Chapter 4—Technological Change

New consumers' goods, the new methods of production, or transportation, the new markets, the new forces of industrial organization that capitalist enterprise creates
• Innovation: the creation and diffusion of new ways of doing things—at the very heart of the processes of economic growth and development
• Fundamental force in shaping the patterns of transformation of the economy
Not see technology as being deterministic: as "causing" a specific set of changes, making particular structures and arrangements "inevitable", or creating a linear and predictable path of technological change
• Technological change therefore, is a socially and institutionally embedded process
• Conditioned by their social and economic context
• Choices and uses of technologies are influenced by the drive for profit, capital accumulates and investment, increased market share, and so on
• Second, technology should be seen as an enabling or a facilitating agent
Processes of technological change: an evolutionary perspective
• A form of learning—by observing, by doing, by using, of how to solve specific problems in a highly differentiated and volatile environment
• Depends on the transformation of inventions into usable innovations, and the subsequent adoption and diffusion or spread of such innovations
• In the economic sphere, this is essentially an entrepreneurial process
Types of technological change
• Incremental innovations: small scale, progressive modifications of existing products and processes, created through "learning by doing" and "learning by using." Although individually small—and therefore, often unnoticed—they accumulate, often over a very long period of time, to create highly significant changes
• Radical innovations: discontinuous events that that drastically change existing products or processes. A single radical innovation will not, on its own, have a widespread effect on the economic system, what is needed is a cluster of innovations
• Changes of technology system: extensive changes in technology that impact upon several existing parts of the economy, as well as creating entirely new sectors. These are based on a combination of radical and incremental technological innovations, along with appropriate organizational innovations, along with appropriate organizational innovations. Changes of technology system tend to be associated with the emergence of key generic technologies
• Changes in the techno-economic paradigm: truly large-scale revolutionary changes, embodied in new technology systems
Long waves
• One particular type of wave—usually known a s a K-wave—is a long wave of more or less 50 years duration
• Each wave may be divided into four phases: prosperity, recession, depression, and recovery
• Each of the waves is generally associated with changes in the techno-economic paradigm, as one set of techno-economic practices is displaced by a new set
• Each K-wave has a specific geography as well as technological leadership shifts over time, both in terms of lead nations and also at the micro-geographical scale
Information and communications technologies: entering a digital world
• Fifth K-wave has to do with ICT and digital technologies
• New information technologies are not simply tools to be applied but processes to be developed
• But the current generation of information technologies has one very special characteristic: based on the convergence of two individually distinct technologies: communications technologies or computer technologies
Time-space shrinking technologies
• Processes of circulation are fundamental to the operation of production circuits and networks
• Circulation technologies—transportation and communications technologies—overcome the frictions of space and time
• Transportation systems are the means by which materials, products, and other tangible entities are transferred from place to place
• Communications systems are the means by which information is transmitted from place to place in the form of ideas, instructions, images, and so on
• Helped progressively to transform the economic-geographical landscape, at increasing geographical scales and shorter periods of time
Accelerating geographical mobility: innovations in transportation technologies
• In terms of the time it takes to get from one part of the world to another there is no doubt that the world has "shrunk" dramatically
• Steam power as a means of propulsion and the use of iron and steel for trans, railway tracks and ocean-going vessels
• Flows of materials and products were enormously enhanced and the possibilities for geographical specialization greatly stimulated
Take-off: the introduction of jet aircraft
• One was the introduction of commercial jet aircraft
• Enabled precedent rapid individual travel over vast distances, allowing face to face meetings at times and in places hitherto unrealistic
• Take off of TNC growth and the take off of commercial jets in the 1950s
• The second significant effect of jet transport was in the movement of certain kinds of freight
Moving in bulk: containerization
• The other major development was the introduction of containerization for the movement of heavy and bulky ocean and land freight, an innovation that vastly simplified transshipment of freight from one mode of transportation to another, increased the security of shipments and greatly reduced the cost and time involved in moving freight over long distances
The unevenness of time-space convergence
• Shrinkage has been and continues to be highly uneven
• The big investments needed to build transportation infrastructures tend to go where demand is greatest and financial returns are highest
• Consequently time space convergence affects some places more than others
• The time-space surface is highly plastic; some parts shrink whilst other parts become extended
Everywhere is at the same place: innovations is communications technologies
• Communications technologies—the key technologies transforming relationships at the global scale
Transmission channels: satellites and optical fibre cables
• Satellite technology began to revolutionize global communications from the mid 1960s when satellites were launched
• Satellite technology made possible remarkable levels of global communication of both conventional messages and the transmission of data
• However, for the most parts of the world, satellite communications have been increasingly challenged by optical fibre technology carried within submarine cables
• Since then, technological developments in optical fibres have continued to accelerate, vastly increasing the speed and capacity of communications networks
• As a consequence more than 90 percent of all international telecommunications is now transmitted using optical fibre cables
The internet: the skeleton of cyberspace
• Its origins go back to the early 1970s and are to be found within the US Department of Defense. It spread initially through the linking of more specialized academic computer networks and, for some time, it seemed that it would remain a niche technology. Not so.
• Internet communication has replaced a huge swathe of conventional communications methods.
