The Industries of the Future

by Alec J. Ross

Adapt or perish, now as ever, is nature’s inexorable imperative. —H. G. Wells, A Short History of the World (1922)

The losers were people who lived in high-cost labor markets like the United States and Europe whose skills could not keep up with the pace of technological change and globalizing markets.

I’ve served as Secretary of State Hillary Clinton’s senior advisor for innovation, a position she created for me just as she became known as Madame Secretary.

Before going to work for Clinton, I served as the convener for technology and media policy on the Obama campaign that beat her in the 2008 presidential primary and had spent eight years helping run a successful, technology-based social venture that I cofounded.

My job at the State Department was to modernize the practice of diplomacy and bring new tools and approaches to addressing foreign policy challenges. Clinton recruited me to bring a little inno...

I played building a bridge between America’s innovators and America’s diplomatic agenda. In this time, I spent much of my life on the road. I saw a lot of the world before and after my time in government, but the 1,435 days I spent working for Hillary Clinton gave me a particularly intense, close-up view of the forces shaping the world. I traveled to dozens and dozens of countries, logging more than half a million miles, the

I saw next-generation robotics in South Korea, banking tools being developed in parts of Africa where there were no banks, laser technology used to increase agricultural yields in New Zealand, and university students in Ukraine turning sign language into the spoken word.

The world in which I grew up, the old industrial economy, was radically transformed by the last wave of innovation. The story is by now well worn: technology, automation, globalization.

China reversed its economic model, creating a new form of hybrid capitalism and pulling more than half a billion people out of poverty. The European Union was created. The North American Free Trade Agreement (NAFTA) came into effect, integrating the United States, Canada, and Mexico into what is now the world’s largest free trade zone. Apartheid ended and Nelson Mandela was elected president of South Africa.

The places where innovation gets commercialized are expanding too. In the United States, breakthroughs are coming not only from Silicon Valley, from the Route 128 corridor around Boston, or from North Carolina’s research triangle. They are beginning to come out of Utah, Minnesota, and the Washington, D.C., suburbs in Virginia and Maryland. The breakthroughs will not be exclusively American, either.

After years of growth rooted in low-cost labor, there are promising signs of innovation coming from the 3 billion people who live in Indonesia, Brazil, India, and China. Latin American countries with a face to the Pacific, including Chile, Peru, Colombia, and Mexico, appear to have figured out how to position themselves in the global economy.

The highest-skilled labor markets in Europe are producing start-ups that make Silicon Valley ...

Estonia, “the little country that could,” the entire economy seem...

Africa’s entrepreneurs are now changing the face of the continent, fueling development and creating a new class of globally competitive businesses.

The near future will see robot suits that allow paraplegics to walk, designer drugs that melt away certain forms of cancer, and computer code being used as both an international currency and a weapon to destroy physical infrastructure halfway around the world. This

the next wave will challenge middle classes across the globe, threatening to return many to poverty. The previous wave saw entire countries and societies lifted up economically. The next wave will take frontier economies and bring them into the economic mainstream while challenging the middle classes in the most developed economies.

Innovation brings both promise and peril. The same forces that are unleashing unparalleled advances in wealth and welfare may also allow a hacker to steal your identity or hack your home.

Social networks can open doors to form new connections or create new forms of social anxiety. The digitization of payments can facilitate commerce or allow for new forms of fraud.

Today coastal China, particularly the areas around Shenzhen and Shanghai, has become the world’s factory. Its coal comes from western China and Australia.

Similarly, mining regions in India’s northeastern peninsular belt, Turkey’s Anatolia region, and Brazil’s Santa Catarina region supply the industrial bases of their emerging economies and other economies around the world. In each region, mining offers a stepping-stone toward greater economic ties and opportunities—at least for a time.

The Union Carbide Corporation established the world’s first petrochemical plant in West Virginia in 1920.

My grandfather understood one of the curious conundrums of globalization: exposure creates not only opportunity but competition, and it can make us question and eventually lose our standing in the world. West Virginia, like so many other industrial centers in America, was just realizing its high point during my grandfather’s lifetime.

The Kanawha River Valley, which runs through Charleston, was known as “Chemical Valley.” For almost a century, Chemical Valley hosted the highest concentration of chemical manufacturers in the United States: Union Carbide, DuPont, Monsanto, the Food and Machinery Corporation (FMC), and many, many others.

The town of Nitro, 14 miles downriver from Charleston, is named for nitrocellulose, or gunpowder, bringing a literal meaning to the term boom town. Nitro was built up during America’s mobilization for World War I, when the United States faced a critical shortage in gunpowder production.

In the 1960s, the former Monsanto chemical plant in Nitro manufactured the herbicide Agent Orange, used by the US military to defoliate jungles during the Vietnam War. Dropping this chemical in the Vietnamese jungle harmed the health of more than 1 million Vietnamese and 100,000 American combat veterans, and it produced birth defects in more than 100,000 children.

For the chemical industry, globalization meant that businesses could locate their plants in places with fewer environmental regulations and less expensive labor. The chemical companies moved their operations to India and Mexico.

