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Social Inclusion and the Future of Work is of interest to those who expect a critical but positive vision of the times we live. Experts explain the situation of the organizations, institutions and regions according to resilience, creativity and digital innovation for the future of work, social inclusion and the Sustainable Development Goals (SDGs). SDGs are considered as the essential guidelines that facilitate the strategic consideration of the future of work and social inclusion, even more in times of pandemic.
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Social Inclusion and
THE FUTURE
OF WORK
JOSÉ SÁNCHEZ-GUTIÉRREZ
TANIA-ELENA GONZÁLEZ-ALVARADO
COORDINATORS
First edition, 2020
Sánchez-Gutiérrez, José; González-Alvarado, Tania Elena (coordinators).
Social Inclusion and the Future of Work. Mexico: Universidad de
Guadalajara.
This book is a product of the members of RIICO (Red Internacional de
Investigadores en Competitividad) with external contributions. The
findings, interpretations, and conclusions expressed in this work do not
necessarily reflect the views of Universidad de Guadalajara and RIICO.
All the photos on this book were taken from Unsplash. Unsplash is a
photo discovery platform for free to use, high-definition photos. Unsplash,
Inc., a Canadian corporation) operates the Unsplash website at
unsplash.com (the “Site”) and all related websites, software, mobile apps,
and other services that they provide (together, the “Service”) with the goal
of celebrating and enabling contributors and fostering creativity in their
community.
This work is licensed under aCreative Commons Attribution-NonCommercial-
ShareAlike 4.0 International License.
Cover photo byDaniele FranchionUnsplash
Cover design: González Alvarado Tania Elena
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CONTENTS
Prologue……………………………………………………………….. 5
Sánchez-Gutiérrez, José
Employment is more than a Job. It Is the Essential Pedestal
Underpinning Social Inclusion and Democracy Itself…………… 7
Argyriades, Demetrios
Innovation for the Future of National Well Being.………….……. 25
Galicia-Haro, Emma-Frida; Coria-Páez, Ana-Lilia and Ortega-Moreno,
Irma-Cecilia
Socioeconomic Development: The Steel like a Crucial Key…….. 39
Espinoza-Parada, Lourdes-Fabiola; Cavazos-Salazar, Rosario-Lucero
and Cruz-Álvarez, Jesús-Gerardo
Generation of Employment and Digital Age in the Hotel
Sector of Peru………………………………………………………… 57
Espinoza-Vilca, Sofía; Blanco-Jiménez, Mónica and Terán-Cázares,
María Mayela
Digitization of Economic Activities for Job Creation and Social
Stability and Competitiveness.…………………..………………….. 71
Morales-Alquicira, Andrés; Rendón-Trejo, Araceli and
Guillen-Mondragón, Irene-Juana
Film Industry International for the Future of Work and Social
Inclusion………………………………………………………………. 89
González-Alvarado, Tania-Elena; Kubus, Renata and
Sánchez-Gutiérrez, José!
Contents
3
Impact of Open Data on the Creativity for Innovation……………… 107
Estrada-Zamora, Carlos
The Trust on Social Networks and the Increased Social
Commerce………………………………………………………….….…. 121
Robles-Estrada, Celestino; de la Torre-Enríquez, Diana-Isabel and
Suástegui-Ochoa, Alberto-Alejandro
Adaptability of Small and Medium-Sized Businesses and E-
Commerce……………………………………………………………… 149
Bellon-Álvarez, Luis Alberto
Social Inclusion and the Future of Work
4
Prologue
ocial Inclusion and the Future of Work is of interest to those who expect a critical
but positive vision of the times we live. Experts explain the situation of the
organizations, institutions and regions according to resilience, creativity and
digital innovation for the future of work, social inclusion and the Sustainable
Development Goals (SDGs). SDGs are considered as the essential guidelines that facili-
tate the strategic consideration of the future of work and social inclusion, even more in
times of pandemic.
Eachpartofthisbookwasbasedon empirical real-lifeevidencefromen-
terprises, universities, governments and institutions. All of these studied organizations
are part of the competitive environment. Thewritersbelieveineconomicprogressin
line with innovation,resilience, entrepreneurship and international cooperationbet-
weenregions,countriesand corporations.
The authors are from the United States of América, Greece, Spain, Poland, Peru,
and Mexico. All of them are experts in Economic andBusinessSciences.Theuniversi-
tiesthat participateinthisprojectare the John Jay College, City University of New
York, Universidad Andina del Cusco, Universidad Nacional de Educación a Distancia,
Universidad Autónoma Metropolitana-X, Instituto Politécnico Nacional, Universidad
Autónoma de Nuevo León and UniversidaddeGuadalajara.
This publication was created following the best practices of scientific
edition.Turnitin was applied to favor the originality. Theeditorial teamcarefully
analyzed the quality   and originality   of the contents.   Every chapter   was
selected,evaluated,andmodifiedwiththesupportof international peers.
Editors and authors hope is that this book will contribute to theadvancementoftheo-
reticalandpractical knowledge
Dr. José Sánchez-Gutiérrez
S
Prologue
Sánchez-Gutiérrez, J.
5
Social Inclusion and the Future of Work
6
Photo by!boris misevic!on!Unsplash
Chapter 1
Employment is more
than a Job. It Is the
Essential Pedestal
Underpinning Social
Inclusion and
Democracy Itself
Employment is more than a Job
It is the Essential Pedestal
Underpinning Social inclusion
and Democracy itself
Demetrios Argyriades
John Jay College, CUNY, USA
“SDG16: Promote Just, Peaceful and Inclusive Societies”
“Peace, stability, human rights and effective governance based on the
rule of law are important conduits for sustainable development. The Sustainable
Development Goals aim to … reduce all forms of violence, and work with governments
and communities to find lasting solutions to conflict and insecurity. Strengthening the
rule of law and promoting human rights are key to this process.”
