Here at RoboticsAndAutomationNews.com, we often wonder about the relationship between a nation’s reported economic growth and its utilisation of robotics and automation systems. We have a hunch that the more automated machines a country integrates into its economy, the more growth it experiences. We can’t say we prove this hunch in this article, but we think most readers will agree that it is an important correlation that deserves some investigation.
Economic growth sounds like a concept that’s easy to understand, but we don’t think it’s as straightforward as it seems. Each nation and region has its own way of calculating what is called “economic growth”, and there are countless gears turning to drive nations’ economies forward.
Among these, automation – robotics being a sub-set of automation – has emerged as one of the most powerful engines for transforming many previously small economies into global payers. Over the past few decades, while being derided for using cheap labour to gain an advantage – which undoubtedly has happened, countries like China, Japan, and South Korea have surfed the automation wave to reach remarkable economic heights.
But how significant is the role of robotics in boosting gross domestic product, or GDP, which is the most widely-used measure of economic growth, and how does this compare to other growth drivers? Let’s delve into this vital topic.
First, let’s briefly explain what is meant by “economic growth”. There’s a longer explanation at the end of the article, but here’s a short version.
Economic growth refers to the increase in a country’s production of goods and services over time, typically measured by the rise in GDP, usually given as a yearly amount. So, to provide a few examples, the GDP of the United States is more than $27 trillion, while China’s is just under $18 trillion, and Japan’s is $4.2 trillion; Germany’s GDP is around $4.5 trillion.
It’s probably worth noting here that all of these four nations are huge users of robotics and automation, even the US. Although not much is reported about it these days in the mainstream press, the US is still one of the world’s top manufacturing nations.
The rise of robotics
Robotics and automation have been the backbone of modern industries since the 1950s and ’60s. While never a glamorous subject for the media – until recently, maybe – robots have redefined efficiency, productivity, and scalability in manufacturing, logistics and other sectors by automating repetitive and precision tasks.
For a number of years, South Korea has led the world in robot density, with over 1,000 robots per 10,000 workers in manufacturing, far surpassing the global average. Japan – a pioneer in robotics, and the first to implement industrial robotic arms in large numbers – continues to be the largest maker of such robotic arms, and the people are much more open to developing robotic solutions to economic and social problems such as an ageing population.
Meanwhile, China has become the largest buyer of industrial robots globally over the past couple of decades after entering the global economic system through its access to the World Trade Organization. Moreover, it has also now become the world’s largest automotive market – and auto manufacturers happen to be the largest purchaser of industrial robots.
Many robot makers have opened manufacturing plants in China, and there is a growing robotics manufacturing ecosystem in the country, driven primarily by the manufacturing sector and, lately and perhaps more crucially, the logistics sector.
The robotic leap forward
As mentioned earlier, GDP measures the total economic output of a country. Traditionally, it has been driven by labor, capital investment, and innovation. However, in the modern economy, the role of automation in amplifying productivity and competitiveness cannot be overstated.
Robotics, as a form of capital investment, represents a significant leap forward in efficiency, often unlocking growth potential that was previously unattainable.
China, like Japan and South Korea in the past, as well as the US and Germany of course, recognised this fact and have grown their economies through placing robotics at the heart of industrial production.
Examples of growth through robotics
China: The growing giant
China’s economic rise is rightly regarded as one of the most remarkable achievements of the 21st century. Over the past two decades, it has not only become the world’s largest manufacturer and the largest buyer of industrial robots, but also, it has lifted the largest number of people out of poverty than any country in history.
The surge in automation technology in the country aligns with its emergence as the biggest automotive market – a sector that is heavily reliant on robotics and which acts as a catalyst for innovation of many kinds, lately in the electric or “new-energy” vehicles sector.
The Chinese government has strongly supported robotics and artificial intelligence over the past five years or so, and has launched its “Made in China 2025” initiative, which aims to further integrate robotics and advanced manufacturing – which includes technologies such as 3D printing.
The country of 1.4 billion people is keen to secure its place as a global industrial leader.
South Korea: The high-tech zone
South Korea has thrived within the security framework provided by the United States, and has learned a lot from Japan’s progress.
Moreover, its transformation into a technological powerhouse is closely tied to its use of robotics, much like Japan. Industries such as electronics and automotive, spearheaded by giants like Samsung and Hyundai, have embraced automation to drive historic growth in productivity and innovation.
