How to prepare for revolution
Artificial intelligence, robotics, self-driving vehicles, 3D printing and bioengineering technologies will change our lives and become the new growth engines for the global economy. Robots are not science fiction anymore. AI is widely used in smartphones and digital health management products. Drones are flying for surveillance, military, agriculture and transport purposes. Companies and governments around the world are competing for new technologies.
In the history of humanity, technology has been a major factor for economic development. Thanks to the technological advancements, mankind could overcome natural conditions and physical limits and enjoy luxury and convenience. In 1775, James Watt invented steam engines that led to new sources of energy replacing human, animal, hydraulic and wind power, and the industrial revolution began. In 1879, Thomas Edison invented the light bulb, and artificial lighting kept factories, theaters and restaurants open after dark. The second industrial revolution began as the electricity supply network was established and electricity was used as a source of energy, making mass production possible.
The topic of the 2016 World Economic Forum in Davos, Switzerland, was the fourth industrial revolution. The third industrial revolution was the enhanced productivity and the internet connecting the world as a result of advancements in computer and information and communication technologies.
Now, the fourth industrial revolution has begun as cyberspace on computer networks and the physical world are connected and objects communicate automatically and intelligently. Advanced automation, hyper-connectivity and industrial convergence would bring a transformation in human history just as dramatic as the previous three industrial revolutions.
We need to be prepared for new technology. Development of major new technologies often makes conventional technologies obsolete and destroys existing industries. The development of online commerce and FinTech has affected bricks-and-mortar distributors and banks. Robots and Internet of Things will drastically change the way of production and influence consumer behavior and leisure activities.
The labor market will also see many changes. The invention of automobiles and computers have both eliminated and created jobs. The World Economic Forum’s “Future of Jobs” report analyzes that robots and artificial intelligence would eliminate 7.1 million jobs and add 2 million new jobs in 15 countries in the next five years. This is only an estimate, and the exact impact of new technologies on jobs and works is uncertain. But it is evident that the income gap between those who can use the technologies and who can’t will grow.
We also need to calmly analyze the opportunities the new technologies would bring and respond prudently. Some say that the fourth industrial revolution is nothing new but a continuation of the third industrial revolution as there hasn’t been a major technology whose impact is comparable to the steam engine, electricity, automobile, computer, internet or smartphone.
Moreover, it is uncertain how the fourth industrial revolution would enhance profits of investors and productivity of global economy in a long run. Past experience shows that it took a long time for a new technology to become commercialized and create profits. ENIAC, the first electronic computer, was invented in 1946, but Apple introduced personal computers in 1977. While some companies became successful, others made investments too early and failed.
It is risky for a company to give up too early or enter a new industry without preparation. Both strategic mindset and a bold pioneering spirit are needed. A government can also result in distorted investment distribution and adverse effects on overall economy if it intervenes without appropriate strategies.
Thomas Edison invented the lightbulb at age 32 and changed the world. He teamed up with a dozen mechanical engineers, mathematicians and chemists from various countries and succeeded after many failures. The invention was not made possible by the inspiration of a single genius. At the time, dozens of inventors competed to make a lightbulb, and technological innovations accumulated.
Compared to other developed nations, Korea is behind in entrepreneurship, innovation, labor and financial markets supporting technological advancement and efficiency in government policies, according to international organizations. We need bold entrepreneurs, outstanding engineers, wise investors, compensation system for risks, an efficient competition system, excellent education and research institutions, a legal and systematic environment and proper government assistance to create an ecosystem where more innovative companies can succeed. Park Geun-hye administration’s “creative economy” has not shown noticeable result yet. In the New Year, we need to refresh our pledges and work harder not to fall behind in the competition of the fourth industrial revolution.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, Feb. 6, Page 27
*The author is a professor of economics at Korea University.
by Lee Jong-hwa