“Everyone has the right to work, to the free choice of employment, to just and
favourable conditions of work and to protection against unemployment”.
Universal Declaration of Human Rights
[Gen. Assembly Res. 217 (iii), 10 December 1948]
INTRODUCTION
here is always a silver lining! After four decades of Reaganism, which
told us that “Big Government” was the source of all our problems, the
effects of the pandemic have been to demonstrate the very polar
opposite. We are slowly rediscovering the value of the “public” in
Public Administration including a propensity to public-private partnerships,
where “public” is in charge (Nabatchi, 2010:S309). Suddenly resurrected, the
Administrative State became not only a banker or paymaster, but also
epidemiologist, employer, engineer, social administrator, and therapist of first
and last resort. Regulation, castigated as “bureaucracy” inimical to progress by
laissez-faire economists, was now restored to prominence, when deadly
T
Employment is more than a job. It is the essential pedestal underpinning social inclusion and democracy itself
Argyriades, D.
7
repercussions of its regrettable absence and the effects of lax controls over
“assisted-living” and related nursing homes came into sharp relief. In just a
matter of days, going to work had been subject to restrictions and the right to
work itself made conditional on Government’s own definition of what now
represented essential as opposed to non-essential forms of occupation and
labour.
To be sure, health, information, transportation, food supplies and security
were placed in the “essential” category. Holders of other jobs, including shop
assistants, workers in nail salons, barbers and hairdressers, as well as professors
and teachers at schools and universities were asked to stay away. Many people
were furloughed or “fired”. After years of full employment, with unemployment
rates at a historic low around, in fact, the level of 3 per cent, society had to adjust
to a crisis brought about, not by paucity of demand or a liquidity shortage but an
invisible virus, whose nature and mutations, as well as targets and symptoms are
still imperfectly grasped, making its treatment difficult, or the hoped-for “Great
Re-opening” a difficult policy option (Barron’s, 2020:A1). Having proved highly
contagious, the challenge it presented has been countered, almost throughout the
world, by enforcing “social distancing” and even “lockdowns” in places. In
services and trade, there are not many tasks that can be carried out, to the client’s
satisfaction, at a distance of six feet - or of two meters. Though digital technology
has tried to bridge the gap and, currently, shopping online has spread from
books to groceries and far beyond, some services, by contrast were not so fast to
follow. Distant learning made some progress and the onslaught of the crisis,
caused by the virus pandemic, created a necessity for the growth of telemedicine.
Still, in health and education, as well as public management and the
administration of justice, most people would agree that physical proximity
remains a potent factor, as well as desideratum. Enabling and engaging the patient
or the student, the citizen or plaintiff remain constructive patterns, for which
there is no substitute – no satisfactory substitute; at any rate.
WHAT “JOB” WILL BE A “NEW NORM”? SYSTEMIC FACTORS WILL TELL
Will there be a new norm? What norm? Will the ongoing pandemic produce new
ways in which we live, relate to one another and work? Some people seem to
think so. For those of us, conditioned to equate all “change” with “progress” and
this, in turn, with “good”, such cataclysmic crises as the COVID-19 pandemic may
be seen as the precursors of momentous transformations. They are often viewed
as destined to become irreversible. (MPM-GEPS, 2018: 160) “Forever” is the
expression that the corona virus certainly brought into prominence. It had been
used extensively by the media and beyond on the morrow of two previous earth-
shaking events, which deeply marked our era and ways in which most people
Social Inclusion and the Future of Work
8
interpret global trends. The first was the collapse of the Berlin Wall, which
presaged the implosion of the USSR and end of the Cold War. The second was
the attack on the Twin Towers, better known as 9/11. The last one served to warn
us of the immanence of “Evil” and, therefore, the need to combat it. The first was
said to herald a New International World Order, seen by many as irreversible: the
Western Liberal Order (Allison, 2020: 30-40; Allison, 2018:124-133; Wertheim,
2020:19-29; MPM-GEPS, 2018: 160).
Dichotomy of the world in two opposing camps, the East and the West,
was curiously now given a new lease of life. This cleavage has a history of ten
centuries or more. It arguably goes back to the Schism (1054) and the Crusades,
which split the Christian Church, as well as the Roman Empire sharply into East
and West. Soon this historic cleavage was vested with a meaning which
manifestly transcended both history and geography -- even religion itself. In
time, it also acquired political, socio-cultural and even moral significance.
Gradually, over the centuries, “East” became synonymous with “Evil”,
“Autocratic” and “Retrograde”, while “West”, by comparison, suggested
freedom, virtue, civility, order, progress and “civilization”. Equated with the
“West”, the “free world” has been treated as virtually synonymous with
“civilization”, which some contrast to barbarism, “totalitarian rule” by “oriental
despots”, and chaos in the East (Ascherson, 1996: 49-51). Conveniently until
recently, Asians were lumped together as “orientals”. “Bon pour l’Orient” was a
common French expression indicating “second-rate”. This totally arbitrary and
ill-founded view of the world has served to legitimate the conquest of new lands,
the subjugation of peoples and the conversion of “pagans” into the “one true
faith”. Furthermore, it lent support and validation to a massive imperial
expansion, well into the XXth century, in tandem with the exclusion of the bulk of
the world’s population; those consigned to be the “wards”-- for their own good
of course -- of the “superior” nations, whom Providence had chosen to “take up
and to shoulder the White Man’s Burden” (Immerwahr, 2019:64-94). During the
1930s and early 1940s, the West and the rest of the world bore witness to the
outcomes of this twisted line of reasoning and hubris.
In the early twentieth century, after the “White Man’s Burden”, Europe
and North America heard of the “Yellow Peril”. It was invoked by Kaiser Wilhelm
II, the German Emperor (1888-1918), on the morrow of Japanese victory over the
Russian Empire, in 1905. Resurrected in the years of the Cold War, it accounted
for expressions, like that of the “Evil Empire”, which certain parts of the “West”
equated with the USSR. Under President G.W. Bush, it morphed into the
expression “Axis-of-Evil”, which included other countries of Central and East
Asia (Newland & Argyriades, 2019:1-30). The Corona Virus pandemic has given
it a new lease of life. Will it serve to extend the life and hegemony of this East-
Employment is more than a job. It is the essential pedestal underpinning social inclusion and democracy itself
Argyriades, D.
9
West dichotomy? A recent surge of polemics, targeting China especially, would
seem to argue as much (The Economist, April 16, 2020). Characteristically titled
“Pandemic geopolitics: is China winning?”, an article appearing in this prestigious
journal suggested that invectives have travelled in both directions. On this side
of the Atlantic, some people took to referring to COVID-19 as the “Wuhan” or
“China” virus, much in the way that the flu, which followed WWI, had become
known as “Spanish flu”. It was quickly seized upon as a pretext for disclaiming a
massive debt to China or to recoup the losses occasioned by the “lockdown”.
“China ought to know its place” were words proffered in London, at the NATO
Council meeting, held in this past November. (Haass 2020)
The dangers of upending a multilateral system set in place by the U.N. on
the morrow of WWII (1945), to foster peace and prosperity, may still appear
remote. A burgeoning arms race, on the other hand, suggests otherwise. Sabre-
rattling goes in hand with diversion of resources from much-needed
development programmes outlined in the SDGs of the United Nations. These
ought to have priority. There is still no end in sight to wars in both West Asia and
North Africa, which devastate, dismantle or serve to perpetuate failed and fragile
States. Even the verbal attacks on the WHO, coupled with the threat of
withholding funds from that organization in the midst of a global pandemic,
bespeak a lack of appetite for constructive cooperation in tackling global issues.
At a time of rampant populism, xenophobia and demagoguery reign supreme.
“My country right or wrong” or “my country best and foremost”, become the
rationale for escapes to ethnocentrism and unbounded unilateralism but also for
resisting progressive policy initiatives on the domestic front. Furthermore, as
demonstrated in ongoing public narratives and debates, they point to the
marginalization or exclusion of “out-groups” to better shelter “in-groups”. There
can be little doubt that the ongoing pandemic will unleash a trove of trends,
some clashing, contradictory or pulling in directions that cannot be foreseen, at
this very early stage. There will be a tug-of-war between competing forces and
ideas. Which will prevail, may well depend on power; clout vested in some
groups, rather than in the intrinsic worth of ideas and the real needs of people.
What this crisis demonstrated, on the other hand, is the primacy of
community and the ethics of solidarity over the rival claims of unfettered
individualism, which prevailed for four decades. The words of Mrs. Thatcher
“Society does not exist” would not have gone down well in the City of New York,
in the days of the pandemic, when doctors, paramedics and nurses juggled the
rival claims of patients in their care, as they struggled to make do with
inadequate equipment and supplies, through more than twelve-hour shifts. The
sight and sounds of people’s spontaneous loud applause of such self-sacrifice
spoke volumes on survival of values, deeply buried in our conscience and our
Social Inclusion and the Future of Work
10
collective mind, after four decades of “Thatcherism” and the neo-liberal ethic.
(Interlandi, 2020: SR6-7; Krugman, 2020: SR16; Reich, 2020: SR9; The New York
Times 2020: SR1-3)
A BROKEN SYSTEM AND MODEL
Like sudden massive earthquakes, the global virus pandemic shook the
economic system and socio-political structures to their foundation. But will they
stage a comeback? Only time can tell. The system came complete with values and
a mindset, in which “instrumental logic”, utilitarian values and pragmatism or
opportunism reigned supreme. A hegemonic model, it sought to exclude all
others (“One size fits all”). It is axioms permeated our language and our policies,
exerting a mighty hold on our collective conscience and individual minds. They
guided our research and train of thought, but all too often also gave credence to
both myths and misinformation, which have weighed on decisions and policy
guidelines shaping our collective lives.
The corona virus pandemic is unique in the annals of history. In
suddenness of onslaught, in sweep and range of outreach, in magnitude of
impact, it may have no known parallel, in modern times. At this stage, it is hard
to predict when and how it will come to an end. In the United States -- and in
New York -- it shuttered an economy, which was on the up and up. The crisis
propelled unemployment nationwide, to more than 30 million, in little more than
a month (The New York Times, 2020, A1 & B1; Chaney & Guilford, 2020; Morath &
Chaney, 2020). It reached 40 million by the end of May 2020. Also by the end of
May, the totality of deaths from the pandemic stood at c. 102,000. Still, in relative
terms, it was not very high compared to western Europe but disproportionately
borne by the elderly, the poor and minorities of color. Already, more jobs have
been lost nationwide than the US economy was able to create since the onslaught
of the Recession, which begun in September 2008, or indeed the Great
Depression of 1929. To be sure, civil society rallied instantly and admirably in
support of the numerous victims of this unprecedented debacle. On the personal
level, however, the gravity of the crisis brought into sharp relief the most
egregious facets of the system and model in place.
Specifically, one case that caught the public eye, concerned a middle-aged
staff member of the Metropolitan Transportation Authority (MTA), who died
suddenly after contracting the virus. Overnight, his bereaved family had lost not
only a father and breadwinner but also health insurance, a cover and protection
that no one can afford to live without. Yet, on the macro-level, as Mr. Sanders
noted announcing the suspension of his campaign for the democratic ticket to the
2020 election, this was the common fate of close to a hundred million of people in
Employment is more than a job. It is the essential pedestal underpinning social inclusion and democracy itself
Argyriades, D.
