Sunday, May 20, 2012

The Third Industrial Revolution

Must read article from the Economist on the "Third Industrial Revolution"; advancements in the way goods are designed, produced and distributed, that will have a significant impact on economic life. For the United States, the good news is that this may lead to the return of some previously outsourced industries, but do not expect the return of high paying jobs for low skilled workers. Production will increasingly rely on and reward skilled, educated workers.  According to the Economist:

"The revolution will affect not only how things are made, but where. Factories used to move to low-wage countries to curb labour costs. But labour costs are growing less and less important: a $499 first-generation iPad included only about $33 of manufacturing labour, of which the final assembly in China accounted for just $8. Offshore production is increasingly moving back to rich countries not because Chinese wages are rising, but because companies now want to be closer to their customers so that they can respond more quickly to changes in demand. And some products are so sophisticated that it helps to have the people who design them and the people who make them in the same place. The Boston Consulting Group reckons that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made at home by 2020, boosting American output by $20 billion-55 billion a year."

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