Keynote speach day 1 carlota perez

Carlota PerezCambridge and Sussex Universities, U.K.and Tallinn University of Technology, Estonia

FTTH Conference 2011Milan, February 9-10

UNIVERSAL

INTERNET ACCESS

AND SUSTAINABLE

GLOBAL GROWTH

The dynamic role of the new infrastructurein each technological revolution

Why the near future will not belike the recent past

Can a sustainable global golden agebe unleashed now?

Universal access to internet andthe win-win game of global growth

Each revolution drivesA GREAT SURGE OF DEVELOPMENT

and shapes innovation for half a century or more

FIVE TECHNOLOGICAL REVOLUTIONS IN 240 YEARS

The ‘Industrial Revolution’ (machines, factories and canals)1771

Age of Steam, Coal, Iron and Railways1829

Age of Steel and Heavy Engineering (electrical, chemical, civil, naval)1875

Age of the Automobile, Oil, Petrochemicals and Mass Production1908

Age of Information Technology and Telecommunications1971

NEW PRODUCTS andTECHNOLOGIES

NEW INFRASTRUCTURALNETWORKS

They transform

the WHAT and the HOW

of production and consumption

They provide a new

organizational paradigm

to modernize all existing

industries and activities

They increase the speed

and lower the cost

of transporting

inputs, energy, products,

people and information

They widen, deepen

and reshape markets

A quantum jump in productivity

and in wealth creating opportunities

Two complementary sets of innovations

in each technological revolution

1 Canals and navigations

2 Iron railways, telegraph and penny post

3Cross-continental steel railways, global telegraph,trans-continental steamship routes and ports,local electricity and national telephone

4Road and highway networks, universal electricity,international telephone and telex, airports and airways,fuel distribution systems

Digital telecommunications, the Internet5

Previous infrastructures modernize and adapt to the new context

THE NEW INFRASTRUCTURAL NETWORKS OF EACH SURGE

EACH SURGE OPENS NEW FRONTIERSRESHAPING, EXPANDING OR DEEPENING CERTAIN MARKETS

1The network of canals and rivers facilitatedaccess to national and world markets

2The national network of iron railwaysunified and deepened the domestic markets

3 Steamships, and transcontinental railways andtelegraph created the first truly global markets

4 Roads and electricity created suburbia and intensifiedgrowing domestic markets for mass produced goods

Internet opened global markets and production locationsfor both intangible and tangible products5

THE NEW NETWORKS REDUCE TRANSACTION COSTS

AND DEFINE THE MODERN WAY OF DOING BUSINESS

THE PROPAGATION OF DIGITAL TELECOMMUNICATIONSIS AT THE ROOT OF THE MAJOR CHANGES OF OUR TIME

• It has enabled globalization

And the reach and quality of internet accessdefines the potential global role of each territory

• Which in turn has stimulated the modernizationof sea and land transport

• It has made the knowledge society possible(isolated computers could not take it very far)

• It has accelerated innovation and its diffusion

• It has transformed the patterns of work,of trade and of social interaction


The conditions that gave usthe post-war golden age




The second half is the

DEPLOYMENT PERIOD

when innovation

spreads across the board

to reap the full

economic and social

benefits

The first half is the

INSTALLATION PERIOD

when innovation concentrates

to set up

the new infrastructure

and to let markets

pick the winners

THE MAJOR BUBBLE COLLAPSE

MARKS THE SWING OF THE PENDULUM

THE DIFFUSION OF EACH TECHNOLOGICAL REVOLUTIONtakes more than half a century in two distinct periods

What worked in one period will not work in the next

The shift from financial mania and collapse to Golden Agesis enabled by regulation and policies to shape and widen markets

THE HISTORICAL RECORDBubble prosperities, recessions and golden ages

INSTALLATION PERIOD DEPLOYMENT PERIODTURNINGPOINT

Infrastructure bubblesof first globalisation

(Argentina, Australia, USA)

Belle Époque (Europe)“Progressive Era” (USA)

1890–95

Railway maniaThe VictorianBoom1848–50

Canal maniaThe GreatBritish leap1793–97

Internet maniaand financial casino

Global Sustainable”Golden Age”?