11
the U.S. We need to be reminded that this one hundred million hardly represents
a cross section of the U.S. population. In the vast majority of cases, the members
of this cohort belong both to the poor and to the black or brown minorities, better
known as Afro-Americans and Hispanics. The bulk of “first responders” also came
from these communities. Not surprisingly, though amounting to only thirty per
cent of the New York population, they have so far sustained fully seventy per
cent of the casualties of the pandemic. This is a startling figure, which starkly
gives the measure of the inequity, the exclusion and marginalization to which a
broken system condemns a significant segment of its adult population. How
could we go so wrong (Krugman, 2020:16-30; 123-152; 259-288; Newland &
Argyriades, 2019:1-30)?
It hardly befits a professor of Public Administration, who studied
Economics at the undergraduate level, some sixty years ago, to venture into a
discipline he only knows vicariously. However, as a resident, as well as a teacher
of public servants in New York, he needs to express alarm at the outcomes of a
model, widely believed to be “rational”, which “habitually overreaches,” often with
disastrous outcomes (Sternberg, 2020: A15; Kay & King, 2020). The magnitude of
this pandemic and the shock waves it produced, compounded by the inequities it
brought to glaring light, may help explain the scale, as well as relative speed of
the response of Congress, of the Executive Branch and civil society at large with a
view to mitigating the rigours of a system deeply flawed, as it plays out,
especially at times of mega-crises. There can be little doubt that proximity of the
elections, due on this 3rd November, may have added to the alacrity of the
response. But how will it unfold when the worst of the crisis is over? Will it be
back to “normalcy”, back to “business as usual”, when the economy rebounds or
begins to point to recovery? It needs to be remembered that this system has been
in place for more than three decades. It underpinned six presidencies, from both
political parties, survived two major crises and fostered endless wars in parts of
Western Asia, the Middle East and Africa.
Disparities, in fact, and endless senseless wars may be the tell-tale signs
and trademarks of this system, in place since the mid-eighties. Not surprisingly,
this note might sound somewhat uncharitable and, arguably, even biased to
some people. The system did produce – at least facilitate a huge technological
progress, as well as spectacular wealth. Where the system failed demonstrably is
in “distributive justice” i.e. the distribution of wealth and dispensation of
benefits in health, social protection, housing, food security and education, as well
as in the advancement of human rights, protection of minorities and of the poor.
It is a system marked not just by grave inequity but also a starkly visible ethical
and democratic deficit. The Nobelist Paul Krugman described this broken system,
Social Inclusion and the Future of Work
12
as well as mega-trend and the outcomes it produces, in the following searing
terms:
“The skewing of America the shift of a growing share of income to a small elite was
already clearly visible by the late 1980s. This seemed to many people … to be a bad thing.
Not only did it mean that ordinary families were failing to share in economic progress; it
meant a loss of [the] sense of living in a shared society. So, one might have expected a
serious discussion of the forces behind rising inequality, and what if anything might be
done to reverse this trend” (Krugman, 2020:259).
To be sure, there has been some discussion. However, as the primaries have
shown, the distance separating so-called “moderates” from those whom they
dismiss as “radicals” and “socialists” both deemed derogatory terms– leaves
little room for dialogue, complacency or consensus. Extremes of wealth and
poverty compounded by inequality in every sphere of life take on a special
salience in light of the pandemic, particularly on account of the known past
passivity of government in this regard. This is beginning to change.
Nevertheless, the chasm that separates the highest from the lowest income levels
remains starkly forbidding. It stood at 1 to 20 during the 1970s; it tops 1 to 300 in
our days (Krugman, 2020:259). Worse, it self-perpetuates as it becomes a part of
daily life and sights in major cities, where every night the homeless must be
removed from subways to which they look for shelter (Appelbaum, 2020: SR10).
The homeless have no voice, except for the NGOs, who take up their defence. As
for the very poor, they are struggling to be heard. Political elites, who dominate
the narratives, would wish them away, invoking the “American dream” but also
the “Axis of Evil”, which seeks to explain away the trillions spent on wars and
massive weapon systems. American exceptionalism and the “indispensable
nation” are also widely invoked. (Marchese, 2020:13)
Must this be the new norm; one in which government sits idly by,
intervening only in pandemics or other “acts of God”? Must we allow the present
inequities and disparities to escalate, which endless wars and violence absorb the
scarce resources that would be better spent on SDG16? The study of recent
history may suggest otherwise. Perhaps we needed a crisis to bring to light the
legacy of John Maynard Keynes (Carter, 2020). We needed a pandemic to
demonstrate that markets are really social phenomena, inextricably meshed with
other social phenomena; not an autonomous system but rather a sub-system with
wide ramifications reaching out and deeply affecting every single part of Society
and the Polity. Perhaps, this pandemic has shown that government can do, at
times of plenty what, in our days, it has been forced to accomplish in extremis.
Contrary to the gospel, which offered us downsizing, outsourcing and deregulation
as the one way to progress and efficiency, we need the hand of government and
the Administrative State to steer the markets clear of rocky reefs and to re-
introduce a better sense of balance, a better “sense of living in a shared [i.e.
Employment is more than a job. It is the essential pedestal underpinning social inclusion and democracy itself
Argyriades, D.
13
inclusive, democratic] society” than has been our experience in fully four
decades (Krugman, 2020: 259). One of the many risks to which we’ve been
exposed, during the past decades, is the perpetuation of myths and misinformation
which warn against the perils of any change of course.
Language is weaponized, mostly for domestic purposes, in part to “export
discontent” but partly also to shield the status quo against incipient perils from
“creeping, alien socialism”. With an eye to the coming elections, moreover, some
of the opinion leaders engage in the-all-too-familiar “blame-game”. It seems as if
all ills can readily be assigned to one main source: one individual person, one
country or one group. According to this logic, remove that individual, push that
“rogue country” back to where it should belong and all will automatically fall
back into place (Osgood, 2017:A19).
A “SKEWED”, ONE-SIDED SYSTEM AND ONE-DIMENSIONAL MAN: THE
HOMO ECONOMICUS
What people unwilling to look beyond mere symptoms cannot discern is
the effect of models and systems in perpetuating beliefs, as well as political
narratives and shaping behavioural patterns in ways that deeply influence the
course of events in society at large. Since the mid-1980s, vast swaths of the world
and humanity including, in particular, Western countries and the US have lived
under the constellation of a skewed model; one which prizes material success
and primes one set of values above all else. The embodiment or archetype of this
overarching model points to Homo Economicus. (Kim & Argyriades, 2015:424-425)
With Homo Economicus, the Market Model of Governance signalled the rapid
advance of economists, accountants and management consultants, where
previously psychologists, sociologists, lawyers and administrators had been
manifestly in charge. With the 3Es ascendant, all other values rapidly receded to
the background. The “pragmatists” prevailed, claiming that they knew better and
were mindful, in particular, of the “bottom line”.
With galloping disparities and maladministration, which trailed the
Market Model, important shifts of power vouchsafed to a small minority
decision-making influence out of all proportion to the numbers it represented. It
was “the economy, stupid!”, as Bill Clinton liked to say. This carried in its wake or
definitely favoured some of the salient features of the New Public Management
(NPM): support of those in power, intolerance of dissent (“let the Managers
manage!”), a “pragmatist” dislike for “theoretical” issues bereft of “practical”
value, coupled with a penchant for measurable outputs. A slogan said it all.
“What I cannot measure, I cannot manage”. There was also “results over process”,
which posits that success at any price trumps decency and due process. That
such results were skewed to favour very few, the pragmatists dismissed as
Social Inclusion and the Future of Work
14
“value-laden”, as overly “theoretical”; arguably, open to “moral” inquiry but not
to quantification and, for this very reason, to corrective action accordingly.
Indeed, it must be admitted that “ethics”, in the form of probity and integrity, has
loomed large in the narratives of NPM and related policy initiatives; but this has
mainly occurred in the fighting of corruption, which has grown exponentially
around the world. Ethics has been interpreted as mostly a drive to enforce
transparency with accountability in the workplace and as compliance with
orders.
With this new set of values, came a new Model of Man. It is conspicuously
at variance with models which prevailed from the 18th century onwards, through
to the 1970s. As pointed out, already the new “neo-liberal” model features Homo
Economicus, an “independent contractor” and “entrepreneur of self (Kim &
Argyriades, 2015: 425). Averse to all forms of “collectivism”, the Homo Economicus
prefers to be “own his own”. Hostile to social welfare provided by the
government, he is also mostly averse to public personnel policies, which take a
long-term view of people and their needs. The entrepreneurial model rejects
career development “as pampering pen-pushers”, and as not cost-effective.
Equating civil servants with “bureaucrats” cast aspersion on the “civil” as
contrasted to the “military” in the public sphere. It certainly took umbrage at
public sector unions. The antics of some unions have certainly exacerbated such
negative reactions to public sector unions from segments of society (MPM-GEPS,
2018:176-182). Still, viewing men and women as “resources” has meant that the
employers’ duty to the employee was strictly co-extensive with the latter’s offer
of services. “At will” employment practices and automatic severance upon
retirement, dismissal or layoff were logical corollaries of “lean and mean”,
minding the “bottom line” and “protecting the taxpayer”; this notwithstanding
the fact that taxpayers include a sizeable number of public employees, as well as
“first responders” in their ranks (MPM-GEPS, 2018).
There can be little doubt that Homo Economicus, in one of many versions,
elicited support from NPM, with narratives and literature contributing
substantially to a new, minimalistic approach to public personnel management.
“Reductionism” was in: from reduction of the notion of the common good, to
concepts like morale and motivation (Dwivedi et al., 2007: 121). Reduced to mere
“resources” meant that humans were disposable; ephemeral and viewed in
instrumental terms (Argyriades, 2010: 73-104; Argyriades, 2005: 86-102). Though,
to be sure, their skills, morale and motivation are what would matter most when
they are hired, they are employed “at will”. They can be “fired” at will, when
circumstances change or a pandemic strikes and their utility falters. Priming the
“bottom line”; reluctance to commit to long-term contracts and take
responsibility for people and their families over the long-haul become the signal
Employment is more than a job. It is the essential pedestal underpinning social inclusion and democracy itself
Argyriades, D.
15
features of this newer trend and pattern in Human Resource Management. It claims
to be “pragmatic” but really takes no cognizance or very little note of either
human needs or human career development, in all their rich diversity. “Work and
the Nature of Man” (Herzberg, 1966): employment as empowerment; as active
participation in the productive process; work as form of inclusion, as well as job
security and needed structure receded to the background, as the twentieth
century drew to its close.
For more than three decades, Homo Economicus has reigned supreme. He
carried in his trail “outsourcing” and privatization: policies and practices, which
spread like wildfire world-wide, both to the public and the non-profit sectors.
Even sensitive areas of government like Defence and Foreign Affairs have not
been spared, in spite of sub-optimal outcomes (Stanger, 2009). That we persist
with such minimalistic notions of human resource management is consonant, in
fact, with neoliberal views not merely of Society but also of Human Nature and
Human Rights (Sen, 2009:361-364). “Humans” are viewed essentially as
incidental to the process of production and economic activity; “as factors of
production”. This means that what they are worth may also come and go.
Though, to be sure, their skills, input and “needs” are noted and rewarded, they
must be subordinated to economic criteria and a cost-benefit calculus. A far cry
from the days of Mayo, Rothlisberger, Maslow, McGregor and Herzberg, as well
as Herbert Simon and Mary Parker Follett (Mosher, 1981:207-287), Human
Resource Management appears to cling to theories more in tune with private
sector practice than with traditional concepts of public service, national or
international. The litmus test remains: how consonant these practices may be
considered to be with widely accepted values and democratic principles.
Increasingly, moreover, we come to recognize that findings of research on “Work
and the Nature of Man” have been both contradictory and inconclusive. So far,
they have mostly proved unable to sway deeply ingrained assumptions,
stereotypes and belief systems propounded and upheld by powerful vested
interests (Tingle, 2018; Herzberg, 1966).
Models and systems change. They emerge, they rise and fall all for a
reason; we need to fathom why. This paper tries to argue that, in exploring
causes, a systems approach is needed; in-depth historical studies, as well as
“numbers-crunching”. In one-and-a-half centuries, since Woodrow Wilson’s
study of Public Administration and close to a hundred years after Max Weber’s
analysis of Bureaucracy in Wirtschaft und Gesellschaft, we have seen shift before us
three very dissimilar Models of Public Administration and Public Service
Management but, also and most importantly, different Models of Government,
Society and Man (Weber, 1947). We started from the Enlightenment and from the
18th century. During the 19th century, this rationalist model received renewed
Social Inclusion and the Future of Work
16
attention from lawyers and engineers, notably at the height of the Industrial
Revolution. After the First World War, it was reshaped perceptibly. It morphed
into a new model now fashioned by psychologists, sociologists and social
anthropologists. It primed human behaviour, interpersonal relations and a range
of human needs, as most important factors in enhancing motivation and
performance in the workplace.
Quite suddenly in the 1980’s and 1990s’, this model came under attack. It
was declared obsolete. With Homo Economicus in the ascendant, economists,
accountants and management consultants took charge of the debate. Because we
must admit that human nature changes but not so fast, we must conclude that
other major factors have been at play. During the 1930’s, this in fact had been the
outcome of the famous Hawthorne Studies (1927-1932), which paved the way for
the rise and triumph of the Human Relations Movement. HRM, as it was known,
focused on the Human Factor. It shifted the focus of management, away from
techniques and equipment to the social dimensions of work. Away from
command and compliance, away from hierarchy and discipline, it focused on
morale and motivation, as keys to good performance. It primed participation,
inclusion in the workplace, interpersonal relations, development and growth.
Predicated on the assumptions of the Homo Economicus, the model that
prevailed with the New Public Management also primes the human factor, but
only instrumentally, as a “resource” contingent upon need, for a limited period of
time. The employee’s development is not a prime concern, especially in the case
of “independent contractors”, who come and go “at will”. We have seen how “at
will” plays out at times of crisis or in pandemics, like now. Critically, however,
the focus of attention has recently shifted away from the employee to principal
stakeholders: the CEOs, of course, top management, shareholders, important
sponsors, donors and other VIPs, whose influence and support are eagerly
solicited. Their names are featured prominently in the titles of institutions like
universities, hospitals, colleges and concert halls. In the West, they are called
“philanthropists”. In parts of the East, by contrast, they morph into “oligarchs”,
whenever their pronouncements or actions are seen as being at variance with
“Western” national interests (Kantchev & Simmons, 2020: A9).
It is a pattern of governance and management which is increasingly
challenged in our own days. It has been criticized on grounds of distributive
justice and democratic principle but also of its reliance on instrumental reason,
utilitarian ethics and reductionist approaches to both work and the complex
nature of Man. Likewise, it is taken to task for failures to consider a range of
societal and human needs. Its merits are disputed by those who value equity and
the community most. They search for a model of governance and public
administration that pays more than lip service to their foundation principles of
Employment is more than a job. It is the essential pedestal underpinning social inclusion and democracy itself
Argyriades, D.
17
liberty, equality and fraternity or solidarity. In light of growing disparities within
and between nations, as well as the numerous flaws and maladministration these
carry in their trail, many are calling for change, which should be more than
decorative and more than scratch the surface. They call for a paradigm shift. They
call for a new model; one that fully takes account of the systemic properties in
governance, society and the economy, as well as a new model of public service
management; a model that respects human nature, in all its rich diversity and
“leaves no one behind”.
CONCLUSIONS: WHAT LESSONS CAN WE DRAW?
“Too good a crisis to waste”, or words to this effect has been a current
expression among some party activists in the United States. Truly an oxymoron, it
points to the expectation of short-term political gain that may flow from the
crisis, if it is “used” judiciously, from a party-political standpoint. The author of
this paper will use it, nonetheless, to articulate the hope that some good may
come out of this challenging experience of a pandemic unique both in its
virulence and spread of its effects. Unevenly, the crisis brought into sharp relief
the inequities and flaws of the model and system of governance that have been in
place since the mid-nineteen eighties. Both have been calculated to optimize the
prospects and conditions for wealth creation and advance in a number of areas
like science, technology and war. They represent a system which vouchsafes to a
very few what it denies to many: access to wealth and clout with potential to
secure, for one’s descendants mostly, enormous assets and influence. Not only, in
other words, is this particular system geared to concentrating wealth in the
hands of very few but also, making sure that the system and its outcomes will
tend to be irreversible. The system offers freedom to an elite but is manifestly
deficient when it comes to securing equality and the necessary measure of
protection and predictability to all citizens and residents. Equality with justice
have, since the Age of Lights, been viewed as cardinal virtues of democracy and
good governance; moreover seen as such since the golden age of Athens and the
writing of the Proverbs (31-9). That such values are not obsolete but embedded in
our culture, the remarkable response of New York civil society demonstrated in
many ways, when the pandemic struck.
