50 l THE CONVERGING TECHNOLOGY REVOLUTION AND HUMAN CAPITAL
Impact of New Technologies on Labor Demand in South Asian Countries The deployment of technologies in production may replace or complement human labor, but many other factors also affect overall labor demand. Morover, technology adoption is itself driven by a large number of factors, and the impacts on different countries will depend on their sectoral composition, the relative cost of labor to capital, and the extent of competition from other countries. To accelerate development, emerging economies need to leapfrog industrialization to the high-tech economy (UNCTAD 2021). Leapfrogging will require prioritizing investments in people for the acquisition of higher-level skills, but it also will, in turn, create more demand for jobs in the local service economy. In South Asian countries with large shares of youth, there is heightened urgency to provide youth and migrant workers from disadvantaged groups with a mix of hard and soft employability skills so they can reap the benefits of demographic dividends. To combine human intelligence to innovate with the computing power of machines, the workforce would have to acquire twenty-first-century skills such as critical thinking, creativity, communication, collaboration, problem-solving, cross-cultural literacy, work ethic, empathy, and socioemotional and digital intelligence. COVID-19 has exposed the fragility of the world’s supply chains for medicines and medical products, food, energy, vehicles, telecom equipment, electronics, and countless other goods and services. In response, certain companies, notably early adopters of Fourth Industrial Revolution technologies, have begun to reconfigure their sourcing and manufacturing footprints for greater reliability and resilience. Others are accelerating the adoption of digital work instructions, augmented reality-based operator assistance, and simple, inexpensive retrofit automation. This reorganization of production patterns, which is being accompanied by increasing servicification of supply chain networks, can either increase or decrease the number of jobs. For the South Asia region, developing globally competitive manufacturing hubs is one of the biggest opportunities to operate in international markets, double its manufacturing gross domestic product (GDP), create new high-value service jobs, and provide long-term employment and skill pathways for millions this decade. How can India, in particular, and the subregion, as a whole, take advantage of these shifts? Mature value chains (such as pharmaceuticals, automotive components, fast-selling technology products, and software) and service sector jobs (such as health care, tourism, financial services, logistics and supply chain coordination, information technology outsourcing, and creative industries), both of which rely on sophisticated capabilities and healthy supplier ecosystems to serve domestic and export markets, must scale up. A second group of value chains, which mainly produce for domestic markets (such as food processing) but lack scale, productivity, and technological sophistication, must transform to compete. Finally, entry into emerging value chains (such as the “sunrise” sectors in energy storage, electric vehicles, and the bioeconomy) will require strategic partnerships with global consortia to access the technology and capital needed to establish local manufacturing capacity. Although the unique circumstances of the pandemic have elevated
