Creating wealth without labour?: emerging contours of a new techno-economic landscape
In: Discussion paper 2018,11
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In: Discussion paper 2018,11
Structural change towards diversification and competitiveness is important to make our economies productive, wealthy and sustainable. In market economies, structural change is essentially driven by private entrepreneurs who challenge incumbents with new business ideas and take risks to implement them. While public policy cannot fully anticipate the outcomes of such market-driven search processes, it does have important roles in directing structural change: it can facilitate stakeholder processes meant to overcome coordination and information failure and thereby smooth the transformation; it can make pre-competitive investments in infrastructure and skills for the future; and it can help align structural change with broader societal objectives, such as environmental sustainability or job creation. To fulfil these roles, policymakers need to have an idea about future competitive patterns of specialisation. The challenge is to anticipate trends and facilitate action towards promising futures in ways that are as evidence-based as possible and effectively synchronised with market forces. Our paper makes three essential contributions to addressing this challenge: (1) We identify five influential methodologies for anticipating future competitive advantages, analyse their strengths and weaknesses, and suggest ways to consolidate their most valu¬able features in one synthetic approach. (2) In doing so, we emphasise the importance of disruptive change, stemming in particular from decarbonisation as well as the digitali¬sation of economic processes and products. Such game changers are likely to affect virtually all economic sectors, thereby reducing the predictive power of methodologies that essentially extrapolate from the past. (3) We highlight the need to contextualise the various analytical tools, and caution against using them as technocratic blueprints. To be of practical use, evidence-based assessments of future competitive advantages need to be embedded into a political economy framework that takes account of both societal objectives (normative level) and implementation capabilities (institutional level).
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World Affairs Online
In: Discussion paper 2014,28
The paper in a nutshell: In this paper, we present the normative concept of green industrial policy, which we define as encompassing any policy measure aimed at aligning the structure of a country's economy with the needs of sustainable development within established planetary boundaries. We elaborate on why we need green industrial policy, how it differs from conventional industrial policy, why it is faced with significantly bigger challenges, and how these can be met. What and how we produce and consume is largely shaped by markets. However, markets fail to solve many of the environmental challenges we are facing. Therefore, we need governments to intervene, thus reclaiming the primacy of public policy in setting and implementing societal objectives. While safeguarding the sustainability of human life on our planet makes green industrial policy a highly normative undertaking, the economic case for green industrial policy is strong as well – the success stories of such 'green' frontrunners as Germany and Denmark demonstrate the competitiveness potential of the new technologies. However, as shown by decades of discussion on industrial policy, government intervention almost invariably brings about risks of political capture and government failure. Green industrial policy is thus not only governed by ethical norms, but also by politics. The risks of failure are magnified by the urgency and scale of today's global environmental challenges, requiring particularly bold, comprehensive and well-orchestrated government intervention under high uncertainty. By highlighting lessons learned from practical cases of both success and failure, we show how these risks can be, and have been, managed. In particular, we submit that a broad- based social vision and contract need to be forged – supported by change coalitions and coupled with policy process safeguards, openness to policy learning, and an alignment of green industrial policies with market mechanisms.
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This Discussion Paper presents a normative concept of green industrial policy, which is defined as encompassing any policy measure aimed at aligning the structure of a country's economy with the needs of sustainable development within established planetary boundaries. The paper elaborates on the rationale of a green industrial policy, how it differs from conventional industrial policy, why it is faced with significantly bigger challenges, and how these can be met. Production and consumption patterns today are largely shaped by markets. However, markets fail to solve many of the environmental challenges the world is facing. Therefore, governments have to intervene, thus reclaiming the primacy of public policy in setting and implementing societal objectives. While safeguarding the sustainability of human life on our planet makes green industrial policy a highly normative undertaking, there is also a strong economic case for green industrial policy – the success stories of such 'green' frontrunners as Germany and Denmark demonstrate the competitiveness potential of the new technologies. However, as shown by decades of discussion on industrial policy, government intervention almost invariably brings about risks of political capture and government failure. Green industrial policy is thus not only governed by ethical norms, but also by politics. The risks of failure are magnified by the urgency and scale of today's global environmental challenges, requiring particularly bold, comprehensive and well-orchestrated government intervention under high uncertainty. By highlighting lessons learned from practical cases of both success and failure, this paper shows how these risks can be, and have been, managed. This involves both the disruption of old pathways (with locked-in technologies and infrastructure as well as stranded assets) and the creation of new pathways responding to sustainability imperatives. The paper argues that a broad-based social vision needs to be forged – supported by change coalitions and coupled with policy process safeguards, openness to policy learning, and an alignment of green industrial policies with market mechanisms.