What the crisis also showed is how unevenly the costs of responding to
the pandemic -- or to any crisis in fact turn out to be distributed when to a
democracy deficit is added a lack of capacity to shield and to provide for the
weakest and the most vulnerable (Dror, 2001). That barely 30 per cent of the total
population bore the brunt of the burden of coping with the pandemic; indeed,
that 80 per cent of all police arrests related to the enforcement of social distancing
in New York, targeted blacks and Hispanics can hardly be an accident. It points
Social Inclusion and the Future of Work
18
to a system failure with deep historical roots. (Krugman, 2020:103-169;
Frederickson & Ghere, 2013)
The paper tried to show that, though the very nature of the pandemic was
such that no one government agency might have it in its power to swiftly stop
from spreading and to contain, emergency preparedness and sound contingency
planning left much to be desired. Both represent critical responsibilities that
government, on any level, cannot afford to abjure, neglect or outsource. We are
talking of the Public Space (Timsit, 2013:23-33; Ktistaki, 2013:35-69).
Governments, by their very nature, are both the first responders and help of
last resort. Often used by Harry Truman, the words “The Buck Stops Here” take
on a special salience, when it comes to the functions of government, at times of
crisis especially. We live, it has been argued, in an “age of
discontinuity” (Drucker, 1968). Uncertainty, in our days, is greatly exacerbated by
climate change which, lack of cooperation among the world’s Great Powers, is
turning into a menace to our Planet and humanity. Other than the obvious need
for international governance and inter-governmental collaboration in all spheres
of activity, the merits of long-term strategic planning, pluri-disciplinary studies
and holistic approaches to issues in critical current affairs stand out as of the
essence. They marked the Marshall Plan and Development Decades of an Age of
Reconstruction after WWII; they were abandoned later in the 1980s and 1990s.
(World Bank, 1994:xvi)
Notoriously, the challenges, to which the world at large must now focus
attention, require such all-encompassing strategic planning. They straddle many
disciplines and touch on diverse needs. The COVID-19 crisis may be a good
example. Not only Health Commissioners and epidemiologists, but also urban
planners, lawyers, public managers, economists and educators were asked to
lend a hand. To bring all these together demands more than good leadership,
important though this is. It calls for systems-thinking and corresponding
structures; capacity to govern, which in short supply, because what it requires is
coping with complexity and problem-solving skills. It calls for keen awareness of
the present task environment; of constraints and opportunities it offers, with both
the past and future always in mind. (Dror, 2017, 2014, 2001, 1986)
One may hope that, in due course, multi-disciplinary studies and cross-
sectoral research will explore the many facets of this unique experience, which
shook us to the core. It brought out strengths and weaknesses; the bright and
darker sides of governance and public administration. On the upside, the way in
which society, across the board, has rallied to the challenge, easing the
government’s tasks, represents a hopeful message. Yet even during this crisis,
dark shadows from the past were not slow to re-emerge. Ostensibly, in
“Philanthropy, Race is Still a Factor in Who Gets What” (The New York Times,
Employment is more than a job. It is the essential pedestal underpinning social inclusion and democracy itself
Argyriades, D.
19
2020). It cannot be denied that also the government rallied although, given the
novelty and complexity of the challenge, the marks of some confusion and lack
of advance planning became visible throughout. In an election year, the tendency
and temptation to weaponize the virus gave vent to the “blame game”, which
still goes strong.
How all this plays out and what the virus pandemic eventually brings in
its trail, it may still be too soon to tell. Whether, to be specific, it leads to more
strategic, more science-based and democratic governance, to a more progressive
society and more inclusive communities remain to be seen. For now, it may be
argued that the country and the world stand at a watershed. The virus and the
crisis exposed for all the see a broken model of governance and, underpinning this
model, a one-dimensional vision of the economy and society, world-wide (Kim,
2019: xi-xxv; Newland & Argyriades, 2019:1-30; Pichardo & Argyriades,
2010:15-19, 47-104, 329-341).
Politically articulated by Reagan, Thatcher and others, in the 1980’s and
1990’s, the Market Model of Governance represented an attack on the
Administrative State and the Progressive Movement, which gave us Social
Protection and the Public Service Profession, the way we have come to know
them in our days. The former it attempted to privatize, proclaiming its intention
to “get the government off the backs of the people” and to promote a
“Government that Worked Better and Cost Less” (Hood & Dixon, 2015).
With close to forty years of this Market Model at work, it cannot be
sustained that these goals have been attained. Not even size and cost have been
reduced appreciably. Simply, priorities changed and the narratives have been
revised to explain and justify a pivot from welfare to warfare. In fostering the
objective of “a government that cost less and worked better”, the Market Model
primed “deregulation” in tandem with downsizing and outsourcing. Ostensibly
in pursuit of efficiency and effectiveness, these strategies were carried to great
lengths. It is hardly accidental that, when the virus struck, the only part of
government with needed strategic reserves were the Armed Forces.
What will the “new norm” be? Will our collective experience of the
pandemic lead us to revisit and revalue our institutions and the ways our
governance works? Will it force us to revisit and revalue the Administrative State
and government priorities, as these evolved from the early 1980’s until to date?
The Gospel of Efficiency, as Waldo has described it (Mosher, 1981: 61-63), gained
momentum in the trail of the expanding tasks of government with the New Deal,
during the 1930s. It came with “faith in Science” (ibid) but also faith in government
and the virtue of public service. (DeVries & Kim, 2014)
Paradoxically, in the eighties and at the turn of the century, a new ideology
surged that looked at the State as the enemy and at state regulation as, in von
Social Inclusion and the Future of Work
20
Hayek’s words, “The Road to Serfdom”. Efficiency and effectiveness became
goods in themselves. They trumped all other values (Harlow, 2001). With
“instrumental reason”, claims of intrinsic value were discounted or dismissed.
Even respect for truth and “speaking truth to power” were now questioned and
subjected to criteria of expediency, utility and effectiveness. Highly
particularistic, predicated on utility, such values and such logic have not availed
the public space where, historically, other standards and criteria had prevailed
(Sen, 2009: 361-364). Hallowed over the centuries, values in Education (Paedeia)
and public service have seemed to fade away, discounted or dismissed by Homo
Economicus, if they could not contribute to gain in money terms (Hitz 2020). This
reductionist approach inter alia entailed erosion not only of public service, but
also public trust (Newland, 2015:39-68; Kim & Argyriades, 2015:422-426; Caiden &
Caiden, 2002).
