The fourth industrial revolution and the Caribbean

How well will the Caribbean cope with the 'disruptive technology' and 'disruptive innovation' that in less than a decade could change structurally, employment, competiveness and consumer thinking in most developed and in many developing nations?

The two expressions refer to new technology or innovation that helps create a new market or value network by disrupting existing networks in ways that the market may not expect.

Put more simply it means change through technological advance that makes the established way of doing things virtually obsolete. Its normal effect is to increase competition, reduce prices and restructure a market in ways that often result in changing the behavior patterns of an existing market and how and where individuals are employed.

Some disruptive technologies are already so well established we take them for granted, forgetting what they have displaced. For example, we all expect every hotel to have Wi-Fi and every nation to have near national coverage for our cellphones, and that these technologies only became commonly available in the region around the start of the millennium.

When it comes to booking hotels, flights and car hire, we take for granted the numerous sites that have displaced many travel agents, and we have come to expect freedom of access to web-based news and information which has made many print publications and newspapers, unviable.

More recent examples are electronic taxi hailing services, of which Uber is the best known, or Airbnb which enables individuals to rent out their usually privately owned properties to visitors. Both relatively unsophisticated IT-driven services are already available in parts of the region causing significant numbers of consumers to begin to threaten the often ultra-conservative vested interests that operate taxi services or hotels.

Other forms of disruptive innovation are emerging globally.

Recent examples include bitcoin, or more likely, derivations that could lead to a transmittable global digital currency beyond the control of individual states; three dimensional printing which, when scaled up, is capable of constructing in situ buildings including housing, offices, whole hotel rooms, and even weapons and body parts; and big data that in future will be brought together from multiple global sources to enable marketing to the individual of almost anything on a personally tailored basis.

What is apparent, however, is that these are relatively innocuous developments compared to what is likely to emerge in the next twenty years, requiring responses from Caribbean governments, politicians, businesses, the courts, and citizens.

Of these the most challenging will be artificial intelligence and robotics that will alter not just the nature of employment but, in the surprisingly near future, will take away the livelihoods of many millions of workers globally, including in the Caribbean.

In a report published in January, the World Economic Forum estimated that up to 5.1m jobs could be lost in the next five years alone in some of the world's leading economies as a result of the disruptive effects on the labour market of robots and artificial intelligence, in what is coming to be known as the fourth industrial revolution.

The organisation, which organises the annual conference in Davos that enables global leaders to look over the horizon, says that what we should expect as these new technologies take hold, is a blurring between the physical, digital, and biological spheres, altering the way we work and relate to one another.

Its report speaks to developments that will have profound implications for education, skills, employments prospects, where and how we work, and migration. It suggests that many jobs will be replaced, while new previously unimagined forms of employment will be created, and that income inequality will rise across the world as those with higher skill levels come to command much higher levels of remuneration.

An indication of who will be most affected by such change is contained in a paper, 'The Future of Employment: How susceptible are jobs to Computerization?', published in 2013 by two Oxford academics, Carl Benedikt Frey and Michael Osborne, which establishes which occupations are most at risk.

Its authors use a mathematical model to identify which of 702 forms of employment are most likely to be replicated by machines. The answers they come up with in relation to the US are often surprising. Those least at risk included recreational therapists, the clergy, composers and Chief Executives, while among those most at risk were, according to their calculations, bookkeepers, watch repairers, insurance underwriters and telemarketers. Along the way many occupations common in the Caribbean in tourism, agriculture, back office services, administration, parts of the legal profession and medicine, were deemed also to be at significant risk.

All of which points to potentially uncertain outcomes for countries and regions that do give early thought to the implications for education, competitiveness, the nature of future employment, and more generally the wider implications for social order in a world in which developed and developing nations will face similar challenges, especially in determining how and what skills to teach for the future.

In the Caribbean it will require for example, finding early answers about the extent to which its largely un-mechanised high-cost agriculture is viable; decisions on how to extract value from the region's current focus on becoming a strategic hub for shipping, manufacturing assembly and transshipment when within a decade most such operations will be driven by robotics; and how to respond to the possibility that many of those working in the law, basic teaching, financial services, and even parts of the public sector may find their roles replaced by artificial intelligence located offshore operating at much lower cost.

In the case of tourism, the questions will relate to the type of destination that each Caribbean nation and its industry wishes to aspire to, and the extent ignoring new technology might actually offer competitive advantage.

Could the Caribbean decide, for instance, that it would be better to ignore the new technologies that will change the nature of everything from front desk operations to food preparation and general administration, and instead make a marketing virtue out of a nation's tourism product being provided by genuinely highly trained, thoughtful individuals providing a personal service at premium price?

The only countries presently giving real thought to all of these issues are Cuba, the Dominican Republic, and Puerto Rico.

The potentially existential nature of what is happening suggest that at the very least there is a pressing requirement for all nations to begin to consider how the region's education systems and teaching should be adapted to develop the skills required for a disrupted world.

David Jessop is a consultant to the Caribbean Council and can be contacted at
david.jessop@caribbean-council.org

Previous columns can be found at www.caribbean-council.org April 15th, 2016