Extra Worth at Upstream Layer in Expertise Pyramid

Expertise is the chief of the entrepreneurial world. And it leads with a structure. In contrast to the standard political construction, this structure consists of algorithms written by engineers, scientists, and so on., relatively than congressmen and politicians.

The worldwide competitors is especially who has the most effective technical group to put in writing the most effective; on this case, algorithms consisting of patents, technical processes, instruments, and so on. When a nation develops, adopts, applies and disseminates the contents of this Structure, it enhances the lives of its residents. The extra innovation a nation strives for, the extra it refines this structure.

Economists have proven a correlation between the Data Economic system Index (KEI), productiveness and way of life. The problem for every nation is to enhance their KEI quantity. These embody an excellent training, an financial regime, and different variables that assist enhance expertise skill.

The age of pure assets that dominated international commerce and business is over. The necessary factor now could be to create and apply information. Some nations will create, others will solely devour. However wealth is concentrated within the inventive section, and nations that target consumption with out growing expertise is not going to thrive.

Even with an abundance of pure assets that the consuming nations, in lots of circumstances, can not course of independently with out the information companions, this improvement of restricted nationwide wealth is not going to change with out technological improvement.

On this foundation, I distinguish the 2 layers on which nations use and compete with expertise as upstream and downstream layers. It is like a two-layered pyramid with the downstream on the backside and the upstream on the prime. What is going on right here is that some nations concentrate on the downstream layer, whereas others mix each the downstream and upstream layers.

Probably the most superior nations mix the 2 ranges when aiming for worldwide competitiveness. They supply a expertise roadmap that appears to the longer term and have plans to make the most of the expertise. They create and develop issues and are thought of knowledge-driven economies within the twenty first century. In these international locations there are plans for continuity and expertise succession.

For the opposite nations that normally develop, they compete primarily on the downstream stage within the expertise pyramid. They lack the know-how to create issues and commercialize technological mental property. Nations should not pushed by expertise, however by uncooked supplies. They’re susceptible to commerce shocks and sometimes not dynamic economically. They fail to create wealth by means of expertise and take part within the pyramid as customers or prosumers.

Let me illustrate with Nigeria the place they converse the language of petroleum. Within the petroleum business, there are the downstream and upstream sectors. Whereas the upstream focuses on the exploration of crude oil, the downstream handles distribution and advertising.

The cash is within the upstream sector, a key purpose why now we have concentrated the overseas companions there. Data is created there and utilized in business. I’m cautious to say that Nigeria can not mine this product with out the information companions in Nigeria to assist discover this crude. Backside line: the oil can be there and can have no tangible financial profit.

It will comply with a sample the place villages have water beneath them however no drilling expertise to make use of the water for cooking and consuming. That’s the drawback of anchoring the nationwide technique on the downstream stage. There’s a lack of inventiveness.

In Africa and plenty of growing international locations the place ICT has been adopted, they seldom know that there’s extra worth than what ICT offers them. ICT has helped many growing international locations to enhance their enterprise processes, instruments and other people. They’re so excited in regards to the energy of sooner and sooner communication. You may benefit from the wonders of electronic mail, internet, cell and extra. These experiences relate primarily to the advertising, distribution and set up of those ICT programs. You hardly ever do them and might solely play on the downstream stage.

There, economists repeatedly seek advice from the improvements that ICT has dropped at nationwide economies. I agree, ICT is wired for innovation in so many areas. Nonetheless, the excellent news is that there are extra advantages up the pyramid as you progress up the upstream tier. By not creating expertise, our techno-economic advantages are restricted and this is not going to change till we climb the pyramid.

Though this level might be illustrated with any expertise, I’ll use ICT as a result of it’s well-known and acquainted to individuals. I’ve already illustrated the purpose within the petroleum business the place many growing international locations rely on the developed international locations’ petroleum refining expertise to extract the oil. Even when they develop applied sciences for distribution, the upstream thought will win. Nations earn more money from licensing applied sciences upstream than downstream.

Coming again to ICT, the upstream layer contains the event of laptop programs, cellphones, routers, machine drivers and some other infrastructure that may allow an ICT revolution. As a substitute of importing the most recent telephones, we’re going to consider the right way to model them. In 80% of the growing international locations that use cell expertise, lower than 2% of the expertise is developed and manufactured there.

Sure, there are firms that distribute and promote these gadgets and make marginal income. They’ll import a laptop computer from China for $500 and promote it to their prospects for $650. As a result of the barrier to entry is so weak, margins are slim. Everybody sells and there are retailers for everybody. They’re expertise firms for his or her nations as a result of they will load the software program and configure the networks and get the laptop computer working.

Evaluate that to giants like Intel and AMD taking a chunk of sand (silica) and processing it. In the long run, that piece of sand can promote for, say, $1,000 for $3,000 as a result of it’s important to know the right way to flip the sand right into a microprocessor. That is information and the perfect of human creativeness and creativity. It performs expertise upstream, and therein lies the worth.

Nations win upstream as a result of the gross sales margins are so giant, as a result of the merchandise are area of interest and usually revolutionary, and have few gamers internationally. It is not simply commerce or margins. Upstream layers of expertise create good jobs, whether or not in developed or growing international locations. A few of the finest jobs in Africa are with the oil giants, the place upstream expertise guidelines. They create enviable good jobs for residents. They’ve the cash to spend and increase different areas of the financial system. They’ve jobs that convey honor and dignity, and so they use their minds to form the world.

You can also make the identical argument for pharmaceutical firms that blend parts, compounds, and so on. to make medicines. A few of the medicine are very costly however the elements are low-cost. Persons are paying for the analysis and improvement that went into the event of this drug. In growing international locations, they concentrate on advertising and promoting the medicine. As with oil, ICT is all in regards to the downstream. Why the large pharma firms can have 1000% margins, these firms can hardly make 6% margins.

In essence, there are alternatives for nations on this century. If growing international locations proceed to compete additional down the pyramid, they’ll discover it troublesome to maneuver ahead, since competitors is basically synonymous with expertise. There may be extra danger, extra want for information and extra worth upstream. And that is the place now we have to go.

How will we do this? Our nations have to make basic adjustments of their nationwide insurance policies on technical training, or relatively Science, Expertise, Engineering and Arithmetic (STEM). That’s the reply. I consider in information and training develops it. It is about increasing engagement into microelectronics, nanotechnology, biotechnology, arithmetic, chemistry, physics, laptop science, engineering, drugs and so forth, and inside a technology we will turn into gamers upstream within the expertise pyramid. And reap that nice worth in it.