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Beam me up Scotty

July 19, 2013

People often speculate about how long it will be before Star Trek-style teleporting becomes reality – ie. the instantaneous beaming of people and things from one place to another thousands of miles away. Well, we won’t be standing in shower cubicles like Spock for some time. But in effect physical things can already be teleported.

As I mentioned in my last post, three-dimensional scanning and printing has made international trade in things – ie. the physical shipment of goods – potentially obsolete. Designs for almost anything can be emailed, downloaded or scanned and printed on location in 3D.

The following video shows an adjustable spanner being scanned and printed in an hour and a half.

Services can be already be traded online – but the virtual trading of goods will have a potentially revolutionary effect on economies, and one which has still to be understood. The reduction of shipping costs will also have significant environmental implications.

Several groups of developing country might benefit. About 29 nations are unofficially classified as small island developing states by the United Nations. A further 31 are considered landlocked and developing, most of which are small by population and economic size. That’s 60 countries – almost a third of the world’s total. Admittedly it’s not a third of the world’s population – most poor people live in China and India – but it’s a fair chunk.

Other countries will benefit too, and possibly in significant ways, although it’s among the nations marginalised from trade that I think there is most potential. These economies tend to grow more slowly because they face higher import and export costs, which result from the need to transport things either a long way by sea or across other countries.

Small island developing states are more dependent on trade than low income countries, according to the World Trade Indicators, with goods and services trade making up an average of 128% of income-weighted GDP. That’s largely because these countries can’t make much at home. Their imports and exports are less diversified by product and destination (with a higher Hirchsman-Herfindahl market concentration index for imports and exports by product and destination compared with low income countries). These countries will never produce in large volumes or achieve economies of scale because they aren’t big enough  and don’t have enough people or capital.

A country like Vanuatu, for instance, spends about US$242 million on imports every year, which is about a third of GDP. Of this, 56%, or around US$135 million, is manufactures. In a very far-fetched world a considerable proportion of this sum could be substituted by locally printed products. All that would have to be imported is the powders and polymers for use in 3D printers, which would be smaller and more easily transported. Similarly the currently tiny volume of exports could be boosted by niche, locally-produced printed products. The impact on the economy could be enormous, potentially reducing the chronic imbalance on goods trade. The country has run a visible trade deficit during every year since independence in 1979.

Admittedly much of this is science fiction, but it’s not ridiculous to imagine a world in which pretty much most processed goods other than staple foodstuffs are printed. Even foods can be processed using 3D printers.

I’m not sure many people realise quite how the dire state of domestic production and diversification is in many isolated developing countries. Typically they produce one or two commodities, often with low or zero processing and limited diversification by destination. Usually these countries depend on trade preferences. Landlocked Lesotho’s garment industry, facilitated by the US AGOA trade preference system, is almost the sole major source of exports – and it depends on a large annual government subsidy. Haitian exports are almost entirely made up of T-shirt sales to the United States under the HOPE II trade scheme. Annual exports from a new nickel mine in Solomon Islands will alone be worth two-thirds of GDP.

The economic structure in these countries is severely inflexible, limiting the possibilities for the conventional process of industrialisation. But with the development of 3D printing there would be no need to produce in large volumes – no-one should ever seriously imagine that small island developing or landlocked states will develop on the basis of mass export-based industrialisation like East Asia did. Set-up costs for Maker workshops are pretty minimal — potentially a few thousand dollars – and labour costs reasonably small in the early stages.

Could you potentially see a cluster of infant cottage industries catering to local demand? The main problem with import substitution industrialisation was that it encouraged low-quality domestic production, given that companies were shielded from international competitive pressures. Giant, old-fashioned companies producing shoddy goods – the classic example is Brazilian cars – became the standard.

But with the reduction in the cost of design and the increase in open-access software and hardware, via the Internet, access to cutting-edge international designs has become free. There is no need to make sub-standard products. Small developing countries can potentially produce to the highest standards.

A key problem in small island and landlocked developing states is that their lack of economic diversification makes them vulnerable to international shocks. Contrary to the classical theory of comparative advantage, economic development is a process of diversification, not specialisation. A cluster of workshops printing a range of goods would spread production across a range of areas, helping shield the economy from wobbles in the international economy.

What trade policy would need to accompany the shift to additive manufacturing? Maybe higher tariffs on finished products wouldn’t be necessary because the natural rate of protection due to vastly reduced transport costs would be so significant. It might be necessary to lower input costs by reducing tariffs on the inputs necessary for printing. But import volumes would surely be slashed. A single container of inputs, packed solid and limiting space wastage, could potentially result in production many times greater than a container of a finished item.

As I say, most of this might just be speculative science fiction, but if Chris Anderson and the Economist are to be believed, we may be looking at a new industrial revolution.

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