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In: Deutsches Institut für Entwicklungspolitik Discussion Paper 28/2014
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Denmark and Germany both make substantial investments in low carbon innovation, not least in the wind power sector. These investments in wind energy are driven by the twin objectives of reducing carbon emissions and building up international competitive advantage. Support for wind power dates back to the 1970s, but it has gained particular traction in recent years thus opening up new innovation paths. This paper explores the key features, similarities and differences in innovation paths in Denmark and Germany and sheds light on their main determinants. The paper shows that there are many commonalities between Denmark and Germany when it comes to innovation pathways, both in technological and organisational innovation. In turbine technology, the similarities are the constant increase in turbine size and quality. The key difference to be found is the relative importance of different turbine designs. The 'Danish Design' remains the global standard. The direct drive design, while uncommon in Denmark, dominates the German installation base. Direct drive technology has thus emerged as a distinctly German design and sub-trajectory within the overall technological innovation path. When it comes to organising wind turbine deployment, both countries have moved along broadly similar paths. There are now fewer turbines deployed than at any time in the past 10 to 20 years, but on average these are concentrated in larger projects and the production capacity and total electricity output has increased significantly in both countries. The key difference is in the role of the offshore segment in deployment: Denmark has been a pioneer in the offshore segment, which has hitherto played a much smaller role in Germany. While this paper shows that there are many common features between the two countries, it also identifies a diversity of pathways, or rather, a co-existence of different sub-trajectories in both core technology and in the organisation of deployment. It is as yet unclear whether the future will bring more convergence or divergence. To address this, the paper explores specific determinants of innovation paths: government policies, demand conditions, geography, value chains, and the strategies undertaken by firms. It demonstrates that the innovation paths common to both countries have roots in a confluence of determining factors which are mainly due to social and political priorities, preferences and decisions at national level. However, the sub-trajectories, which create variation between Denmark and Germany, differ in this regard. They tend to have roots in 'given' geographical conditions and in company-level technology choices. In other words, many of the similarities in innovation paths between Denmark and Germany have common national causes, while company-specific strategies also influence the innovation paths in significant ways. This raises important questions about the national specificity of innovation paths in wind power development. Finally, the paper briefly addresses the increasing global interconnectedness of wind technology markets and the role of emerging new players, such as China and India.
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In: Lema , R , Nordensvärd , J , Urban , F & Lütkenhorst , W 2014 , Innovation paths in wind power : Insights from Denmark and Germany . GDI Discussion Paper , no. 17 , vol. 2014 , vol. 2014 , 17 edn , German Development Institute , Bonn .
Denmark and Germany both make substantial investments in low carbon innovation, not least in the wind power sector. These investments in wind energy are driven by the twin objectives of reducing carbon emissions and building up international competitive advantage. Support for wind power dates back to the 1970s, but it has gained particular traction in recent years thus opening up new innovation paths. This paper explores the key features, similarities and differences in innovation paths in Denmark and Germany and sheds light on their main determinants. The paper shows that there are many commonalities between Denmark and Germany when it comes to innovation pathways, both in technological and organisational innovation. In turbine technology, the similarities are the constant increase in turbine size and quality. The key difference to be found is the relative importance of different turbine designs. The 'Danish Design' remains the global standard. The direct drive design, while uncommon in Denmark, dominates the German installation base. Direct drive technology has thus emerged as a distinctly German design and sub-trajectory within the overall technological innovation path. When it comes to organising wind turbine deployment, both countries have moved along broadly similar paths. There are now fewer turbines deployed than at any time in the past 10 to 20 years, but on average these are concentrated in larger projects and the production capacity and total electricity output has increased significantly in both countries. The key difference is in the role of the offshore segment in deployment: Denmark has been a pioneer in the offshore segment, which has hitherto played a much smaller role in Germany. While this paper shows that there are many common features between the two countries, it also identifies a diversity of pathways, or rather, a co-existence of different sub-trajectories in both core technology and in the organisation of deployment. It is as yet unclear whether the future will bring more convergence or divergence. To address this, the paper explores specific determinants of innovation paths: government policies, demand conditions, geography, value chains, and the strategies undertaken by firms. It demonstrates that the innovation paths common to both countries have roots in a confluence of determining factors which are mainly due to social and political priorities, preferences and decisions at national level. However, the sub-trajectories, which create variation between Denmark and Germany, differ in this regard. They tend to have roots in 'given' geographical conditions and in company-level technology choices. In other words, many of the similarities in innovation paths between Denmark and Germany have common national causes, while company-specific strategies also influence the innovation paths in significant ways. This raises important questions about the national specificity of innovation paths in wind power development. Finally, the paper briefly addresses the increasing global interconnectedness of wind technology markets and the role of emerging new players, such as China and India.
