

 

How America became a superpower.

An interesting video from VOX on how America became a superpower; really important graphs and facts.

Please watch below: