Don’t put all eggs in manufacturing basket

If the big change induced by the pandemic is work-from-home in office work, on the shopfloor, it is automation. The number of robots in use will, by the end of 2021, have doubled from the level in 2015, to 3.2 million, reports The Economist.

The total market for industrial robots is forecast to grow from $45 billion in 2020 to $73 billion by 2025. All the chatter about machineto-machine communication and artificial intelligence analysing the mass of data flowing from ubiquitous sensors is finally turning into action.
This has implications for continued viability of the traditional transition from agriculture to a modern economy via industrialisation. Manufacturing will no longer absorb the armies of labour it used to as late as in the post-World War 2 period of the Asian Miracle. India got late to the manufacturing party.

While India should, and can, try to transplant bits of manufacture that is no longer viable in China, where labour costs have risen, on account of both a shortage of workers and improved living standards, low cost of labour is no longer the cutting-edge source of comparative advantage it used to be. An automated production line in China or even the US could compete with labour-intensive operations in a low-wage economy.

High-quality manufactures of the kind traded in the global markets could well require highquality manufacturing processes that call for co-working robots in larger numbers than workers. Instead of placing all its bets on manufacturing as the route to prosperity for India’s rural poor, India must invest in the right kind of education that will allow its cohorts of young people to innovate and thrive in an ever-diversifying services economy. Technology will create, not kill, yet more service jobs.

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