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Flashcards in Policy Deck (20)
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Why is manufacturing important for policy makers?

  • No country, other than financial havens and oil states, has achieved high and sustainable standards of living without development of a significant manufacturing sector
  • Multiplier effect: for every job in manufacturing there is a complementary one in another business area.
  • Jobs
  • Innovation: responsible for 70% of R&D
  • Rebalancing the trade deficit


What makes manufacturing complex from a policy perspective?

  • Manufacturing and services: traditional strict distinctions are less relevant.
  • Limitations of statistics: poor level of detail, no standard method of classification, modern industries difficult to characterise.
  • Supply chain complexity: intemediary producers will fit into many supply chains


What are the drivers of change in the industrial landscape?


  • digitalisation:
    • increased connectivity and integration of manufacturing systems, interfirm systems and integration across product lifecycle
    • digital links between design and production
    • connected factory and supply chain
    • data analysed over product lifecycle
    • greater efficiency and productivity
  • accelerating product lifecycles
  • globalisation: e.g. iPhone
  • demographic change
    • loss of key skills, increased welfare and healthcare needs
  • changing consumer habits:
    • individualism and luxury markets
    • customisation
  • threat to global security
    • e.g. natural disasters or economic shocks
  • urbanisation: mobility and housing
  • sustainability
    • resource limitations
    • waste, recycling and symbiosis


Megatrends are changing the drivers of competitiveness including:

  • efficiency
  • quality
  • price
  • flexibility
  • speed of response
  • reduction in defects
  • reduction in downtime
  • speed of NPI


What is the 'smile curve'?

  • A curve plotting value added associated with various segments of an industry's value chain.
  • Presented as evidence of where more valuable activities are and more attractive policy targets


Some sectors frown:

  • for semiconductors and petrochemicals, production and processing account for the highest value added.
  • The same is true for a range of other industries which depend on complex manufacturing processes and precision engineering.


What are the different sources of value capture?

Product innovation: speed of new technology development

Process innovation: product mix, flexibility and factory productivity

Supply chain capability: reconfigurable supply capabilities

Product/service delivery: superier understanding and response to customer needs


Give examples of sources of value capture in regards to digitalisation of manufacturing?

Product innovation

  • Smart products: new data services, mass customisation

Process innovation

  • Smart processes: reduced process variability, better planning and forecasting

Supply chain innovation

  • Smart supply chain: improved traceability, virtual supply chains

Product/Service delivery

  • Smart design and delivery: new business platforms, better understanding of demand


What is industrial policy?

The industrial policy of a country is its official strategy effort to encourage the development and growth of part or all of manufacturing or other sectors.


The government takes measures aimed at improving the competitiveness and capabilities of domestic firms and promoting structural transformation.




What are the characteristics of an industrial policy?

  • Selectivity
    • vertical: deliberately target certain sectors/firms
    • horizontal: all firms and sectors are equal
  • Diversity of industrial activities
    • ​can cover other industries aside from manufacturing


What policies and instruments can governments use for industrial and scientific, technology and innovation policy?

Economic industrial policy

Economic instruments

  • import tariffs/export subsidies
  • tax credits
  • investment/training grants
  • interest rate subsidies

Public goods

  • procurement policy
  • export market info
  • training institutes
  • development bank
  • incubators


Scientific, technology and innovation policy

  • block funding
  • cluster policy
  • funding for R&D
  • competitive research grants
  • fiscal measures
  • studentships and fellowships
  • science and innovation councils



What is scientific, innovation and technology policy?

Innovation policy is the set of specific public intervention aimed at addressing concrete problems in the innovation system.


The identification of these problems requires the targeted and specific analysis of the determinants of innovation processes, based on relevant and specific indicators.


Why is a systems perspective important when understanding innovation systems?

  • firms rarely innovate in isolation
  • important to interact with a range of organisations (universities, suppliers etc.)
  • organisation behaviour shaped by 'institutions' (rules, laws, routines etc.)



What are the functions of national innovation systems?

Overall function: to diffuse, develop and use innovations

  • Knowledge generation: basic and applied research & development activities
    • Examples: TRLs: feasibility, development, demonstration, deployment.
  • Knowledge diffusion: development of network linkages, system-wide intelligence , roadmapping / foresight 
  • Knowledge deployment: capability development activities to help firms access new technological knowledge


What are the national policy concerns for UK manufacturing?

  • supply chains need to be able to respond to changes in technology
  • hollowing out of supply chains across sectors
  • Gaps in support for commercialisation of innovation
  • Lack of investment in technical education
  • Brexit
  • Regional disparity


What are the grand challenges in the UK's industrial strategy?

  • AI and data economy
  • Future of mobility
    • faraday battery challenge
    • extreme robotics
  • Clean growth
    • transforming construction and food
  • Ageing society
    • medicines manufacturing




What is 'made smarter' uk approach to 4th industrial revolution?

A focus on digital technologies used throughout the industrial value chain to increase productivity, growth and jobs.


  • Adoption of IDTs across supply chain (deployment)
  • Faster domestic innovation in IDTs (generation and diffusion)



What are the policy mechanisms to support digitalisation?

Knowledge Generation

  • Financial: funding and subsidies for companies and universities
  • Education: development of courses of industry 4
  • Promotion of linkages: private public partnerships
  • Services for industry: matchmaking, advisory


Knowledge diffusion

  • Awareness: forums, seminars etc.
  • Demonstration: pilots, grants for pilots
  • Internationalism, networking and linkages: events
  • Services for industry: consultancy


Knowledge deployment

  • Skills/workforce
  • Financial
  • Services for industry: catapult, access to facilities
  • Internationalism, networking and linkages: online tools


Give examples of knowledge generation, diffusion and deployment?

Generation: R&D clusters


Diffusion: database of use cases, Singapore future of manufacturing initiative


Deployment: Japan IoT configurations at accessible cost, Spain industrie 4.0 consultancy.




What is the role of an research and technology organisation?

RTOs occupy the intermediate space between:

  • the exploratory universities and science and engineering research endeavours of universties
  • and the more proprietary innovation activities of firms.

RTOs are organisations linking public and private innovation efforts


What key services do catapults provide?

  • equipment leasing
  • technical advice and consultancy
  • analysis and testing
  • workforce training
  • collaborative R&D
  • prototyping and demonstration


Discuss, illustrating your answer with examples, how governments can support manufacturing firms of all sizes in responding to the emergence of a new production technology.

  • Basic answer should provide an overview of the role of government in terms of technology, innovation and industrial policies, and what each means and how linked.
  • The basic answer should also describe the issues that may arise as a result of this being a production technology (i.e. need for development and diffusion of enabling technologies) and that there will be a huge range of different needs for technology intensive compared with technology contingent firms.

Stronger answers would

  • (i) describe the context for emerging production technologies in more detail (e.g. Tassey)
  • (ii) draw out issues relating to firms of different sizes (i.e. support for start-ups c.f. SMEs c.f. MNCs)
  • (iii) identify different types of support required at different stages of the emergence/maturity of the technology
  • (iv) highlight that different government support mechanisms might need to be used in combination/synchronisation to ensure effective impact/competitiveness.
  • (v) make reference to different approaches that have been deployed in different countries