Automation: exaggerated threat of robots

Original author: Nico Beckert
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Lack of jobs and insufficient industrialization impede the development of many African countries. And now, apparently, there is another threat: production automation. However, it will still be a long time before robots become cheaper than workers from Africa.

Industrialized countries use low-paid labor to build industry and mass production. Today in Africa, labor is relatively cheap, so a similar process of industrialization can take place there. Some people worry that robots will be able to block this path of development. Robots are most useful in performing routine tasks - namely, such work is typical for mass production with large labor costs.

But so far, robots are too expensive to replace thousands of workers in industries with high labor costs, most of whom are in a very early industrialization process. Robots today are best used in more technologically advanced things, like the automotive industry or the electronics industry.

Difficult digital environment

Even the rapid decline in the cost of robots will not lead to the replacement of workers in the short term in Africa, where countries are seriously lagging behind in speed of the Internet and other information and communication technologies. They lack good IT experts. Other problems include unreliable energy sources, the high cost of electricity and the financing of new technologies. For these reasons, it will be difficult and expensive to integrate robots and other digital technologies into African product lines.

Accordingly, there remains the possibility of industrialization using labor-intensive industries. African countries are unlikely to be able to jump over several stages of technological development. It is more likely that the local business environment will develop gradually, as has happened elsewhere. First, you need to create basic infrastructure - including reliable energy sources, roads, ports, finance, financing, personnel. And on this foundation companies will already be able to build industries with a large number of jobs.

When the digital environment becomes sufficiently appropriate, then it makes sense to use robots that eliminate some jobs. However, at the same time, these countries will be able to use new technologies for the production of new products, which will create new jobs.

International competition

However, there is another threat - international competition. Industrial robots allow countries like Germany, USA, Japan and China to produce more competitive products than ever before. In these countries, robots cost less well-paid workers. Robot companies from these countries can surpass African companies, the main competitive advantage of which is low wages.

But this threat is not new. Technologically advanced and innovative manufacturers have always squeezed other companies from the market and complicated the work of companies from less innovative countries. What matters is how governments respond to these hazards.

China introduces a policy of promoting technological industries, such as the auto industry and electronics. For example, foreign automakers are obliged to form joint ventures with Chinese firms, so that their production operated in China. This strategy has provided Chinese firms with access to technology from foreign corporations.

At the UN Conference on Trade and Development, it was stated that automating products with robots and the savings resulting from these funds over the medium term could lead companies to transport production from developing countries and emerging markets back to industrialized ones. It will hurt the growth of African industries involved in global food chains.

So far, the possibilities of production made by Western companies abroad are three times higher than the production that was returned home. A report from the German Development Institute states that the Chinese government expects 85 million low-wage jobs to disappear - and some of them may move to Africa.

It is not yet clear whether this trend will continue, or will be reversed. Transferring jobs back to the company's homeland only makes sense when automatic home production becomes cheaper than low-paid production in Africa.

Calestos Juma, a professor at Harvard School. Kennedy at Harvard University, who died in 2017, stressed: "Jobs are created or disappear not because of the emergence of a single technology, but because of business models designed to take advantage of this technology." As with previous automation processes, it is hard for African countries to reap the benefits of new technologies because of their limited ability to compete and the lack of digital technology.

Africa needs trade and industrial rules that will give her time to build industrial plants. Digital infrastructure, trained workers and affordable financial opportunities should be features of the business climate. Otherwise, it will be impossible to profitably use in the production processes of robots. If, on the other hand, African opportunities for innovation improve, it will help balance the negative effects of automation. Modernization on the basis of technology will be favorable both in terms of innovative products and in terms of new jobs.

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