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September 5, 2007
Snippets from the I-Cubed Economy
Two stories from this week's Christian Science Monitor that illustrate the shifts taking place as the I-Cubed (Information-Innovation-Intangibles) Economy evolves. The first is about the rise of China as an innovative economy -- China ready to leap from industrial to information-age economy:
After 30 years of securing China's role as the cut-rate factory to the world, its central planners are pouring money and political will into becoming an innovation economy.I think the story is too pessimistic about China's shift. By focusing on the top-down view of China, they (and other observers) may be missing the bubbling entrepreneurial activity coming from below. Remember, we said the same thing about the Japanese economy -- before they took over the consumer electronics industry.
But like other Asian tigers before it, China is finding making the shift from textile mills to Silicon Valley isn't easy. The biggest challenge is nurturing technological creativity in a society run from the top down, says a chorus of foreign and local experts.
The second story is about the Great global shift to service jobs:
For the first time in human history, more people are laboring in service trades than in food production, according to data gathered by the International Labor Organization (ILO), an agency affiliated with the United Nations.
As recently as 1996, agriculture accounted for 42 percent of world employment, with another 21 percent of workers in goods-producing industries and 37 percent in services. By last year, the ILO says in a report released over the weekend, 42 percent were in services, 37 percent in agriculture, and 22 percent in industry.
Most of the story talks about the opportunity this shift presents for developing countries. On this, I think they may be too optimistic. India has been able to capitalize on the offshoring of services, but that is because of a large English-speaking, well-educated, technically trained set of workers (large by industry standards, but still a small percentage of the Indian population). Other countries may not be able to repeat that success (Singapore and Ireland as special cases). Offshoring of services will remain a challenge for US competitiveness, but not necessarily a huge breakthrough for most developing countries.
By the way, the ILO report - “Key Indicators of the Labour Market (KILM), fifth Edition” shows that the US is the world leader in productivity.
What’s more, the report also shows that the productivity gap between the US and most other developed economies continued to widen. The acceleration of productivity growth in the US has outpaced that of many other developed economies: With US$ 63,885 of value added per person employed in 2006, the United States was followed at a considerable distance by Ireland (US$ 55,986), Luxembourg (US$ 55,641), Belgium (US$ 55,235) and France (US$ 54,609).
However, Americans work more hours per year than workers in most other developed economies. This is why, measured as value added per hour worked, Norway has the highest labour productivity level (US$ 37.99), followed by the United States (US$ 35.63) and France (US$ 35.08).
So, the French are almost as productive as the Irish - home of the Celtic Miracle. And on an hour by hour basis, the French are almost as productive as the Americans. Interesting.
Posted by Ken Jarboe at September 5, 2007 7:20 AM
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