50th St. Gallen Symposium "Freedom Revisited": 7–8 May 2020


Can machines sabotage the pattern of economic development in Asia?

The economic success of the Asian tigers reveals a common pattern of development. After the Second World War countries like Hong Kong, Korea, Taiwan and Singapore started exporting labor intensive products to rest of the world. As they became richer they specialized in much sophisticated capital intensive industries like automotive and electronics. Later their places were taken by countries like China, Malaysia, Thailand and Indonesia. As these countries are now trying to build capital intensive industries and wage level is rising, the third tier of countries like Bangladesh, Cambodia and Vietnam are now taking advantage of their low wage to export labor intensive products to rest of the world. But will they be able to follow the same development pattern to reach the stage where Singapore and Korea is now?

Robots were never really thought of as an alternative to human in making labor intensive products like clothes. Stitching takes several stages and long and delicate skills are required to complete a product. Also entrepreneurs were not interested in designing automated systems for such low margin industries. But things have started to change. According to ILO economists Chang and Huynh more than 80 percent of garments industry workers in Southeast Asia might lose their jobs due to automation and ILO estimates this change might start occurring only two years from now. USA based startup named ‘SoftWear Automation’ has already started selling their invention ‘Sewbot’ which can pick up flexible fabric and pinpoint where to stitch and cut. At the moment it can produce products like pillows, towels and mattress covers which require 10 steps or fewer but they are working on upgrading the machine to produce t-shirts and jeans. Revenue of ‘SoftWear Automation’ rose 1000 percent last year and they are likely to repeat this performance this year. It will not be surprising if the number of companies like SoftWear Automation increases in upcoming years.

The economic success of the Asian tigers reveals a common pattern of development.

This can be a worrying news for countries like Bangladesh where more than 80 percent export earnings come from ready-made garments. It is high time for these countries to think differently before the machines break the ladder they are wishing to climb in order reach the higher stage of development.