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Science-Based Economic Development edited by Susan Raymond
Robert M. Stempel
Executive Director
Energy Conversion Devices
This meeting brings together an honored group from around the world to consider the impact of technology and the changes it is wringing on the economies
of developing countries Indeed, as we approach the year 2000, technology is now changing the entire world, much the way the Industrial Revolution changed it as we entered the year 1900.
But there is a significant difference between the beginning of this century and the next, notably the pace of change. Things are moving very rapidly, a situation that affects the education and training of all of our citizens. What worked in the past may not work today. Earlier an education obtained early in life could satisfy one's needs for one's working life, with perhaps only minor changes. Today we have job categories that did not exist five years ago, and rapid advances have been made in traditional areas such as engineering. If a professional hasn't been back to school for the last five or six years, his or her skills are likely becoming obsolete. Retraining and learning new skills is absolutely necessary, and education is key to the successful implementation of technology, especially new technologies. It requires people capable of understanding the technology and most importantly, able to use it.
We're often reminded to look back in history and learn from the lessons of the past. But emerging countries don't have to develop the way we did. The new technology can be introduced as a step function. We don't have to start from a prior, well established base to prosper in the future.
Information technology is just one area in which change is occurring quickly A few years ago 120 megabytes of storage was more than adequate for most computers and most computer applications. Last summer, through our licensees, Ovonic phase change, erasable optical memory was introduced with 650 megabytes of capability. Matsushita, the lead licensee, had to increase its Panasonic power drive production six times since July 1995. Already we're been asked, how many more bytes can you get on the disk?
In short, people are willing to accept change, and it comes rapidly. Managing change is always difficult, and when the pace of change is so rapid- revolution instead of evolution- government is often eager to step in and " help," in developing countries just as in the developed countries. I firmly believe the role of government includes helping, but by facilitating, not dictating.
Governments should not try to pick winners and losers among the emerging technologies. One example of their inability to do so comes from several decades ago when MITI, the Japanese Ministry of Industry and Trade, wanted to be sure that the country's emerging automotive industry was protected and developed into a strong industrial base. A major motorcycle manufacturer wanted to enter the car business, but MITI did not want them to. There are undoubtedly some in Detroit who wished they hadn't entered the car business either, for Honda's success in moving from motorcycles to automobiles to standby power is well known and created many more work places than if the company had just stayed with motorcycles. Today, not only has Honda prospered, but MITI has changed its rule too, focusing on pulling emerging technology to commercialization. It's a very important change.
The U.S. government has also wanted to help U.S. industrial companies since the end of the Cold War. Of course many defense and weapons projects have been terminated, and with forethought the government decided to make the U.S. National Laboratories available to commercial industry in this country, shifting from primarily defense projects to helping industry apply newly emerging technologies to commercial projects. The U.S. government also wanted to move primarily from a regulatory relationship with industry to one that included a focus on long-term research and development. There was also a desire to improve the long-term productivity of the U.S. manufacturing base by upgrading manufacturing technology. In September 1993 President Clinton and the leadership of U.S. industry announced the formation of the Partnership for a New Generation of Vehicles (PNGV). It was a partnership of industry, both the original equipment maker and suppliers, with the government, including the departments of energy, defense and commerce, the National Labs, and a variety of education and training units. Initially it became known as the scheme to develop an "eighty mile-per-gallon car with a little bit of corporate welfare involved." But in fact it's quite different.
Three goals are being actively pursued today, and while it's not perfect, the partnership demonstrated that very diverse sectors can work together if we have a common agenda. The goals include:
The PNGV encourages joint research and development among competitors, some thing that was not possible a few years ago because of U.S. antitrust laws.
There is now a little-publicized change, the National Cooperative Research Act of 1984, which permits precompetitive research and development among industrial competitors. One of the first shared projects was the National Center for Manufacturing Sciences located in Ann Arbor, Michigan, and funded by several different industries in 1984. Four years later the auto industry formed its first research consortia after a very involved legal process to insure compliance with antitrust laws. (Recall that when the Clean Air Act of 1970 was enacted, it specifically prohibited cooperation between government and industry. The individual, costly, separate research resulted in a common solution: The catalytic converter and unleaded fuels. But much time and money would have been saved had automobile companies been able to work together.)
