What might production look like in 10 years?Insights from the OECD STI Outlook 2016
Michael Keenan, OECD
Smart Industry Conference: Enabling the Next Production Revolution -
Implications and Strategies for Industry and Policy
17 November 2016Stockholm, Sweden
What might production look like in 10 years?
What are the main factors underpinning the next production revolution?
• Technological change• Effects
• Pace and direction
• Distribution of benefits and risks
• Non-technological factors• Demand, shaped by demographics,
macroeconomics, political stability, etc.
• Supply of capital, raw materials, skills, machinery, etc.
• Firm-level strategies
• Risks, e.g. to environment and human well-being
• Public policy
Outline of this presentation
• Brief introduction to the OECD’s STI Outlook 2016
• Key technology trends
• Megatrends shaping future production
• Roles of policy
Science, Technology and Innovation Outlook 2016
“What’s new in the field of science, technology and innovation policy? “
International review based on latest policy information and indicators
Unique policy questionnaire
A 20-year tradition. Every 2 years.
2016 edition
Includes a 10 year forward look
Key emerging technologies
Megatrends for STI
Future research systems
TECHNOLOGY TRENDS
• Technological change is a significant megatrend in its own right, but there is uncertainty about its future directions and impacts.
• Various types of technology assessments can provide useful insights
• The STI Outlook maps and compares the results of recent foresight exercises
• On that basis, we focus on 10 technologies that are expected to be disruptive in the near-to-medium term future
• Each of the 10 technologies has a 3-page fiche that provides a brief introduction and discusses potential areas of application, conditions for future development, and possible future barriers, including technological, social and ethical issues
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Technology trends
Canada – Metascan 3: Emerging technologies: A foresight study exploring how emerging technologies will shape the economy and society and the challenges and opportunities they will create (2013)
European Commission– Preparing the Commission for future opportunities: Foresight network fiches 2030 (2014)
Finland – 100 Opportunities for Finland and the World: Radical Technology Inquirer (RTI) for anticipation/ evaluation of technological breakthroughs (2014)
Germany – Forschungs- und Technologieperspektiven [Science and Technology Perspectives] 2030: Ergebnisband 2 zur Suchphase von BMBF-Foresight Zyklus II (2015)
United Kingdom – Technology and Innovation Futures: UK Growth Opportunities for the 2020s –2012 Refresh (2012)
Russian Federation – Russia 2030: Science and Technology Foresight (2014)
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Mapping of national (& EC) foresight exercises
40 key and emerging technologies
Internet of Things
Big data analytics
Artificial intelligence
Neurotechnologies
Nano/microsatellites
Nanomaterials
Additive manufacturing
Advanced energy storage technologies
Synthetic biology
Blockchain8
10 disruptive technologies for the (near?) future
Digital technologies (1)
• Internet of Things
• Potential to improve factory operations – maintenance of machines, enabling fully automated production processes, better waste management
• Improve supply chain management – product logistics, inventory management
• Developments depend on big data analytics and AI
• Interoperability issues
• Data protection and security concerns
• Big data analytics
• Allows firms to closely monitor and optimise their production processes
• But can also provide information on customer preferences, enabling more personalised products
• Skills are a major concern
• Privacy and security issues
Digital technologies (2)
• Artificial intelligence
• Machine learning that empowers new kinds of software and robots that increasingly act as self-governing agents
• Will expand the scope of task automation, displacing labour
• Issues around legal responsibility / liability
• Robotics
• Increasingly flexible and autonomous, with the ability to adapt to changing working conditions
• Labour displacement / augmentation potential
• Blockchain
• Smart contracts and their impacts on the supply chain
Nanomaterials and additive manufacturing
• Nanomaterials• Display unique optical, magnetic and electrical
properties that can be exploited in production
• New materials, e.g. alloys, polymers
• Process innovation, e.g. catalysis, layered printing
• Technical barriers have hindered them realising their promise – current market value EUR 20 Bn
• Issues of safety and toxicity• Additive manufacturing
• Used in prototyping, tooling and manufacturing
• Generally profitable for small quantities of highly complex and increasingly customised products
• Coupled with digitisation, it has the potential to better integrate product design, manufacture and delivery
• Uncertain environmental impacts
• Risks of IP infringements
Synthetic biology
• Drawing on engineering principles in genetic manipulation
• Standardisation, modularisation and interoperability, e.g. biobricks as functional components
• To design and construct new biological parts or re-design natural biological systems for useful purposes
• Wide and varied applications • Energy, medicine, agriculture and chemicals
• Bio-based production of new materials
• An enabler of DIY biology / biohacking• Potential engine of innovation (c.f. Silicon Valley)
• Obstacles and concerns • High costs of DNA synthesis
• Biosafety and biosecurity concerns
• Ethical issues, e.g. around gene editing
Neurotechnologies
• New generation of brain-computer interfaces
• Deployment in design and manufacturing
• Cognitive enhancements
• Also to offset cognitive decline with age
Nano- and micro-satellites
• Revolution in the design, manufacture and deployment of satellites
• Speed and flexibility of production at low cost
• Opening space to all, e.g. popular with universities for technology demonstration
• Promise in agricultural production – monitoring
0
100
200
300
400
500
600
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Number of satellites (1-50kg)
Historical launches Full market potential SpaceWorks projection
Launch history and projection for nano- and microsatellites, 2009-20
Source: SpaceWorks (2014), www.sei.aero/eng/papers/uploads/archive/SpaceWorks_Nano_Microsatellite_Market_Assessment_January_2014.pdf.