Like many advanced Asian countries, South Korea prioritises education and research and development, which in turn has supported economic growth, and has created a skilled workforce capable of implementing and complementing robotic systems, as well as innovating such technologies.
Japan: The pioneer
Japan’s automation revolution began decades ago, with the purchase of the first-ever industrial robots. Today, the country remains the largest producer of robots, exporting them worldwide, including to China, of course.
Japan’s culture of cleanliness, neatness and precision probably helped it to adopt robotics faster than other countries where there may be more trepidation about such technologies, partly perhaps brought about by science-fiction stories.
For Japan, robotics manufacturing has driven success in many industries, including electronics in previous decades and automotive production even now, and other high-tech industries.
Japanese companies like Fanuc and Kawasaki Robotics are among the largest manufacturers of industrial robotic arms in the world.
Contrasting growth models
Manufacturing-led growth
Newly elected US President Donald Trump has always wanted to boost manufacturing in America, but the tide is against him. Advanced industrial economies – more clearly in the case of the UK – deliberately and publicly ditched manufacturing in favour of a “service economy”.
While it could be argued that it was inevitable that manufacturing would move to Asia and other poorer parts of the world because of much lower labour costs, western governments’ apparent backing of the trend probably accelerated the decline in manufacturing in Europe and America.
Countries like China, Japan, and South Korea, meanwhile, have relied on the manufacturing sector to power their economies. Cheap labour may have been the fuel to drive the engine of growth initially, but even China is no longer an ultra-low-wage economy.
Tim Cook, CEO of Apple, recently said that the reason why Apple manufactures in China is not because of low wages, it’s because there are a lot of highly educated, highly skilled workers in China – finding them in such numbers in other countries would be virtually impossible.
Through the years of debating such points, automation has been pivotal in the progress of China, reducing production costs, enhancing product quality, and enabling global competitiveness.
Finance- and real estate-led growth
While Asian countries looked to the manufacturing sector to help grow their economies, Europe and the US have achieved economic growth over the past few decades primarily through the financial and real estate sectors. These sectors, sometimes criticised as being parasitic, largely generate wealth through speculation rather than creating tangible societal value. And, as a result, the economy is weaker.
For instance, the 2008 financial crisis highlighted the fragility of growth built on inflated property prices and complex financial instruments.
Critics argue that this type of growth leads to inequality, with wealth concentrated in the hands of a few, while industries like manufacturing – which stimulate economic activity in related sectors and, arguably, benefit society more broadly – have seen a decline.
This stark contrast raises questions about sustainability and equity in economic models. While robotics and automation in manufacturing create jobs and encourage innovation, the financialisation of economies can, some say, lead to stagnation and social discontent.
Definitions of economic growth used by different countries
While economic growth is universally associated with GDP, its measurement and interpretation can vary.
United States: Economic growth is measured primarily using real GDP growth, which adjusts for inflation to provide a clearer view of economic performance over time. Other measures, such as Gross National Product (GNP) and Gross Domestic Income (GDI), are sometimes used for supplementary analysis.
European Union: The EU uses GDP per capita as a key measure to compare economic growth across member states. The EU also places emphasis on inclusive growth, integrating indicators like employment rates, income inequality, and environmental sustainability.
China: China focuses on GDP growth, often targeting specific annual rates to align with its development goals. In addition, indicators like industrial output, infrastructure investment, and trade balances are closely monitored.
Developing economies: Many developing nations consider economic growth as GDP increases but often highlight sectoral growth, such as agriculture or energy, which contribute disproportionately to their economies.
Sustainable progress
The evidence is clear: robotics and automation are reshaping the global economic landscape. While some economies ride the wave of technological progress, others remain tied to growth models that many view as unsustainable.
The next economic superpowers may well be determined by their ability to harness automation effectively. And although artificial intelligence is probably too big a subject on its own to bring into this article, it could be considered as being part of automation.
As time marches on and the world moves forward, it’s worth asking the big questions, even if the answers are not clear or cannot be provided by anyone.
One of those questions is: Are we investing in engines of real progress, as manufacturing-led economies could be argued to be doing, or are we building castles in the air through over-financialisation and property speculation?
