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knowledge + economic innovation « Previous | |Next »
January 17, 2007

So another textile and footware industry moves offshore to take advantage of low wages in Asia, as de-industrialization gathers pace. This time it is the Hobart-based Blundstone, which recently announced that it was shifting manufacture of its boots to Thailand and India. Manufacturing in Australia is being downsized, as it gravitate to low-wage countries in a global world.

The solution is to go high tech, embrace a knowledge economy, and put resources into economic innovation. The neo-liberals are right on this---the universities become the incubator of new technologies, which are then commercially developed and distributed by start-up companies. This is the future in a global world. Protection, or a closed economy, as is advocated by some manufacturing unions, is not the answer.

In an op-ed in The Australian Glyn Davis and Joshua Frydenberg argue that Australia should emulate California, which is the home of this kind of innovation. They say:

The Californian strategy is clear and it is working: produce the engineers, scientists, researchers and MBA graduates who will invent new industries. The approach created Silicon Valley is flourishing in bio-medicine and looks set to boom in bio-fuels, energy alternatives and new fields such as robotics. Each begins in university research facilities but moves quickly to start-up companies and markets. The process once took years. Now the cycle is getting shorter, with knowledge transfer a core business for American universities.

This is what Australia should emulate they say. Their argument is that Australia shares share much in common with California: a welcoming climate, natural resources, an immigrant culture and an economy in which services rather than manufacturing provide most employment. Like California, Australia too is seeing and seizing the economic opportunities in Asia, particularly in China.

Davis and Joshua Frydenberg state that:

.. if Australia is going to take the next step and become a hub for innovation and new markets, it is our universities that must become the fulcrum for this change. Building closer relationships between educators and business, encouraging a greater culture of philanthropy, increasing our appetite for venture-capital-type risks, and a more active program for recruiting and nurturing the best talent are just some of the techniques Australia needs to more effectively employ. Australia has the people, the resources and the capacity to replicate California's success. Let us start now.

What they do not mention is that the state in California puts in billions of dollars to help fund new initiatives in renewable energy and stem cell medical research, whilst the Australian government cuts back on investing in renewable technology. Australia was once a leader in this kind of renewable energy research. Most of it has gone offshore from lack of support. That lack of support was not even from neglect and ignorance. It was a deliberate running down.

Despite the Backing Australia’s Ability (BAA) program---an ‘innovation action plan for the future’--- the Australia state under Howard and Costello is into pork barrel and protection: they are protecting unsustainable agriculture and the polluting fossil fuel lobby. Their industry policy and agenda is not the neo-liberal one of fostering university knowledge and technological innovation. Their image of Australia is the old fashioned one--Quarry Australia not an knowledge economy. As Evan Jones observes:

Any concern for potential de-industrialisation has been offset by a longstanding ‘cargo cultism’, a naïve optimism in a rosy future for the Australian economy. The massive trade deficit in value-added manufactures is seen as temporary, or as a step on the path to more efficient future production. Resources exports will be our perennial salvation; even greater scale is achievable by better infrastructure. Tourism revenue will bring up the rear. The science and technology sector, should anything of substance eventuate, will be icing on the cake.

In contrast to California there is little by way of opening new horizons for business.


| Posted by Gary Sauer-Thompson at 6:12 AM | | Comments (2)
Comments

Comments

This ties into your previous piece.

I don't know, but I would suspect that California would have the most diverse population in the US.

Contrary to the Conservative view that diversity leads to problems (all though there is some friction that needs to be managed), it leads to a great deal more in terms of creativity.

Creativity is what drives technological economies.

Another point where you can see the current government failing to allow the nation to reach it's potential.

In fact, looking at the objective evidence, sans a resource boom, we would be flat on our arses now because of theirlack of positive policy.

BigBob,
I don't see much support for creativity in the universities re technological innovation, or for commercializing that creativity in areas where Australia has a natural advantage.

There is no such thing as an industry policy, as the dominant economic policy culture is antagonistic to one.The tension between an antagonistic policy apparatus/culture and the imperatives of realpolitik of supporting industry has produced policies that are fragmented, poorly devised and monitored, and unstable.