One of the very first PNGV projects involved automotive seating, which may seem surprising since seats have been around since the days of the horse and buggy. It's a very traditional manufacturing process, but was there a better way to do it? A tier-one supplier actually led the project which involved Ford, Chrysler, and General Motors, as well as tier-two and tier-three suppliers. At the conclusion, productivity was improved 50 percent. The twelve weeks of total supplier inventory was reduced to six weeks of inventory. Agile or flexible manufacturing processes were introduced that facilitated the rapid design changes, and quality was improved.
Those kind of projects, of course, pay off handsomely in manufacturing productivity and there are many more underway. While PNGV was started as a U.S. project involving manufacturing firms in close proximity, today's industry is global. Satellite communications permit global interaction among various partners and competitors, and they allow less developed countries to utilize the latest technology. Just outside of New Delhi, India, there is a growing computer programming industry in which highly skilled, well educated Indian natives, many of whom were trained in the U.S. and Europe, are developing programs based on data and information transmitted or accessed via satellite from the U.S. or other countries. They are part of India's emerging middle class, and the high earnings they spend locally helps the Indian economy. There are many computer-driven manufacturing tasks coupled with satellite data transmission that may allow the developing countries to increase the value they add products they are currently handling.
Concerns over global warming or climate change, first agreed to internationally in 1992, are also presenting some interesting opportunities for developing countries. Such processes not only contribute to a reduction in greenhouse gases, but also utilize developing technology to increase skilled job opportunities, and thus increase economic growth. Industrialized nations benefit too. The 1992 Rio Accord on Climate Change encourages the developed nations to stabilize their greenhouse gas emissions at 1990 levels by the year 2000. Proposals introduced in Berlin last year will propose further reductions by the year 2020 and beyond.
Had we used only traditional solutions to the problem of global warming, there would be a pronounced negative effect on the economy in North America and Europe, and the standard of living could be substantially changed. Although opinions differ on global warming or global freezing, the Montreal Conference last fall noted, "international negotiations have progressed to a point where we cannot use scientific inconclusiveness as a reason for not acting. While future research may indicate that global warming may be slight or non-existent, public perception will likely keep the issue on industry's agenda for years to come."
It is time for industry to be proactive. Consider the concept of joint implementation, which allows parties from developed countries to meet a portion of their voluntary emission reduction by implementing efficient improvements with projects in developing countries that reduce greenhouse gases. The electric power industry and the utility industry have started international utility efficiency partnerships in many countries, including several in Central and South America and in Russia. In Honduras, where one of the major industries is woodworking, sawdust and scrap were typically burned in open fields. In Tucson, Arizona, the Tucson Electric Power Company has the latest and best available technology installed and operating in their power plant. However, Tucson is still a nonattainment air quality area, and Tucson Electric decided to participate in a joint implementation program with Honduras. A 45-megawatt biomass waste-to-energy power plant was proposed, beginning with a 15-megawatt pilot, followed by an increase of 30 megawatt. When the $98 million project, which is 70 percent funded by Tucson Electric and the balance by the World Bank, is finished, the plant will supply 15 percent of the Honduran power grid requirements.
For Honduras, the plant will provide a significant reduction in carbon dioxide gases, particulates, hydrocarbon, and unburned material- a reduction of about 113,500 metric tons a year. For Tucson, it was a very cost effective way to obtain credits for clean air. The same percent reduction achieved in Honduras was not even possible at the Tucson site, regardless of the money invested. In addition, today there are eight implementation projects involving geothermal energy, wind generation, and gas recapture. With the recent U.S. utility deregulation, World Bank financing, the availability and growth of technology, and the increasing need for worldwide electric power, these unique approaches can be used by many countries- a true win-win situation.
aAll of these examples help to demonstrate how global warming, a subject most often discussed in emotional terms- oceans will rise, the coast will disappear, and so forth- is in fact a high-tech issue. It depends on emerging technology for solution. Industrialized and developing nations alike can benefit from cleaner air and economic growth, and most importantly, we can do something about it. The point is that the emerging technologies should not be overlooked for developing countries. Technology can be used to promote economic growth in developing countries while providing a better fit with countless industrial nations.
