Session 3

Brief Overview/Summary

The third TWC lesson was about Technology and Industrial Development: Moving Towards Sustainable Development, followed by the topic on Technology and Innovation Management.

Interesting Observations and Ideas

Prof Shahi started the lesson by sharing how the US makes up of 5% of the world’s population, but they are using 30% of the world’s resources. This means that if everyone uses natural resources like how the US does, we will need 3-4 planet Earths for everyone to survive. With this, one-third of the Earth’s natural resources have been depleted and sustainable technology must be quickly created and put into place so as to maximize value creation without reducing options for future generations. This shows a strong need for industrial and technological processes to shift to a more sustainable system so as not to deplete the finite resources available on Earth.

Prof also talked about how humans are the greatest “copycats”. As mentioned in Reading 2 of Session 3a, “(Industrialization) catch up has accelerated since the 19^th century, due to increased globalization, greater possibilities for international technology transfer and increasing advantages of backwardness”.

This shows that there are actually advantages to backwardness! Countries who develop at a later stage compared to others are able to benefit from knowledge spillovers from other developed countries. They do not need to incur high costs of innovation and invention to achieve high levels of technology. For example, Africa is about to be one of the fastest growing economies in the coming years. According to an analysis done by The Economist, “Real GDP rose by 4.9% a year from 2000 through 2008, more than twice its pace in the 1980s and ‘90s.” This can be attributed to the rapid dissemination of knowledge from developed neighbors, where they are able to use to aid development in the country.

During the second part of the lesson, Prof Shahi shared about the conceptual framework of innovation management. The Valley Opportunities” refer to commercialized markets, which has low barriers to entry and start-up cost. This market structure is very similar to the monopolistic competition, where firms share very common knowledge of investments and innovation. The Summit Opportunities refer to markets with just a few competitors, with high barriers to entry. This market structure is very similar to the oligopolistic and monopoly structure, where either one or a few firms have high interest for investments to differ themselves from their competitors. These firms are very knowledge intensive and are always innovating to reach the Cloud Opportunities. Cloud Opportunities refer to firms with “future” economic principles and are keen to invest in future technologies, which seem impossible today.

Firms today must invest in research in intensive research and development to differ themselves from their competitors to earn more profits. It is only through R&D that they are able to move from Valley Opportunities to  Summit Opportunities, and lastly to Cloud Opportunities. Likewise, if Cloud Opportunities firms do not invest in research and development, other firms, which innovate greatly, will overtake them, bringing them to back to the Valley Opportunities section of the spectrum.

Lastly, I was very impressed with Prashant’s presentation on fashion and how it has detrimental effects on the Earth. It is very uncommon to link fashion with unsustainable technology today. However, I realized today that the productions of most of the clothes we wear today are actually harmful to the Earth. Also, the concept of shopping also has detrimental effects on Earth. The use of receipts and plastic bags rapidly deplete natural resources such as forests and oil. On the other hand, the concept of online shopping, which is becoming increasingly popular today, helps to control the depletion of resources.

According to my research, skincare and beauty products are also harmful to the Earth. The Body Shop promotes its product as being made from almost natural ingredients, and this entices people to purchase their products. However, as people purchase their products, they do not realize that the mass production, packaging and transportation of huge quantities of their goods are using up the world’s resources faster than they can be renewed. At the same time, the production techniques are filling the land, sea and air with dangerous pollution and waste. Also, as the sole buyer of oil from the Kayapo Indians in Brazil, The Body Shop exploits the indigenous people by buying oil at a low price, without considering or safeguarding the Indians’ future interests. This slows down the rate of sustainable social development on Earth. 

Key Takeaways

1)   The homeostatic mechanisms of the Earth are being overstretched by human activities, and industrial processes need to move to a more biodegradable system to prevent this from worsening.

2)   Sustainable technology must be able to internalize the externalities created by industrialization.

3)   Investments in research and development are crucial and necessary for advancement in sustainable technology.

4)   It is a three-step process (Research à Development à Application) for a new product to enter the market today. However, knowledge spillovers are very common today, making new inventions copied. This decreases a firm’s incentive to invest in innovation, knowing that their knowledge will spread to competitor firms.

5)   In relation to Yali’s question, uneven social and economic developments around the world today root from the country’s incentive to invest in research and development. It is only with research and development where a country can advance and reach greater heights of technological advancement.

Issues for Further Discussion

1)   Are biodegradable clothes and beauty products possible to be made in the near future?

2)   Are consumers today really interested in the protection of the Earth based on the products that they consume? (I.e. are people willing to pay an extra amount of money for energy-saving light bulbs?)

3)   Will sustainable energy ever be free for consumption all around the world?

Personal Ratings

I would rate this lesson 9/10. Sustainable energy is a pressing issue today, which needs to be solved as soon as possible so that future generations do not have to suffer for our actions today. I found today’s class very interesting, as it is very relatable to our world and society today.