Escape from the Commodity Trap: Will the Production Transformation
Sustain Productivity, Growth and Jobs?, John Zysman (2014)
For the advanced industrial democracies to expand the real income of the citizens and sustain growth in employment and productivity, their economies will have to escape from the Commodity Trap. The commodity trap is the price-based competition throughout markets for standard goods and services, which puts pressure on wages and profit margins alike. Clearly, the way out of this trap is to create distinctive high value added products – both goods and services. The emerging transformation of the production of goods and services is dramatically altering what is produced, where, how, and who captures the value. It creates opportunities and challenges
This study examines the processes and consequences of the transformation of production. Part I of this essay examines the transformation of production and its acceleration by Cloud Computing. The arguments developed in that section are highlighted here.
- First, the transformation of production, including both manufacturing and ICT-enabled services should be our focus. The decomposition of production, moreover, further blurs the meaning of the distinction between services and manufacturing.
- Second, ICT-enabled services are as much a source of productivity, employment and growth as manufacturing. These services systems must be developed and built.
- Third, manufacturing is being pulled in two directions. On the one hand, the decomposition of manufacturing, and indeed of ICT-enabled services, has produced complex cross-national supply networks. In some countries, including the United States, that decomposition has decimated the core infrastructure of skills and knowhow required for competitive advantage in production. On the other hand, the rapid evolution of advanced manufacturing has encouraged the re-composition of production, the reintegration of development and production. Both processes will endure. A core question will be when a firm or place must control production to maintain a competitive position as products and technology evolve. A mosaic will result from strategy choices by firms and policy choices by “places”. The question is when will manufacturing be a strategic asset and when a vulnerable commodity.
- Fourth, the transformation of production will be accelerated by the emergence of Cloud Computing as the next Information Technology platform
Part II of the essay makes a few focused policy suggestions and considers several issues policy makers need to consider as they frame policy.
- The analysis focuses policy on the tools required to implement the transformation, on the competencies “places” require to succeed in the transformation, and the possibilities of direct government action.
- In framing the policy debate, the analysis suggests that policy makers need to consider when production is a strategic asset and when a vulnerable commodity while continuously evaluating whether the production transformation will be seen as merely a revolution or a real revolution.
The crucial policy question is how to nudge that transformation in the advanced countries toward higher value added, higher skilled, higher wage solutions.
Transatlantic Policy Comparison Papers
Increasingly, rules for the global economy are set between Washington and Brussels . When Americans and Europeans agree, robust starting points for international policy deliberations result. When they disagree, their respective positions tend to frame the broader international debate. In either case, policy-makers and business leaders thus pay close attention to transatlantic policy dynamics as the "new economy" evolves.
With generous support of the German Marshall Fund, BRIE researchers have compiled transatlantic policy comparisons in some of the most critical "new economy" policy areas - personal data privacy, intellectual property, corporate governance, and industry self-regulation. Each paper is structured around three propositions for discussion, followed by extensive background analysis of the critical policy drivers.
"Data Privacy," by Abe Newman
"Copyright's Digital Reformulation," by Brodi Kemp
"The Collapse of the European Union Directive on Corporate Takeovers: The EU, National Politics, and the Limits of Integration," by John Cioffi
"Industry Self-Regulation in the E-conomy," by David Bach
Boom Boxes: Shipping Containers and Terrorists, Steve Cohen, 2005
America's Technical Fix: The Pentagon's Dual Use Strategy, TRP, and the Political Economy of U.S. Technology Policy in the Clinton Era, Jay Stowsky, 1996.
What are the Limits to the Korean Model? The Korean Electronics Industry Under Pressure, Dieter Ernst, 1994.
Japanese Investment in Asia: International Production Strategies in a Rapidly Changing World, E. Doherty, ed., 1995.
The Future of Networking in the U.S., Franзois Bar and Michael Borrus, 1994.
The Uruguay Round: A Legal Analysis of the Final Act, Richard H. Steinberg, 1994.
Driving Production Innovation Home: Guardian State Capitalism and the Competitiveness of the Japanese Automotive Industry, John Jay Tate, 1994.
Summary of Proceedings of the BRIE 1993 Technology Summit, November 4-5, 1993.
OECD-BRIE Telecommunications User Group Project "Information Networks and Business Strategies," Three Volume Report, 1989.
Japanese High Technology, Politics and Power, Steven Vogel, 1989.
Dynamic Markets and Industrial Mutation: The Changing Organization of Production Automotive Firms, Dennis P. Quinn, 1989.