2007/08

-???

The roaringtwenties

Post-warGolden age

Europe1929–33

USA1929–43

Bubble prosperity Maturity“Golden Age” prosperityCollapse &Recessions

1771Britain

1829Britain

1875Britain / USA

Germany

1908USA

1971USA

1st

2nd

3rd

4th

5th

GREATSURGE

Yearcountry

WHY TWO PERIODS? WHY THE BUBBLE?

RESISTANCETO THE NEW

Old industriesold habits

old methods

Need a period ofCREATIVE DESTRUCTIONto force modernization

UNCERTAINTY

Which products?Which technologies?Which companies?

Which markets?

Need to experimentin ferocious “free market”COMPETITION

NATURE OFINFRASTRUCTURES

All or nothingInvest up-front

Revenues come later

Need credit creationthrough bubble boom andshort-term CAPITAL GAINS

Once the bubbles collapse, the job is done

THE NEW PARADIGM IS INSTALLED AND CAN BE DEPLOYED

But that requires a structural shift away from the casino economy

From “creative destruction” survival competitionto synergistic “creative construction”(stable industry structures, oligopolistic competition)

From supply-push innovation(to establish the paradigm)to demand-pull innovation(responding to growing markets

From finance-led casino investmentto production-led expansionary growth

From income polarization and individualismto the return of collective social responsibility

From modifying the old lifestyles (hybrid model)to full flourishing of a new model of the “good life”

MOVING FROM BUBBLE ECONOMYTO GOLDEN AGE DEPLOYMENTINVOLVES A STRUCTURAL SHIFT

IT IS A WIN-WIN GAMEBETWEEN BUSINESS AND SOCIETYSUPPORTED BY GOVERNMENT POLICY

BUT THE SHIFT DOES NOT

HAPPEN AUTOMATICALLY

UNLEASHING

THE NEW GROWTH POTENTIAL

REQUIRES POLITICAL WILL

AND SOCIAL CONSENSUS

(last time around it took 13 years and a major war)

Age of Steam, Coal,Iron and Railways

1850s-1860sUrban, industry-based

VICTORIAN LIVING in Britain

DEPLOYMENT PERIOD LIFESTYLE

Each style became “the good life” redefining people’s desiresand guiding innovation trajectories

Age of Steel andHeavy Engineering

1890s-1910sUrban, cosmopolitan lifestyle of

THE BELLE EPOQUE in Europe

Age of the Automobile,oil and Mass Production 1950s-1960s

Suburban, energy-intensive

AMERICAN WAY OF LIFE

2010s-20??s

Will the developed and emergingcountries develop a varietyof ICT-intensive “GREEN”SUSTAINABLE LIFESTYLES?

Age of global ICT

EACH GOLDEN AGE HAS BROUGHT A CHANGE IN LIFESTYLES

with new life-shaping goods and servicesthat open vast new market directions

The change could be as vast as the emergence of the ‘American Way of Life’as the paradigm shift from the Belle Époque…

Refrigerators and central heatingIce boxes and coal stoves

Doing housework with electrical equipmentDoing housework by hand

Preference for disposable plastics of all sortsPaper, cardboard, wood and glass packaging

Suburban living separate from workUrban or country living and working

Mass media, radio, movies and televisionLocal newspapers, posters, theaters, parties

Automobiles, buses, trucks,airplanes and motorcycles

Trains, horses, carriages, stage coaches,ships and bicycles

Synthetic materialsNatural materials (cotton, wool, leather, silk..)

Refrigerated, frozen or preserved foodbought periodically in supermarkets

Fresh food bought dailyfrom specialized suppliers

FROM ENERGY-SCARCE LIVING

Energy is expensive and often inaccessible

TO ENERGY-INTENSIVE HOMES AND MOBILITY

Energy is cheap and its availability unlimited

…all strongly aided by advertising, business strategiesand government policies

THE NEW TECHNOLOGICAL POTENTIALchanges the relative cost structure and marks the direction of change

It is a huge opportunity space for innovation, growthand radical changes in lifestyles

FROM THE LOGICOF CHEAP ENERGY (oil)for transport, electricity,synthetic materials, etc.

TO THE LOGICOF CHEAP INFORMATION

its processing, transmissionand productive use

Preferencefor services

and intangible value

Huge potential for savingsin energy and materials

Preferencefor tangible productsand disposability

Unthinking useof energy and materials

Unavoidableenvironmental destruction

Capacity forenvironmental friendliness

The techno-economic paradigm shift happening since the 1970s-80s

YET, THE NEW PARADIGM IS STILL WRAPPED IN THE OLD

WHY? Because in the crucial 1990s we had cheap oil and cheap Asian labourwhich favoured the stretching of the old marketing and consumption patterns

Mass production disposability and high use of energy and materials are still with us

An automobile in 1898

The first automobileslooked like horse driven carriages

Reproduction: L.De Vries. 1972

TO CONTINUE ON THIS ROUTE WE WOULD NEED SEVEN PLANETS!

CHANGE IN THE ECONOMICS OF THE PRODUCTION,TRANSPORT AND DISTRIBUTION OF TANGIBLE GOODS

Optimal relocation and geographic re-specialization of physical production

Gradual redesign of the consumption patterns for the “good life”

Rising prices of oiland raw materials

Rising packaging andfreight costs

Visible effects ofincreasing global

warming

Rising climatic risksand insurance costs

CHANGEIN BUSINESSSTRATEGIES

CHANGEIN GOVERNMENT

POLICIES

THE UNAVOIDABLE PATH OF THE CURRENT GLOBALIZATION PATTERN

Firm and intelligent

policy action, business strategies

and social decisions

can take us there!

WHY WAIT

UNTIL THE PLANET FORCES US

TO CHANGE COURSE?

AND IT IS PROBABLYTHE BEST WAYTO AVOID JOBLESS GROWTHIN THE ADVANCED COUNTRIES

HOW WASTHE PREVIOUSGOLDEN AGEUNLEASHED?

THE SYNERGISTIC CONDITIONS THAT SHAPED THE POST WAR GOLDEN AGE

Cheap oiland materials

Universal electricity

Road and airwaynetworks

INNOVATION ENABLERSFOR MASS PRODUCTION

They were provided in different proportions in each “First World” country

FORCES SHAPINGTHE DIRECTION

OF INNOVATION

Suburbanization

Post-warreconstruction

Cold war

FACILITATORSOF DEMAND

GROWTH

Welfare State

Labour unions

Public procurement

Credit system

A POSITIVE-SUM GAME

AND BROUGHTTHE GREATEST BOOMIN HISTORY

THAT TURNED THE WORKERSINTO MIDDLE INCOMECONSUMERS

The new globalpositive-sumgame

UniversalICT

“GREEN”GROWTH

FULLGLOBAL

DEVELOPMENT

Full internet accessat low cost

is equivalentto electrification

and suburbanizationin facilitating demand

(and, this time,also education)

Revampingtransport, energy,products and production systemsto make them sustainableis equivalent topost-war reconstructionand the spread of suburbia

Incorporatingsuccessive new millions

into sustainableconsumption patterns

is equivalent to the Welfare Stateand government procurement

in terms of demand creation

And the elements are interconnected

ICT

“GREEN”

FULLGLOBAL

DEVELOPMENT

But we need policy consensusinvolving government, business and society

Internet access isthe socialand geographic frontier

of the global market

ICTs are the mainenabling instrumentsof sustainability

Only with sustainableproduction and consumption patterns

Is globalisation possible

Would providea vast new opportunity spacefor innovation and wealth creation

Would fulfill the needs of peoplein emerging and developing countrieswithout sacrificingthose of the advanced ones

Would avoid climatic catastrophesand extreme prices in energy and materials

A MASSIVE “GREEN” SHIFTIN PRODUCTION AND CONSUMPTIONPATTERNS

BUT IT CANNOT HAPPEN BY IMPOSITIONOR MOVED BY GUILT OR FEARBUT BY DESIRE AND ASPIRATION

“GREEN” MUST BECOME THE “LUXURY LIFE”