Advanced energy storage technologies
• New energy storage technologies could change where, when and how energy is used
• Battery technologies to support more autonomous robotics
• Support the adoption of renewables in production
• A range of different energy storage technologies are still in early stages of development
Maturity of energy storage technologies
Source: IEA (2014), “Energy storage”, IEA Technology Roadmaps, http://dx.doi.org/10.1787/9789264211872-en
Some common themes
• Emerging technologies are expected to have wide impacts across many fields, some of which cannot be anticipated
• Public sector research plays pivotal roles in developing emerging technologies
• Technology convergence and combination are important and point to a need for cross-disciplinary institutional set-ups – for example, for carrying out R&D work and for offering skills training
• Emerging technologies carry several risks and uncertainties, and many raise important ethical issues, too
• Communities and citizens are playing increasingly prominent roles in developing and exploiting some technologies
• Technological change creates winners and losers, with implications for competition, IP and the distribution of benefits
MEGATRENDS
8 megatrend areas for STI
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Demography (1)
Demographics will be important in determining what products are most demanded by consumers, and where production is located. Notable long-term trends:
• Growth of Africa
• Ageing societies
• Migration
Demography (2)
Impacts of demographic change on demand:
• A growing middle class
• Increasing urbanisation
• Smaller but more numerous households
Environment and resources
Environmental conditions and the growing scarcity of some raw materials will increase pressures for materials-, water- and energy-efficient production
Distribution of production
Ongoing economic globalisation will augment competitive pressures that spur innovation and favour automation in high-income economies. This could see a “reshoring” of some manufacturing, for example.
At the same time, as emerging economies’ markets grow and their STI investments increase, they may remain favoured locations for manufacturing
Roles of emerging economies
• Emerging economies will seek to move up the ‘value chain’
• Differences in manufacturing and services will become increasingly blurred
• Expected increase in automation
• Multinationals from emerging economies could ‘leapfrog’ to pioneer some parts of the NPR
• Underpinned in part by domestic skills formation but also by M&A activities in more advanced economies
Slowdown in productivity growth
• Decline in the rate of technological progress?
• Slowdown in diffusion from frontier firms?
• Lag time?
• Duality of the “platform economy”
• Slowdown in capital and KBC investments
• Financialisation and its impacts on long-term investments?
• Mismeasuring economic activities?
Employment, wages and debt
• Manufacturing jobs are in decline, a trend that this is likely to continue in the NPR
• Hollowing out of employment and wages: growing precariat working in ‘non-standard’ jobs
• Consumption underpinned in part by rising household debt?
Plight of the young
• Continued accumulation of human capital in OECD countries, which has trended upwards for decades, could favour the production of increasingly knowledge-intensive products
• However, youth unemployment remains stubbornly high in many countries and young people are increasingly exposed to income poverty risk
Rising inequality
• The world is getting richer, but the benefits are increasingly skewed
• Widening income distribution and wealth gaps, a trend projected to continue
• Poses major political, social and economic risks
• Undermines social mobility
Expectations of government intervention?
Public policy and spending have essential roles to play
But governments’ scope for intervention may be further limited
Policy issues
• The range of policy issues is broad, which highlights the need for policy coordination
• Supportive framework conditions for innovation
• Public research has essential roles to play – open, connected
• Education and skills systems will drive / need to keep pace with technological change
• Support to technology diffusion is as important as novel technology development
• The need to address the distribution effects of technological change – labour markets, innovation rents, etc.
• Policy processes
• Forward-looking, and systematic in using evidence
• Inclusive
• Need for new institutional forms for ‘governing’ technological change? For example, to realise the promises of responsible research and innovation