Time to unleash the young and creative on the global economy to spur growth
Andrew Sheng says as disruptive technology remakes the global economy, growth increasingly depends on innovation, and our youth are best placed to foster change
Earlier this month, I was fortunate to attend the Khazanah Megatrends Forum in Kuala Lumpur on creative disruption. It brought together many amazing speakers at the cutting edge of innovation. The most impressive was Dr Hugh Herr, who lost both legs to frostbite when mountain climbing. His doctors told him that he should be resigned to limited mobility. After an initial period of despondence, he decided conventional medicine was broken, not his body or mind. So he invented robotic legs, and today, fitted with them, he has not only climbed more difficult rock faces than before, but also helped hundreds of other people with disabilities.
Innovation is all about changing the status quo - to do what most people thought impossible.
Asian economies today are facing both the threat of disruptive technology and the benefits of new growth and new profits.
Disruptive technology is a cutthroat business. In the smartphone business, for instance, two companies - Apple and Samsung - dominate, with almost everyone else bleeding losses or being reconfigured.
Likewise, Factory Asia is facing compressed creative destruction - as its industries like coal, steel, petrochemicals and cars are facing excess capacity, pollution constraints and huge energy and resource inefficiencies. No Asian dragon or tiger economy is immune to the combination of both technology disruption and "secular stagnation", the advent of slow growth and deflation.
Harvard professor Dani Rodrik thinks that growth through knowledge-based services could be the focus going forward. However, the shift to a services-driven economy inevitably comes at a cost of slower gross domestic product growth. The value-added services depend also on the skills of the workers. A different policy mindset is required to shift our successful manufacturing model to a service- and innovation-driven one.
In other words, assembly-line skills or pumping oil out of the ground are very different from thinking and creative skills. Certain service sectors are relatively easy to grow, such as tourism, food and catering, but others such as health care, education, financial services, creative industries and internet technology require very specialised skills and mindsets.
So far, advanced countries generate most of the innovation through higher levels of research and development in both basic sciences as well as applied technology. Multinational companies have learned to tap innovation through diversity and investing in youth. Many of our most dynamic companies are not more than 10 years old.
In short, the only way out of the current trap of secular stagnation is continuous innovation and structural reforms. We need to phase out the 20th-century industries that are polluting and wasteful of energy and other resources. Getting rid of these zombies is very difficult because there are huge vested interests protecting their continued survival.
But as long as these entrenched interests control the bulk of resources, the young and innovative have difficulty in getting their fair share of voice, energy and funding into building the new products, processes, platforms and psyches. Thus, if we are to unleash our growth potential, we must celebrate our youth by trusting them to make their own mistakes, to learn from them and build the new businesses and institutions that will improve our societies.
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Throughout Asia, a new generation is waiting to make a difference. They grew up in an age of the internet. Their skills sets are very different from the present generation.
This means we must begin to build the platforms and new social institutions to allow youth to channel their energies towards creative outlets - not in rebellion of the present, but to shape the future. Why do so many public positions go to the "tried and tested grey hairs", rather than the young and diverse? A dialogue between generations is not happening.
Success depends on succession. It's time to pass the baton to the next generation to tackle the problems of the 21st century.
Andrew Sheng writes on Asian global issues