Production of drives Innovation in the modern economy

Presentation Professor Goran Roos

In addition to being a homeowner in South Australia, Professor Goran Roos is considered one of the 20 most important thinkers of the 21st century. He recently presented his views on Australian Manufacturing on a unified breakfast in the South East Business Manufacturers Alliance (South East Business Network), South East Business Network and SEMMA.

The facts and figures that he introduced are for the Australian economy but the principles are universal. Especially, you'll see them even more drastically implemented in the US and UK.

Why modern economy must produce

So what did I learn from his introduction?

  • Here is a short list of what production is in an economy:
    • R & D Driven by
    • Innovation is primarily a production related
    • Value export is usually produced
    • Creates more indirect jobs [19659006] The first growth of knowledge growth
    • is essential for a highly competitive economy

    The point is that " Healthy manufacturing is necessary for all advanced economies with the hope of maintaining both economic and social well-being " .

    Now he has a big deal of my attention. Because this is something I've believed in my whole life. Australia needs production.

    Industry Employment Employment

    Almost he watched the production of employment for employment and why we have a professional problem in Australia. Yes, I know that public unemployment is low, which is because many people who are looking for work are not included in the official film. Here's how pans are out of work:

    • For each production project, there are 2.5 other jobs created
    • In Australia, where 1 million jobs are in production, it means that there are 3.5 million jobs in whole with production
    • For each working person, a dependent person is relying on them for income. These may be relatives, children, spouses, etc.
    • There are a total of 7 million people in Australia dependent on production.
    • Now, we look at mining:
    • For every mining project, another job is created around
    • In Australia, where 200,000 jobs are mining, it means that there are 400,000 jobs in connection with mining [19659006] For each working person, a dependent person is relying on them for income. These may be relatives, children, spouses, etc.
    • In total, there are 400,000 people in Australia dependent on mining

    So current government policy and industrial activity to reduce production and increase mining for direct exports is actually economic suicide.

    The service industry is even worse for indirect job creation, though it uses more than mining for some time:

    • For every service company, there are 0.5 jobs created
    • ABS figures for 2010 show a significant 3 million people employed in service companies, including 0.5 jobs created
    • For each working person, a dependent person is relying on them for income. These may be relatives, children, spouses, etc.
    • There are a total of 6 million people in Australia who are dependent on employment

    What this means is that manufacturing is, in fact, the most important industry in Australia in terms of job creation and future prosperity.

    So lose production, and you lose a lot of jobs.

    The United States has shed 5 million manufacturing jobs since 2000, mainly for offshoring production to reduce cost-cutting. These jobs were replaced by minimizing pay personal service jobs. The net result is the level of unemployment and business practices in each production category.

    He also spoke about hidden categories, especially in industrial products, which led to highly exported imports and have been the strength of many European producers. He explained the features that make these products possible. There were 4 to do with knowledge and 4 to do with the structure and relationship. This looks like you need both. The classification is:

    • Focus
    • Depth
    • Innovation
    • High-quality Workers
    • Globalization
    • Decentralization
    • Proximity to the Customer
    • Entrepreneurial Ambition Manager


  • Economic growth and competitiveness

    Economic growth is a measure of how well you have been doing so far. It is a measure of past performance. It's up to yesterday.

    Competitiveness is a measure of how well you continue to do. It is a measure of relative performance. It is true tomorrow.

    It's important for the future to be in competition, but it has been growth last year. Preferably you will both.

  • Switzerland
  • Sweden
  • Finland
  • It was a simple example of countries that are highly classified for competitiveness and growth surprise. Australia ranked in number 15 for competitiveness and growth according to his analysis.


    Goran Roos was also interested in taking on innovation and this fits well with Edward De Bono's point of view of creating value. He defines 2 types of innovation needed to deal with Australia's lack of competitiveness:

    • Innovation for Creating Value
    • Innovation to Keep Valid

    Based on this, offshoring is a very bad idea. It is only done to reduce costs for cost-effective activities. For value-based activities where we value and earn revenue from Australia, we should disagree!


    Manufacturing is the fastest growth of the domain. This is an interesting requirement and one that had a case for showing value. This is the case:

    • Production generates 15 times the knowledge that mining is per industry
    • Manufacturing forms 3 times the knowledge that service sectors make in each industry

    Professor Goran Roos also noted that Knowledge is like a race. If you slow down, you can not understand if other runners continue to use full steam before.


    It is now prudent that mining for export is not so great. Take some of the greatest possible values ​​and take it away at the lowest point you can in the value chain.

    Onshoring means we take value back to Australia so we get paid for it. And make content and support service sectors that should be our primary policy in the future.

    Second level professor Goran Roos made is that Australia is not a scale based economy. We do not have a large local market according to world standards and we should focus on product categories that do not require a measure. Or in my language: lower volume, higher value adding products. This is also known as Niche Electronics Manufacturing.


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