Developing countries with low wage structures now in the digitisation bulls-eye
Categories: digital prosperity
It's not just boards of directors but I also hear people in some developing countries also think that they won't be as vulnerable to digitisation as what they see in the developed countries. China, the Philippines, Vietnam, India, they look at their low wages as a way of capturing manufacturing and other industries. Call centres and other types of activities, but the reality is, those countries in many ways are even more in the bullseye of this automation tsunami than our advanced countries.
Take manufacturing for instance, as you take robots and allow them to do more and more routine basic tasks, they substitute very well for low-wage labour that's doing routine basic tasks. Low wages are not barrier to automation, in fact, countries that depend on a low wage strategy will ultimately be even more vulnerable than some of the advanced countries.
I just finished writing an article in Foreign Affairs about some of this stuff. This phenomenon I'm talking about, that that China and other countries could be affected quite dramatically. I mean on that point, we guess which location, guess which location Apple chose for its new macro production? It wasn't China, India or Taiwan, it was Austin, Texas. And that's not because Texas has low wages, it's because modern manufacturing doesn't really depend on a lot of labour, so labour costs aren't a big factor. As labour comes out of manufacturing, more of it is going to migrate to either where the highly skilled designers are, or they're close to the markets where they need to deliver the products.