After Manufacturing
Automation Chops Off Development Ladder’s Lowest Rungs

Automation of low-wage jobs in countries that are still reaching for the ladder of economic development is an emerging trend to watch. This latest report from the Phnom Penh Post gives one more good example of exactly how it’s taking shape in Southeast Asia:

Investors in Cambodia’s garment industry are increasingly purchasing modern equipment as they look to produce higher value-added products to compete in the international market and counter rising labour costs, an industry insider said yesterday.

Ly Tek Heng, operation manager at the Garment Manufacturers Association in Cambodia (GMAC), said rising factory worker wages were thinning margins on the production of low-value garments and footwear in the face of fierce global competition.

“If we produce low-value products while the cost of labour keeps rising, we cannot compete,” said Heng. “So, big investors are going to use more modern equipment and machinery, which lets them sell their products at a higher price.”

“Those [factory owners] who don’t upgrade their machinery and equipment to reflect to market’s need are facing tougher competition in the market,” he added.

In the traditional story, textile manufacturing is the first step towards industrialization (and, eventually, post-industrialization). Making the world’s cotton shirts is how Britain, the United States, India, Taiwan, and many other countries began their climb to economic development. Southeast Asia has been trying to follow that same path, but it will increasingly see it closed off. The unrelenting logic of technological innovation, and more broadly of the emerging information economy, means that the labor squeeze long underway in developed countries will be unavoidable in places like Phnom Penh as well.

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