Assignment on the Project of Innovation Landscape in Asia

Discuss which Asian country is most suitable to be competitive in each of the supply chain steps:

               Looking at this supply chain for the production of electric vehicles, it can be said that various Asian countries can be considered for this production, but after looking at few aspects, Indonesia has been selected as a suitable one for this production of electric vehicles. There are a variety of reasons to support this decision. The latest stats have been released in a global perspective that Indonesia happens to be the 16th largest economy, and it is continuing to grow. The market estimates have been made that by 2050, Indonesia will be one of the top economies of the world. It means that a growing world economy will have all things needed for the production of electric vehicles to complete its supply chain (Biz Latin Hub, 2019)

               The first reason for starting this production in Indonesia is the fact that Indonesia is improving its Ease of Doing Business ranking with the passage of time. Currently, they are standing at number 73rd as per ranking released by the World Bank. They were at the 91st place in 2017, and improved a lot in the last two years, which shows their great potential. If an electric vehicle production unit is established, and foreign owners want to purchase the land for the unit, they can do it, because Indonesia allows foreign investors to legally purchase and own land in Indonesia. The middle class is growing in Indonesia, and there will be more consumers to buy luxury and high tech products in the future, and electric vehicles are one of them. They have also come up with various free trade agreements, which make things easier for starting a production unit in Indonesia (Biz Latin Hub, 2019)

               Indonesia is cheap in terms of labor as compared to any Western countries, so when a western company will try to start a production unit in Indonesia, it will be able to save a lot of costs. The other good thing is that the government of Indonesia is also trying to attract companies producing electric vehicles. The government has a plan to encourage electric vehicle manufacturers, who will start production by 2022. They will get tax incentives, and battery material resources will also be easily accessed. The availability of raw material in Indonesia is great for electric vehicles, and they can get raw material cheaper than any other place in Asia. The battery technology is improving in Indonesia, and it is a positive sign for many EV manufacturers because batteries are one of the most important materials in this regard. So, these are some of the reasons to make Indonesia, as one of the best choices to invest in EV production in the Asian region (Kane, 2019)

2. The present paradigm shift into a digital value creating paradigm, is driven by: (1) Routine-biased technological change, (2) Skill-biased technological change and (3) Capital-biased technological change

Question for 30 points:

For each of these 3 changes discuss which country in Asia is likely to benefit the most and which country in Asia is likely to benefit the least

2a) Routine-biased Technological Change:

It is important to understand what routine biased technological change is. The primary idea behind this concept is that there are various routine biased tasks, which are performed by workers on a daily basis in different industries. These tasks can be very basic in nature, and part of the routine. But technological developments such as artificial intelligence, ICT, and robots are changing the innovation landscape because such routine tasks are being replaced by these technological developments. The companies have started to use different machines and robots to replace humans for these routine tasks (Sebastian & Biagi, 2018). Looking at this aspect, if different Asian countries are analyzed, and then China is the country, which is taking more benefits from routine biased technological changes. They are using robots, innovation, and artificial intelligence in their production units and factories so that routine based tasks are done by machines, rather than humans. There are various developing countries in Asia such as Pakistan, who don’t have enough technological development so they are not able to benefit from routine biased technological developments (Xu & Li, 2008).

The routine biased technological developments, Pakistan has no resources or relevant industry for the production. So Pakistan is not appropriate to fit in the market (Romijn, 1997).

2b) Skill-biased Technological Change

The technology has brought so many changes in the production industry and one change is skill-biased change. If skill-biased technological change is defined, then it reveals that when the production industry needs more skilled workers as compared to unskilled workers, then this actually skills biased technological change. The production industries are adopting new technologies, innovation, as well as, machinery, which is more advanced in so many ways, and it cannot be operated by unskilled workers, so skilled workers are needed to work with these new innovations and technologies. It means that the increasing trend of using the latest technology in production is asking to have more skilled workers, who are experts in using such technologies. If this idea is analyzed in the Asian context, then again China has been benefiting the most, whereas countries like India have not been able to get many benefits from this change (BERMAN, SOMANATHAN , & TAN, 2005).

In the Asian countries, Afghanistan, Bhutan and Nepal are those countries which are least benefit countries as well as they do not have good technology. So they cannot be fit in the market (Edwards, 1994).

