Saudi Arabia as a high-tech manufacturing hub?

When the Saudis Disrupt Bangladesh

A Possible (Plausible?) Article from 20 March 2037

1. Beginning of the Saudi Disruption

Back in early February, a World Bank report marked 2036 as the year Saudi Arabia officially joined the ranks of China, Japan, the United States, and Germany as one of the world’s top ten global manufacturing exporters. Indeed, the last twenty years has seen a frenzied pace as Saudi Arabia transformed into a manufacturing powerhouse, causing massive tectonic shifts that have led to socio-economic upheavals and deindustrialization of developing countries like Indonesia and Bangladesh. This upheaval has been labeled the Saudi Disruption.

At the King Abdullah Port, one can regularly witness the Saudi Disruption up close and face to face—or rather face to robot. Among vast hectares of land, sitting beneath massive solar panel installations, automated machines manufacture the latest “Designed in Nairobi” intelligent wearables and clothing. Other teams of robots transport those finished products to port, loading them onto robotically-piloted ships (the largest drones in existence) for global to delivery to far-flung ports such as Sao Paulo and Jakarta.

Figure 1. Early Rolls-Royce concept for a shipping drone from 2014

Saudi Arabia’s genesis as a manufacturing powerhouse began with dire predictions about its energy usage by Chatham House. In 2011, Chatham House reported that its own massive internal appetite for oil (in 2015, Saudi Arabia was the 6th largest consumer of oil) would leave the country a net oil importer by 2038. The next year, Saudi Arabia invested over $109 billion in solar, wind, and nuclear energy to combat its skyrocketing domestic consumption of energy. In response, leading minds in the field of robotics were recruited and tasked with the production, cheaply and at scale, of efficient solar panels. These solar panels were to be used, not only to solve Saudi Arabia’s energy concerns, but also as a new export product, in direct competition with those produced by China.

Figure 2. Early days of Saudi solar manufacturing program in 2015

Despite a shaky start, by the early 2020s Saudi Arabia’s energy program and its solar panel manufacturing industry took shape. Leveraging all it had learned from establishing automated factories for its solar panel manufacturing plants, Saudi Arabia quickly moved to apply their expertise to other industries. By 2023 ultra-efficient textile robots arrived in Saudi Arabia on a massive scale. These robots were far more effective than the early 2014 Chinese models, which were designed to replace five out of eight textile workers. The new Saudi robots replaced seven out of every eight workers—a productivity increase of over 20%.

Figure 3. 2014 photograph of a textile robot by Chinese manufacturer Anhui Efort Intelligent Equipment Co.,Ltd

2. Saudi Robots Deindustrialize Bangladesh

In the mid-2010s, Bangladesh had over four million textile workers, a majority of whom were women, bringing in over $20 billion annually to the economy. But the seeds of the industry’s demise were seen as early as 2015, when factories in China’s Zhejiang province introduced textile robots that aimed to reduce the number of workers needed by over 60%.

Figure 4. At one point, Bangladesh’s textile industry employed over 4 million humans

By 2023—only a few years after the first textile robots arrived in Saudi Arabia—the world’s retailers flocked to Saudi Arabia for cheap prices without the “sweatshop guilt” that plagued working with Bangladeshi or Vietnamese textile factories. This global shift led to the collapse of the Bangladeshi textile industry, taking 50% of Bangladesh’s export with it.

The massive displacement of the millions of mostly female workers led to numerous women?led protests and political parties. This displacement solidified women as the driving force in Bangladeshi politics. Indeed, as we have seen in the past ten years in Bangladesh, there has been a political earthquake as women, driven by anger and disappointment, have gone from working the sweatshops to wielding political power. Despite the political upheaval towards greater equality, Bangladesh is still burdened by an unskilled workforce that the world no longer needs—a population group of unemployed women who are increasingly vulnerable to international trafficking abroad.

Figure 5. 2015 Detroit, USA or 2037 Cikarang, Indonesia?

3. The Ripples of Premature Deindustrialization

Since the 2020s, one can trace the ripples of the Saudi Disruption as it overwhelmed the manufacturing industries of Indonesia, India, and elsewhere. What started in Saudi Arabia has caught on across the globe. Now, every few years, new robots for new industries come online in other countries, such as Germany and Russia, displacing human-based labor in electronics, automotive, and other manufacturing industries. What is left behind after each new wave of robotic replacements are deindustrialized countries left with an unskilled labor force lacking both opportunity and access to the reskilling necessary to compete in more advanced industries.

In Indonesia, one can see how quickly the “Demographic Dividend” of the early 2020s has transformed into the “Demographic Burden.” Indonesia’s potential as a major economy powered by a large labor force has evaporated, leaving behind a large population of displaced Indonesians. Indonesia’s pool of over 91 million youths are today trapped by permanent unemployment. The traditional manufacturing jobs have disappeared, and the Indonesian workforce is too unskilled to compete globally in the Creative Economy.