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In: The journal of environment & development: a review of international policy, Band 27, Heft 1, S. 26-45
ISSN: 1552-5465
World Affairs Online
In: The journal of environment & development: a review of international policy, Band 27, Heft 1, S. 26-45
ISSN: 1552-5465
The transformation toward sustainability calls for profound renovation of economic structures, technologies, and institutions. The concept of green energy policy, which we define as encompassing any policy measure aimed at aligning the structure of a country's energy sector with the needs of sustainable development within established planetary boundaries, is critical to this end. We elaborate on why the state needs to play an eminent role in driving the green transformation in general and that of the energy sector in particular, why this brings about coordination challenges with nonstate actors, and how these can be met. We illustrate these aspects with energy policy examples from countries of the global South and, where illustrative, North. In particular, we argue that green energy policy success is subject to three conditions: effectiveness, efficiency, and legitimacy. These conditions can be achieved by facilitating societal agreement on the direction of change, forging change alliances, systematic policy learning, and using market mechanisms to manage policy rents and political capture.
In: Handwörterbuch internationale Organisationen, S. 197-212
The Discussion Paper examines the opportunities that the rising industrial wages in China will bring for Africa. China has been the industrial workbench of the global economy for decades. However, its competitive advantages are waning, particularly for labour-intensive assembly activities in the clothing, shows, electronics and toy industries. The Chinese government estimates that up to 81 million low-cost industrial jobs are at risk of relocation to other countries - unless China can keep the companies in the country through automation. Against this background, three complementary studies were carried out. The first examines where the automation technology for clothing and footwear production stands today; the second, how clothing companies in China deal with the cost pressure: to what extent they automate, relocate within China or abroad and how great is the interest in Africa as a production location. The third part is devoted to Africa's competitiveness in clothing assemly, with empirical findings from Ethiopia and Madagascar. The Discussion Paper shows that the manufacture of clothing can already be robotized today, but that for sewing, robotization will probably remain more expensive than manual labor in the next 15-20 years. China's companies are investing heavily in the automation of all other production processes and at the same time shifting production to neighbouring Asian countries. In Africa, only Ethiopia is currently competitive in the manufacture of clothing, and here too there are significant institutional difficulties in absorbing large amounts of direct investment.
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The Discussion Paper examines the opportunities that the rising industrial wages in China will bring for Africa. China has been the industrial workbench of the global economy for decades. However, its competitive advantages are waning, particularly for labour-intensive assembly activities in the clothing, shoe, electronics and toy industries. The Chinese government estimates that up to 81 million low-cost industrial jobs are at risk of relocation to other countries - unless China can keep the companies in the country through automation. Against this background, three complementary studies were carried out. The first examines where the automation technology for clothing and footwear production stands today; the second, how clothing companies in China deal with the cost pressure: to what extent they automate, relocate within China or abroad and how great is the interest in Africa as a production location. The third part is devoted to Africa's competitiveness in clothing assemly, with empirical findings from Ethiopia and Madagascar. The Discussion Paper shows that the manufacture of clothing can already be robotized today, but that for sewing, robotization will probably remain more expensive than manual labor in the next 15-20 years. China's companies are investing heavily in the automation of all other production processes and at the same time shifting production to neighbouring Asian countries. In Africa, only Ethiopia is currently competitive in the manufacture of clothing, and here too there are significant institutional difficulties in absorbing large amounts of direct investment.
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