How robots could set the developing world free

Not necessarily. Offshoring may save on payroll costs, but can be expensive in other ways. Distance from home markets and the difficulty of operating in an unfamiliar regulatory environment can both take their toll. Then there’s the potential threat to intellectual property and the opportunities for efficiency improvement that get lost when the shopfloor is a half-a-world-away from designers, engineers and other specialists.

It seems likely that many companies would re-shore their manufacturing facilities and call centres if they didn’t have to pay higher wages – or, indeed, any wages.

That could have devastating consequences for the countries left behind:

“Without a cost incentive to locate in the developing world, corporations will bring many of these functions back to the countries where they’re based. That will leave emerging economies, unable to grasp the bottom rungs of the development ladder, in a dangerous position: The large pool of young and relatively unskilled workers that once formed their greatest comparative advantage will become a liability — a potentially explosive one.”

China, though, will be fine.

As highlighted before on UnPacked, the Chinese want much more for themselves than to be the ‘workshop of the world’; Chinese demographics mean that the country can’t rely on an endlessly abundant labour supply; and, in any case, Chinese technological expertise and domestic consumer markets are strong enough to keep a heavily automated manufacturing sector at home.

The real threat is to those much poorer countries that hope to get the sort of jobs from China that China once got from the West. In other words, if robotics and AI puts an end to the advantage of having a young and cost-competitive workforce, it could also end the spread of industrialisation and the prosperity that comes with it.

That looks like especially bad news for Africa – the great population growth centre of the 21st century. A different way forward is required:

“…what is an emerging economy to do? The first step is to recognize that the traditional paths to economic development — the China and India models — are no longer viable… The next wave of emerging economies must chart a new course.”

The developing world’s use of new technology to leapfrog entire stages of development that richer countries had to go through is a well-documented phenomenon. Examples include mobile phone-based financial services in places where there are no high street banks or, indeed, high streets. Then there’s the use of distributed forms of renewable energy where there are no electricity grids or big central power stations.

But that’s just for starters. If progress in artificial intelligence results in significant automation of specialisms such as the law, accountancy and education, then developing countries may be able leapfrog a lot of the services infrastructure that appears to be so essential to the functioning of a western economy.

Note that this does not require complete automation. For instance, in ten or 20 years time, an AI ‘law bot’ probably won’t be able to do everything that a London QC can do now, but it might be able to undertake more basic legal work. Such tools could combine to allow developing economies to advance without the highly expensive – and, one might argue, self-justifying – public and private sector bureaucracies that weigh us down in the West.

This would free the brightest and best in rising nations to focus on real entrepreneurship and true innovation.

Well, that’s the optimistic scenario – but why not go for it?

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Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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