2c) Capital-biased Technological Change:

The concept must be understood before looking at the Asian countries, which are taking more benefits or fewer benefits from this change. The idea behind this change is that industries such as manufacturing and production, are investing more in capital terms, rather investing more for human workers. It means that they are using technologies, which ask them to invest more capital, rather than investing in workers, which is a reason to decrease income as a whole for workers, increasing income inequality. The developed Asian countries with the strong economy such as China have been benefiting from it, especially its wealthy portion of society, but various developing Asian countries have been paying the price because income inequality has increased due to this technological change (Chang, 2018).

The poorest and least benefit country in Asia is Afghanistan. A country measure for calculating wealth is based on the nominal GDP. The GDP per capita method based on the PPP is preferred due to the provision of clearer picture of the nation through accounting for the living cost as well as inflation. So, According to such standard, Afghanistan is the least benefit country in Asia (Keuleers, 2004).

3. There are four paradigms that can be used for value creating innovations: (1) The Scientific paradigm; (2) The Art paradigm; (3) The Design Paradigm; (4) The Reverse Hermeneutics paradigm.

Question for 5 plus 20 points:

As a bakery  you  are going to innovate in the gluten free bread domain. (1) Identify the relative importance you would assign to each of these four paradigms (5 points). (2) Discuss the focus you would set for the innovation activities in each of these four paradigms (20 points)

(1) Identify the relative importance you would assign to each of these four paradigms (5 points).The gluten-free bread is found to be useful for people to lose weight, as well as, it can be effective in use to deal with the disease such as celiac disease. It is recommended for celiac patients that they should use gluten-free bread. So, when a bakery is trying to add value to the innovation of gluten-free bread, they use different paradigms to make things happen. The scientific paradigm will help to use scientific methods to make the process more convenient and advanced. The art paradigm has not much to do with the innovation of gluten-free bread. But the design paradigm can be effective as it will help to design community, which is ready to use gluten-free bread so that they live a healthier life. Moreover, the Reverse Hermeneutics paradigm is useful to innovate with gluten-free bread, which can reach the developing part of the world ( Roos, 2016)

(2) Discuss the focus you would set for the innovation activities in each of these four paradigms (20 points)

               It is vital to understand that each paradigm can be useful in adding value to the innovation of gluten-free bread. There are various activities, which can be focused for each paradigm. For instance, the scientific paradigm will come up with activities, which use different scientific methods to try new flavors of gluten-free will bread, so that it is made more attractive for people. The art paradigm can help the bakery to come up with an artistic logo and design for packaging to make it look more attractive. As far as the design paradigm is concerned, it will focus on design of a community, which believes in healthy eating options. The knowledge will be spread through this paradigm so that people can use new innovative products such as gluten-free bread. The Reverse Hermeneutics paradigm will focus on activities to spread the reach of this innovation to other areas, such as the developing world, which don’t have enough innovation technologies to innovate with their products. So, these are some of the focus areas for each paradigm.

References of Innovation Landscape in Asia

Roos, G. (2016). Design-Based Innovation for Manufacturing Firm Success in High-Cost Operating Environments. She Ji: The Journal of Design, Economics, and Innovation, 2(1), 5-28.

BERMAN, E., SOMANATHAN , R., & TAN, H. W. (2005). Is Skill-Biased Technological Change Here Yet? Evidence from Indian Manufacturing in the 1990's. Annales d'Économie et de Statistique, 79/80, 299-321.

Biz Latin Hub. (2019). WHY INVEST AND DO BUSINESS IN INDONESIA? Retrieved January 9, 2020, from https://www.bizlatinhub.com/why-invest-and-do-business-indonesia-2019/

Chang, S. (2018). Globalization, Capital-biased Technological Change, and the Labor Shares. University of Hong Kong, China.

Edwards, D. B. (1994). Afghanistan, ethnography, and the new world order. . Cultural Anthropology ., 345-360.

Kane, M. (2019). Electric Vehicle Production In Indonesia To Start By 2022. Retrieved January 9, 2020, from https://insideevs.com/news/360872/electric-vehicle-production-indonesia-2022/

Keuleers, P. (2004). Governance in least developed countries in Asia and Pacific. UNDP, Bangkok.

Romijn, H. (1997). Acquisition of technological capability in development: A quantitative case study of Pakistan's capital goods sector. World development, 359-377.

Sebastian, R., & Biagi, F. (2018). The Routine Biased Technical Change hypothesis: a critical review. Retrieved January 9, 2020, from https://publications.jrc.ec.europa.eu/repository/bitstream/JRC113174/jrc113174_review_of_routine_biased_technological_change_final.pdf

Xu, B., & Li, W. (2008). Trade, technology, and China's rising skill demand 1. Economics of Transition, 16(1).