Faced with deindustrialization and falling standards of living, Indonesia responded with protectionist policies, but as any pasar malam (night market) in Jakarta will show, protectionist laws are no match for a notoriously porous border combined with the demand for cheap, high-quality goods.

Over in the European Union, the Saudi Disruption had far less impact. As early as 2015, countries like Sweden and parts of the Netherlands had already begun testing reduced work-week hours and concepts such as universal basic income. By the 2030s, Western Europe embraced socio-economic policies focused on maximizing employment using 25- to 30-hour work weeks and strengthening social welfare with universal basic income. The European Union’s massive wealth afforded it options developing countries could not even consider.

4. Goodbye Economic Development? Hello Searching for New Models.

Figure 6. Bhutan’s Model of Development: Happiness First

The aftermath of the Saudi Disruption—and of all the countries that followed Saudi Arabia’s path afterwards—has caused an unprecedented economic inequality and political crisis in the developing world. Affected countries could not afford to adopt the universal basic income model, but the competing paths they’re forging today will shape the development of the majority of the world’s population.

In Latin America and parts of Africa, Bhutan’s development concept of “Gross National Happiness” has become the de facto model, with support from social justice factions of the Catholic Church in Latin America. Yet political and sociological conflicts regarding its implementation continue, and have paralyzed the region with endless protests and political maneuvering.

Singapore, the originator of the Singapore and Shenzhen Models, has become the epicenter for discussion of Post-Saudi Disruption economic models. At the Human Sustainability Forum in Singapore, proponents have advocated for an emphasis on economic autarchy supported by decentralized manufacturing run by state-owned robots and state-owned businesses to support employment. Malaysia has become the main laboratory for this model, built upon a closer cooperation between Malaysia’s state of Johor and Singapore.

There is no doubt that debates about defining a new socio-economic model for development will continue. The only agreement is that we are in the midst of a monumental social and economic revolution, which began where so many things began—the Middle East.

————-

Author’s Note:

This is just a casual and incomplete scenario I wrote while en route between Kuala Lumpur and Singapore—with the help of some editors via UpWork. This scenario is neither broad nor deep. Rather, the hope is that this scenario demonstrates the urgent need for all of us to ask ourselves important questions.

China, South Korea, Japan, and other newly industrialized countries developed by exporting products to the West with their cheap labor. For the current crop of developing countries, how are they expected to “export their way to growth and wealth” if all cheap, unskilled labor is replaced by robots? How quickly and effectively, and at what scale, can these countries hope to transform their unskilled workforce into knowledgeable and skilled workforce relevant in the current era? How can we turn factory workers into bioinformatics specialists, energy storage maintenance engineers, or virtual world designers?

Sources & Further Reading:

  1. Figure 1. http://www.businessinsider.my/rolls-royce-drone-ships-2014-2/#mXwjUEk5JDaOfxhe.97
  2. Saudi Arabia & Oil Consumption from https://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption
  3. Figure 2. http://www.theatlantic.com/magazine/archive/2015/07/saudis-solar-energy/395315/
  4. Figure 3. http://www.ejinsight.com/20141107-china-to-boost-support-for-robotics-industry/
  5. “By 2013, about 4 million people, mostly women, worked in Bangladesh’s $19 billion-a-year industry, export-oriented ready-made garment (RMG) industry” from https://en.wikipedia.org/wiki/Bangladesh_textile_industry
  6. Figure 4. http://www.lapresse.ca/international/asie-oceanie/201305/13/01-4650266-bangladesh-des-centaines-dusines-textiles-fermees-jusqua-nouvel-ordre.php
  7. “In 2012 Bangladesh’s garment exports – mainly to the US and Europe – made up nearly 80% of the country’s export income.[12] By 2014 RMG represented 81.13 percent of Bangladesh’s total export.[13]” via https://en.wikipedia.org/wiki/Bangladesh_textile_industry
  8. Figure 5. “Abandoned Detroit Auto Factory” by Freaktography, https://flic.kr/p/qGrU1f
  9. World Bank Data on Indonesian population projects from: http://knoema.com/WBPEP2014/population-estimates-and-projections-2015?country=1000880-indonesia&action=download
  10. Figure 6. “Moment of Impact” by Michael Foley, https://flic.kr/p/a4uX4y
SHARE
Previous articleDaniel’s 2015 Sabbatical
Next articleIndonesia’s First Data Science Bootcamp
Daniel writes on foresight and explores new economic systems. He has over 15 years of experience in technology & digital marketing and has worked with clients in Europe, Asia, and the United States. Daniel is currently part of the University of Houston's Foresight Program.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

two × four =