It may be unnecessary or even unwise to rely on established, proven concepts. If you focus on the next generation of technologies, others will have to catch up with you. For example, in the former Soviet Union, we have a 50-50 Joint Venture with Kvant. They're the Russian unit that was associated with atomic energy, and we're producing solar panels for initial use in the former Soviet Union for power off the grid. It's a small 5-megawatt annual capacity unit to prove the concept before building an economic module of 50-75 megawatts. The solar panels will be used in the former Soviet Union and available for export. The former Soviet Union has all the raw materials, the gases, and all the technology needed to do this, The key was putting it together so they could do it, and they're moving now to a leadership position in the solar panel business. In general, it makes sense to get on the "learning curve" early. It may be a harder first step, but it is much better in the long term, since in the beginning the curve represents growth.
One of my major interests today is electric vehicles- cars, trucks, and scooters. They are fun to drive, fast, clean, economical, and durable. They really do reduce pollution. California had initially put government and industry in conflict with its mandates to introduce electric vehicles by a specified deadline, but these mandates polarized the situation and have now been deferred. Market forces and competition have taken over. Since January General Motors, Ford, Chrysler, Honda, and Toyota have all announced they'll have electric vehicles in the marketplace this fall and next January.
At the same time, Taiwan is very interested in electric vehicles. Because Taiwan's enjoying an enormous growth, it may be able to afford to try this new technology. How does that affect a developing country? Interestingly, Taiwan's sister city on main land China, Xiamen, measures about 35 km by 35 km, a nearly ideal size for electric vehicle transportation. The mayor of Xiamen believes that his citizens will move to electric power as their buying power increases. He wants to bypass the internal combustion engines, and he thinks he can do it. His province is also rich in metallic deposits, nickel, and other metals that are used in electric vehicles and batteries, and he would like to develop a market. But clearly entrepreneurs on Taiwan see this also, and they plan to manage the electric vehicle from raw material to finished product between the two countries, a benefit for both and a true win-win situation.
Regional cooperation between government and industry can also be very effective in promoting economic growth in concert with environmental concerns. The Great Lakes Basin and surrounding states and the Canadian province of Ontario is the industrial heartland of North America. Fifty percent of both nations' manufacturing bases are located in that region, and over the past twenty years great progress has been made in cleaning up the lakes while continuing to grow industries in the region.
This region used to be referred to as the "rust belt," but now it's the "recovery belt." The Council of Great Lakes Industries was formed to bring together industry, government, and environmentalists to achieve mutually satisfactory solutions to regional problems. Some of the recent issues it has examined include the problem of chlorine in the lakes. Some groups wanted a total ban on chlorine, and the chemical industry, on the other hand, wanted to retain the jobs and keep the business of chemical production. Working together, a mutual solution was achieved, eliminating the uncontrolled runoff to the lakes while retaining the manufacture of chlorine, which is vital to municipal drinking water safety, to name one key use. But the key was working together so that all sides were represented.
The reuse of brown-field industrial sites is another important function of the council. With some recently enacted environmental regulations, it's much easier and cheaper to go to a green-field site or a new plant than it is to reopen an old plant. Unfortunately, the existing infrastructure (electric, water, sewer) sits idle and the unused land becomes an eyesore if the old sites are not reused. The key to Detroit's reuse of old industrial sites in the recently designated empowerment zone is an enlightened approach. New technology allows containment or capping in place of the facilities, coupled with monitoring or reuse as recreational sites in less hazardous areas. This sort of use is an important element in rebuilding the city, reuses the existing infrastructure, it increases the tax base and provides jobs for the local area. Working together was not easy. Just because we can now measure in parts per billion, not every reading has to be zero. Making sure the environmentalists, the industrialists and the government agree has not been easy, but people are starting to understand it's best for the region.
There are many success stories of reuse of sites in Illinois, Indiana, and Michigan, and they do make sense economically. The regional cooperation has also improved U.S.-Canada relations, especially over the issue of the shared water border between us, the Great Lakes and the St. Lawrence River. We've been able to establish some good, long-term objectives mutually beneficial to both countries.
During the last several years the explosive growth of technology has opened opportunities that we once only dreamed of, all to the benefit of society. By sharing that technology and preparing our citizens to use it effectively, we can assure economic growth with an improving quality of life in both developed and developing countries.
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