GIT: Living in the IT Era
LECTURE 02
Sustainability of
Productivity
Sustainability of Productivity
All economies fluctuate in a business cycle. For a few years, growth is quite rapid,
output and incomes rise, and unemployment falls. This is the ‘boom’. Then the
cycle turns. Growth slows, and in a true recession the total output of the economy
falls. This is the down-turn of the cycle.
The industry life cycle focuses on those economic mechanisms that cause firms to
be born (to ‘enter’ an industry), to grow, and to die (to ‘exit’ an industry).
The Industry Life Cycle
The industry structure refers to the characteristics of an industry, such as the
number of firms operating in it, the distribution of power between them (whether
some are very large and others very small, or whether they are all very large), and
the degree to which new firms find it easy to enter the industry).
The Industry Life Cycle
Mechanisms affecting industry structure include the dynamics of entry/exit,
technological change and falling prices.
The Industry Life Cycle
The industry life cycle is characterized by the following phases:
1. A pre-market or hobbyist phase, in which the product is produced more as a
hobby or luxury than for commercial purposes.
2. An introductory phase, in which the product begins to be produced more for
commercial purposes than for hobby reasons.
The Industry Life Cycle
The industry life cycle is characterized by the following phases:
3. A growth phase, in which the industry grows rapidly due to the emergence of
a standardized product.
4. A mature phase, in which demand slackens and fewer technological
opportunities are available.
Prices and Industrial Change
How can we look at price changes over time in industries in which the product
undergoes many changes, especially in early stages?
We use the concept of the price index. Indices are used a lot in economics. They
are basically a simple way of measuring change.
Prices and Industrial Change
Price index is a measure of the average level of prices for some specified set of
goods and services, relative to the prices of a specified base period.
The most widely used method of constructing an index is based on the notion of
the percentage.
Prices and Industrial Change
Example:
Suppose that the price of a product is Php 500 in 2000 and Php 750 in 2001 and
Php 1000 in 2002.
In this simple example, our market basket consists of only one product. Selecting
year 2000 as the base year, we can express the prices in years 2001 and 2002
relative to the price in year 2000 as follows:
The price in year 2000 (base year) is equal to 100 per cent
Price index, year 2001 = (Php750 / Php500 )* 100 = 150
Price index, year 2002 = (Php1000 / Php 500) * 100 = 200
Prices and Industrial Change
Importance
Benefits
Changes in Industry Structure
Industry structure refers mainly to the way in which power is distributed among
firms. This can be described by factors such as the number of firms in the industry
and the distribution of market shares
Game Changing
Technologies
Game Changing Technologies
ADVANCED INDUSTRIAL ROBOTICS
Involves machines which are designed to perform industrial tasks automatically,
with high programmability and the capacity to interact with their environment
thanks to the use of digital sensors
Game Changing Technologies
ADDITIVE MANUFACTURING
Involving digitally controlled devices to add layer on layer of material(s) to create
objects from 3D digital models
Game Changing Technologies
INDUSTRIAL INTERNET OF THINGS
the use of connected sensors attached to different objects throughout the
production process to feed live data to central computers
Game Changing Technologies
ELECTRIC VEHICLES
vehicles whose main system of propulsion depends on (externally generated)
electricity rather than fuel
Game Changing Technologies
INDUSTRIAL BIOTECH
the use of biological processes of living organisms for industrial purposes, drawing
on recent scientific insights such as systems genomics and metabolomics.
Game Changing Technologies
AIR, AM, IIOT – involve innovations in the manufacturing production process, and
have a very wide applicability across most manufacturing sectors
EV, IB – concern innovations of specific products (and related processes), and
have a more narrow applicability to particular sectors
Effects of Game Changing Tech
1. Increasing centrality of (digital) information – information as a key source value
2. Mass Customization – flexible production process with interconnecting objects
3. Servitisation – technologies involve the gradual replacement of manufacturing
as traditionally understood by a type of economic activity that is closer to the
traditional concept of services
4. Increased Labor/Resource Efficiency – more efficient use of materials and
energy in production
Effects on Work and Employment
1. Upgrading of occupations
2. Higher level of ICT competence
3. Decline of repetitive and routine industrial work
• Digital factories
The Platform
Economy
Platform-based economy
A platform is a business that connects people through technology, making an
ecosystem that allows value to be created and exchanged. This works by matching
users to each other in order to make financial or social transactions that create
value.
Platforms don’t own the resources that create value, they can grow
much faster than pipeline businesses.
CHALLENGES OF THE 4 TH INDUSTRIAL REVOLUTION
Platform-based economy
Key features of a platform:
◦ Using sophisticated logistics software for matching and
payment.
◦ Providers on the platforms are independent contractors.
◦ Very low barriers to entry for providers on most platforms.
◦ Trust is achieved via crowdsourcing of ratings and
reputational data.
CHALLENGES OF THE 4 TH INDUSTRIAL REVOLUTION
Reference: Neufeind,O’Reilly, Ranft .Work in the Digital Age: Challenges of the Fourth Industrial Revolution: Challenges of the Fourth
Industrial Revolution. Rowman & Littlefield International.2018. ISBN: PB 978-1-78660-906-9