“GREEN” is not only about

saving the planet

It is about saving the economy

and having a high (but different)

quality of life

GLOBAL DEVELOPMENT

is not only

a humanitarian goal

it is about healthy growth,

markets and employment for all

THE THREE GREATESTDEMAND OPPORTUNITY SPACES

FOR THE COMING DECADES

• The change to “green”

production and consumption patterns

• The spread of the knowledge society

(part of “green”, inasmuch as it is a shift to intangibles)

• The incorporation of millions of new consumers

in the emerging and developing countries

THEY ARE ALL SUPPORTED BYAND DEPENDENT UPON

UNIVERSAL AFFORDABLE ACCESS TO INTERNET

SUSTAINABILITY WITH INCREASING WELFAREEAST, WEST, NORTH AND SOUTH INVOLVES:

Dematerialization of the “good life”(more services, creativity, social relations, learning…)

Radical increase in the productivity of resources(less per unit, recycling and reuse…)

Durability of products(new materials, beautiful design for upgrading, repair and refurbishing)

Greater proportion of renewables

Optimal location of production and consumption(reduce or avoid mobility and transport)

Diversity and variety(spread use among resources, target diversified high value markets,respect and enhance cultural identities…)

Each of those directions of innovation, production and consumptionis facilitated by the universal availability of ICT

The shift to “green” is not just about energy and CO2

And the best way to spread

the skills required for that

is to make high quality internet access

as “normal” as electricity

The optimal direction

of respecialization

for the advanced countries

facing the challenge

of the emerging world

is a “green” knowledge society

THE REINFORCINGFEEDBACK LOOPSOF THE GLOBALWIN-WIN GAME

“GREEN”GROWTH

FULLGLOBAL

DEVELOPMENT

universalICT

An intense flow of new entrantsto the global markets

enables the profitabilityof durable “green” production

Internet hasenabled globalization

and constantly widensits frontiers

The “green” directionfor innovation favors

the knowledge societyand the use of ICT

The ICT paradigm andits generic technologies

encourage intangible consumptionand facilitate “green” innovations

A sustainable redesignof production and consumption patterns

creates enough growth opportunitiesfor all countries

Global developmentmarks the rhythm of growth

of markets for ICTand internet-based services

The technological revolution and the global boom

have provided the wealth creating potential

FOR A SUSTAINABLE GLOBAL GOLDEN AGE

The challenge is to collectively build

win-win games

BETWEEN BUSINESS AND SOCIETY

BETWEEN THE ADVANCED AND THE ADVANCING COUNTRIES

AND BETWEEN HUMANITY AND THE PLANET

WHAT LOOKS IMPOSSIBLE NOW MAY SEEM OBVIOUS LATER

In mid-1930s DEPRESSION

it seemed impossible to imagine…

…that blue collar workerswould have lifetime jobs andfully equipped suburban houseswith a car at the door

But later it was obvious that…

…increasing wages createdmany more millions of consumersfor mass production and sustained growth

And it seemed impossible in the late 1960s…

…to expect some of the valuesof the hippie movement[back to natural materials,organic food, etc.]to becomethe luxury norms

Shifts in consumption patterns shift profit-making opportunities

…or that most colonieswould gain independence

…the new middle classesrising in the developing worldwidened world markets for mass productionby adopting the “American Way of Life”

…innovations in natural textile fibershave transformed the world of high fashion

But it is now obvious that…

… and innovations in distribution logisticshave made organic foodsthe premium segment in supermarkets

…… TO THINK IT WILL BETO THINK IT WILL BELIKE THE RECENT PAST!LIKE THE RECENT PAST!

Which isthe easiest way

to make a mistakeabout

the near future?

Current successes are the past response to recent trendsCurrent successes are the past response to recent trends

Future successes are based on anticipated opportunitiesFuture successes are based on anticipated opportunities

Betting on the future

is a risky game

Betting on the future

is a risky game

but history

can be a powerful guide!

but history

can be a powerful guide!

Keynote speach day 1 carlota perez

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