In the 1960s Roy Amara, a Stanford computer scientist, observed that “we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”. The progress of 3D printing might be a case in point. Also known as additive manufacturing, 3D printing is a fast-evolving technology with the, as yet, unrealised potential to decentralise production. It could provide the answer to the world’s addiction to supply chains — by getting rid of them. For now 3D printing is useful for toy models and prototyping but has not reached mass adoption. The world is littered with promising technologies that never made it. Those that did were often helped by external events. What the climate crisis has done for electric cars, the Covid-19 lockdown may do for 3D printing. While it is clear that the lockdown has boosted food delivery services and sales of teleconferencing equipment, the less visible impact on industry could be more important over the longer term. Supply chain managers in industrial companies will be busy right now studying alternative sources that are more local. They may trade efficiency for robustness. They may be looking at automation. Back in February, they may not have seen the need to fix what did not seem broken. But now it is. A recent 3D printing industry survey found that companies are looking at the technology differently, with more of them now considering using it for end production rather than just prototypes. A German study in 2015 predicted that the economic impact of 3D printing would be to lower barriers to entry, making it easier for companies to serve different markets and cutting prices for consumers. It would constitute what economists call a positive supply shock. We are still a long way from a situation where we will be able to detect the effects of 3D printing in official economic data. Robert Solow, the economist, once quipped that he could see the computer age everywhere except in the statistics.
The digital revolution failed to stop the secular decline in productivity growth rates of many western economies. There are a lot of technological innovations on the cusp of a breakthrough, but not many have the potential to reverse the decline in productivity growth. 3D printing is different — it is a productivity tool by design. It is not another gaming machine. It offers no distractions. If 3D printing is combined with robots, its impact would be even greater. Robots are agile in three dimensions, while 3D printers can build complex things. Add the two together, and there is no reason why they should not be able build any structure from scratch. More localised production would also cut the cost of transport and contribute to the reduction in greenhouse gas emissions. Decentralised manufacturing would allow countries to secure critical supplies during crises such as an epidemic or a war.
Right now the technology remains slow, but in the future, if you needed to switch production to making face-masks or virus test kits, 3D printing should be able to do the job quickly and efficiently. There are downsides. Export-led growth has been the business model of developing countries. More localised manufacturing would hurt them. Automation will improve the employment prospects of some but reduce those of others. A mechanical or chemical engineer can perhaps retrain and find niches in other high-tech areas. But this is not an environment where you want to be in the business of container shipping. Like many technological inventions of the past, this one could also give rise to new forms of inequality.
Economies with strong high-tech investment such as the US and China would do well. European countries would probably not be at the forefront — to put it mildly — but there may be niches for those with a strong technological focus, like Germany or the Nordic states. There could also be opportunities for the UK, post-Brexit. But the impact will depend on policy.
Right now, many people see the lockdown as an unavoidable economic calamity. These are the dark days of the crisis. But we might find out later that the experience may have triggered a large scale technological shift — one that is actually reflected in the data. So if you want to be bullish about the stock market, you may want to look beyond the Federal Reserve or the latest stimulus package. A positive technology shock would constitute a truly rational reason for optimism.
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