In India and China, together 40 percent of the world’s population, the changes have been eye-popping. In the 30 years from 1982 to 2012, India’s poverty rate dropped from 60 percent of the population to 22 percent. Life expectancy surged from 49 years to 66. When I was growing up, India was the country of Mother Teresa and famine. Today it is a country increasingly defined by technology, global services, and a fast-growing middle class.

China have been even more dramatic, with its poverty rate plummeting over that same period from 84 percent to 13 percent, pulling roughly 600 million Chinese out of poverty. With an economy 25 times larger than it was 30 years ago, China has become the second largest economy in the world after the United States. What

most valued commodities have gone from salt and sugar to chemicals and fuels to data and services.

Its chapters are built around key industries of the future—robotics, advanced life sciences, the code-ification of money, cybersecurity, and big data—as well as the geopolitical, cultural, and generational contexts out of which they are emerging.

The economic returns in robotics and life sciences will likewise be unevenly distributed between those who are well positioned to create or adopt these new breakthroughs and those who may be left even further behind. In response, societies will need to find new ways to adapt.

“The Code-ification of Money, Markets, and Trust” and “The Weaponization of Code” (chapters 3 and 4) examine how the increasing application of computer code to new areas of the economy—in the virtual and physical worlds—will transform two spheres that are traditionally state monopolies: money and force. Rapid progress often comes with greater instability. The application of code to commerce will provide new opportunities for the proverbial little guy in any part of the world to receive, hold, spend, or transfer money.

I saw the future of an industry that has gone from being a small back-office IT function to one of the fastest-growing and most disruptive industries in the world: the weaponization of code.

“Data: The Raw Material of the Information Age” and “The Geography of Future Markets”

Whereas land was the raw material of the agricultural age and iron was the raw material of the industrial age, data is the raw material of the information age. The Internet has become an ocean of jumbled, chaotic information, but now there is a way to connect this information and draw actionable business intelligence from it. Big data is transitioning from a tool primarily for targeted advertising to an instrument with profound applications for diverse corporate sectors and for addressing chronic social problems.

In the 20th century, the dominant divide between political systems and markets was along the axis of left versus right. In the 21st century, the dominant divide is between those that have open political and economic models and those that are closed.

markets will be future sources of sustainable growth and innovation and how business leaders can make informed choices about where to invest their time and resources.

Throughout the book, we explore competitiveness—what it takes for societies, families, and individuals to thrive. Among the world’s most innovative countries and businesses there is an emerging cultural consensus on how best to strengthen their most critical resource: their people.

Societies that do not overcome their negative cultural legacies regarding the treatment of women will founder in the next wave of innovation.

Innovation doesn’t happen in closed environments, and innovative companies will continue to steer clear of countries with regressive policies on gender.

Parenting is the most important job that a person can have, and our children will grow up to inherit a world that looks much different from our own. We can draw from the wisdom of the innovators profiled in these pages to prepare both ourselves and our children for what’s coming in the next economy—for the economy that begins now.

Welcome your new job takers and caregivers. The coming decade will see societies transform as humans learn to live alongside robots.

Japan’s current life expectancy is 80 years for men and 87 years for women and is expected to rise to 84 and 91, respectively, over the next 45 years. Between 2010 and 2025, the number of Japanese citizens 65 years or older is expected to increase by 7 million.

Today, 25 percent of Japan’s population is age 65 or older. By 2020, this is projected to increase to 29 percent and reach 39 percent by 2050.

With Japan’s persistently strict immigration policies curtailing the number of workers in the country, there will not be enough humans around to do the job at all. Japan’s Ministry of Health, Labor, and Welfare predicts a need for 4 million eldercare nurses by 2025. Right now there are only 1.49 million in the country. Japan allows only 50,000 work visas annually, and unless something drastic changes, the math does not work.

Our future caretakers are being developed in a Japanese factory right now. Just as Japanese companies reinvented cars in the 1970s and consumer electronics in the 1980s, they are now reinventing the family. The robots depicted in the movies and cartoons of the 1960s and 1970s will become the reality of the 2020s.

Rival Japanese companies Toyota and Honda are leveraging their expertise in mechanical engineering to invent the next generation of robots. Toyota built a nursing aide named Robina—modeled after Rosie, the cartoon robot nanny and housekeeper in The Jetsons—as part of their Partner Robot Family, a line of robots to take care of the world’s growing geriatric population.

Robina is a “female” robot, 60 kilograms in weight and 1.2 meters tall, that can communicate using words and gestures. She has wide-set eyes, a moptop haird...

Robina’s brother, Humanoid, serves as a multipurpose home assistant. He can do the dishes, take care of your parents when they’re sick, and even provide impromptu entertainment: one model plays the trumpet, another the violin. Both versions are doppelgangers for the fa...

In response, Honda has created ASIMO (the Advanced Step in Innovative Mobility robot), a fully functional humanoid that looks like a four-foot-tall astronaut s...