The economy can, should and will be smarter

Opinion article by ambassador Richard van Rijssen, SME Daily 11.03.2016

The industrial revolution has often been marked as one of the most important factors in defining modern European society. The production and trade of goods changed our way of life. Since the late 1800s, other industrial revolutions have taken place. Today, we are witnessing an even more important shift. Rapid alterations will succeed one another: Permanent modification of our production methods and economic life will take the place of stable forms of production.

It will not just be the speed of change that is altering. Up until now, a clear division existed between inventions, design, production and trade in goods, let alone the manner in which we dealt with waste. All these phases will coexist and will happening in parallel. This will necessitate rethinking the way we organise economic life, and thus policies: we will have to start integrating all stages of economic activity. Already, the concept of the circular economy is redefining the starting point of traditional production. In designing production in the past linear thinking prevailed: From commodity to production method, to finished product and from the production phase to what we do with waste. 

Production used to be a stable, non-changing part of economic life. A production method was used until the day that a new invention made it obsolete. In modern day economies, the invention and design phase need to be integrated fully into the production process. Perennial renewal means constant feedback. It means as well and consequently that research and development are going to be part and parcel of the production process. And this is true not only for what I would call internal, more traditional research and development within the company, but equally for more fundamental research that today for a large part is done in technical institutions and universities.

The task of government has become more and more to facilitate and enhance the integration of (even fundamental) research into production. At the same time, we need to rethink our traditional schemes for stimulating economic activity. If one considers the growth rate of companies (and unfortunately the occurrence of rapid decline), the traditional industrial policy of support for large manufacturers will very soon become ineffective and inefficient.

Government should instead of protecting the vested interests of traditional industry create a climate in which young and dynamic economic players can flourish. Such a policy, in which government takes the role of incubator, will need to address the imbalance in readiness to invest in young, sometimes revolutionary companies. The double role of government will be to help to bring ideas and money to energetic entrepreneurs. And lastly, but certainly no less important, government will have to streamline regulation. Too often regulations hamper economic activity instead of promoting it.

Active participation of government in such brokering business opportunities requires excellent contacts to Small and Medium Enterprise. Even or perhaps more appropriately, precisely as a consequence of modern day technology this leads to the conclusion that local and regional government has to take up its role in shaping a business friendly climate. In helping to create clusters of related types of economic activity, a mutually reinforcing environment for ‘smart industry’ and ‘smart economy’ can be created.

The participation of a delegation from the Netherlands in the ‘smart industry’ conference by the Ministry of Economy of the Slovak Republic, an initiative that should be applauded, is aiming at precisely this niche in governmental policies. The joint force of technical ideas, business and marketing opportunities and investment in a business friendly environment will lead to sustainable growth, which is a common goal of the Dutch and Slovak Presidencies of the Council of the EU.

Vice Mayor Joost van Keulen of Groningen (NL), leader of Dutch delegation