The electronic mass media
• The development of electronic media during the 20th century provided one of the major ways in which people learned about things going on in other parts of the world
• Do not require high level of literacy
• The existence of such markets obviously depends on income levels, but it depends on potential customers becoming aware of a firm's offerings and being persuaded to purchase them
• The electronic mass media are particularly powerful means both of spreading information and persuasion; hence their vital importance to the advertising industry and to branded products
The electronic mass media, continued
• Although the electronic media transmit messages of all kinds, a very large proportion of these messages are commercial messages aimed at the consumer
• Because commercial advertising is a feature of most mass media networks throughout the world, the communications media open the doors of national markets to the heavily advertised, branded products of the transnational producers
• During the past three decades there has been a major phase shift in the mass media with the appearance of cable and satellite broadcasting and a widespread deregulation of the media
• Global village: certain images are shared and events take on the immediacy of participation
• Customized cottages: the real situation
Communications on the move: towards a wireless world
• Phenomenal growth of mobile communications, especially the mobile phone
• The geographical range and sophistication of mobile phones and their operating systems have increased dramatically
• The introduction of smart-phones like the iPhone, is transforming the mobile phone to a multi-purpose, integrated communications device which can do almost anything
• Technological convergence between computing and communications
• Enormous social and economic changes as they free users (whether they be business or individuals) from the physical tie to fixed communications infrastructure
Digital divides: an uneven world of communications
• The outcomes are immensely uneven. Not all places are equally connected
• By no means everywhere benefits from technological innovations in communications. The places that tend to benefit most are the already important places
• The cumulative effect is both to reinforce certain communications routes at the global scale and to enhance the significance of the nodes on those routes
• Internet is far form being placeless/spaceless phenomenon so often envisioned
• Building the internet on top of existing infrastructure in the way merely reinforces real-world geography
Digital divides: an uneven world of communications, continued
• The persistent geographical unevenness in the provision of communications infrastructure is a major problem at the global scale
• There is a real and serious digital divide between those places and people with access to communications technologies and those without
• The most promising new development for helping to bridge the digital divide is, without doubt, the mobile phone and the spread of wireless capabilities
• In fact, there have been great strides towards connecting the previously unconnected with growth most significant in developing regions
Technological innovations and products and processes
• A firm's profitability can be enhanced through increased penetration of existing markets or expansion into new geographical markets
• However, all products have a limited life span; what is generally referred to as the product life cycle (PLC)
• However, in general, product cycles have been becoming shorter, increasing the pressure on firms to develop new products or to acquire them from other firms
• At any stage, the production process may be rejuvenated by technological innovation
Three ways to maintain or increase a products' sale
• To introduce a new product as the existing one becomes obsolete so that overlapping cycles occur
• To extend the cycle for the existing product, either by making minor modifications in the product itself to update it or by finding new uses
• To make changes to the production technology itself to make the product more competitive
Changes in production systems: towards greater flexibility and leanness
• Production process has developed through a series of stages, each of which represents increasing efforts to mechanize and to control more closely the nature and speed of work
• Five stages have been identified:
o Manufacture
o Machinofacture
o Scientific management
o Fordism
o Flexible and lean production
Changes in production systems: towards greater flexibility and leanness, continued
• Two particular important processes are those of flexible specialization and flexible mass production
o Trend toward information intensity
o Enhanced flexibility of production
o Shift towards multitasking
o Greater emphasis on team-working
o Individualized payment systems
• Diversity of production systems—where the relative importance of specific processes is changing
Changes in production systems: towards greater flexibility and leanness, continued
• Trend towards:
o Increasingly fine degrees of specialization
o Increasing standardization and routinization of these individual operations
o Increasing flexibility in the production process
o Increasing modularity
Geographies of innovation
• Innovation—the heart of technological change—is fundamentally a learning process
• Processes have a distinctive geography
• Conditions of knowledge accumulation are highly localized
• Knowledge is produces in specific places and often used in those same places
• Certainly there is a lot of evidence to show that the volume and characteristics of technological innovation vary greatly by country
• The rapid growth of Chinese patents is matched by the aw-inspiring expansion of Chinese science and its emergence as the second largest producer of scientific knowledge
Localized knowledge clusters
• National systems of innovation are not homogenous entities
• They consist of aggregations of localized knowledge clusters
• Kinds of knowledge
o Codifid (explicit) knowledge: kinds of knowledge that can be expressed formally in documents, blueprints, software, hardware, etc
o Tacit knowledge: the deeply personalized knowledge possessed by individuals that is virtually impossible to make explicit and to communicate to others through formal mechanisms
• Codified knowledge can be transmitted relatively easily across distance.
• Tacit knowledge has a steep distance-decay curve. It requires direct experience and interaction—dependent on geographical proximity
Localized knowledge clusters, continued
• The specific socio-technological context within which innovative activity is embedded—what is sometimes called the innovative miliu—is a key factor in knowledge creation
• Localized patterns of communication; geographical distance greatly influences the likelihood of individuals within and between organizations sharing knowledge and information links
• Localized innovation search and scanning patterns: geographical proximity influences the nature of a firm's search process for technological inputs or possible collaborators. Small firms, in particular, often have a geographically narrower "scanning field" than larger firms
Localized knowledge clusters, continued
• Localized invention and learning patterns: innovation often occurs in response to specific local problems. Processes of learning by doing and learning by using tend to be closely related to physical proximity in the production process
• Localized knowledge sharing: because the acquisition and communication of tacit knowledge are strongly localized geographically, there is a tendency for localized "knowledge pools" to develop around specific activities
• Localized patterns of innovation capabilities and performance: geographical proximity, in enriching the depth of particular knowledge and its use, can reduce the risk and uncertainty of innovation
• Nexus of untraded interdependencies set within a temporal context of a path dependent process of technological change