It underpinned, moreover, the surge of Social Darwinism, which may have
been a factor, as well as well as possible outcome in both the huge disparities,
that have not ceased to grow, and endless foreign wars. In the eyes of the elites,
unfettered gain and power represent god-given rights; entitlements for self that
must be perpetuated. The Neo-conservative Project for the New American
Century (https://en.wikipedia.org) represented an expression of this mindset
and approach. Upended by the virus, utilitarian values and instrumental reason
may yet attempt a comeback. Social Darwinism, encapsulated in Mrs. Thatcher’s
adage that “society does not exist,” may likewise reappear when the crisis has
receded. For all who prize Community, the Administrative State, and democratic
values with SDG16, it is time to stay alert and work towards return to more
inclusive governance, nationally and internationally. (Mazower, 2012)
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Photo by!Mateus Campos Felipe!on!Unsplash
Chapter 2
Innovation for the
Future of National Well
Being
Innovation for the Future of
National Well-Being
Emma-Frida Galicia-Haro
Instituto Politécnico Nacional, Mexico
Ana-Lilia Coria-Páez
Instituto Politécnico Nacional, Mexico
Irma-Cecilia Ortega-Moreno
Instituto Politécnico Nacional, Mexico
INTRODUCTION
he existence of a social phenomenon that impacts the security of
nations, represented by violence and the difficulty of facing it efficiently
by countries, joins the current context of low growth and widening of
the inequalities experienced by the world economy. The role of
innovation, therefore, presents increasing importance in the present and future of
national well-being.
The economic impact of this situation worldwide was US $ 14.76 billion in
2017, measured at constant prices of purchasing power parity (PPP), equivalent
to 12.4% of world GDP or US $ 1,988 per person and annual growth of 2.1%, and
which maintains a growing trend since 2012 (Institute for Economics & Peace,
2019) as can be seen in Figure 1.
The largest expenditure incurred as a result of this was the global military
expenditure, which amounted to the US $ 5.5 billion measured with the PPP,
which represents 37% of the total in 2017.
The second refers to internal security expenditure, which includes
expenditures on the police and judicial systems, as well as the indirect costs
associated with imprisonment, which covers 27.4% with the US $ 3.8 billion and
homicides the third component of violence with 16.6%.
T
Innovation for the Future of National Well Being
Galicia-Haro, E.; Coria-Páez, A. & Ortega-Moreno, I.
25
Figure 1. Global trend of the economic impact of violence
Source: Institute for Economics & Peace, 2018.
By regions (See Figure 2), the economic costs of violence are concentrated
in violent crime and homicide, which represent 71% of the economic cost in
South America, 65% in Central America, and the Caribbean, and only 15 % in the
Asia-Pacific region. In contrast, military spending is more than 45% in Asia-
Pacific and North America, compared to 5% in Central America and the
Caribbean.
The proportions of internal security spending also vary significantly
between the region with the highest spending (Europe) and the region with the
lowest spending (South America) (Institute for Economics & Peace, 2018).
Technological innovation has been in most studies conceived as the
application of science and technology to a new or improved product, process,
marketing, or organizational method used in the company or that is introduced
in the market (Schumpeter, 1944; OECD, 2005).
Social Inclusion and the Future of Work
26
Figure 2. Cost of violence by region
Source: Institute for Economics & Peace, 2018.
And knowledge or learning is an essential element in innovation (Arrow,
1962; Jaffe, 1989) since every new creation comes from what "people do" (Romer,
1994, page 12). There is a large scientific production that addresses the
questioning of the existence of regions with different levels of innovation that
inquire about the behavior of these two fundamental elements.
Multiple studies prove the great association between technology and
knowledge as drivers of innovation in both advanced countries, as well as the
numerous references to the European Union (Buesa, Heijs, & Baumert, 2010;
Charlot, Crescenzi, & Musolesi, 2015; Guastella & van Oort, 2015; Miguélez &
Moreno, 2015; Rodriguez-Pose & di Cataldo, 2015; and Sanso-Navarro & Vera-
Cabello, 2018), and cases such as Russia (Crescenzi & Jaax, 2017), and the United
States (Kang & Dall'erba, 2016a, 2016b), as in others of less development
(Samandar Ali Eshtehardi, Bagheri, & Di Minin, 2017).
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27
They have shown that it is exceptional that both variables present similar
behaviors as in the case of the European Union (Charlot et al., 2015; Sanso-
Navarro & Vera-Cabello, 2018).
There is evidence that one of the two presents better performance either in
R&D (Guastella & van Oort, 2015; Rodriguez-Pose & di Cataldo, 2015) and
specifically the action of business R&D (Samandar, Eshtehardi, Kamran, & Di,
2017), or human capital (Buesa et al., 2010; Miguélez & Moreno, 2015).
There are others where it is shown that one of the two does not present
significance in the creation of innovation as in the case of universities in Russia
(Crescenzi & Jaax, 2017).
More recently, the approach has incorporated into these models that both
technological advancement and knowledge require the existence of a favorable
environment for its development (Jaffe, 1989; Porter, Furman, & Stern, 2000).
Those models incorporate a third composite element for the coincidence of
governmental, business, social and cultural actors that together create a climate
conducive to the development not only of innovation but of competitiveness and
economic growth in specific places.
There is evidence that violence or fear of abuse may result in some
economic activities not occurring at all (Brauer and Tepper-Marlin, 2009 cited by
Institute for Economics & Peace, 2018). That may fundamentally alter business
incentives, as in Colombia that between 1997 and 2001 faced with the highest
levels of violence, new companies were less likely to survive and make a profit
(Institute for Economics & Peace, 2018), which consequently affects long-term
growth and therefore to the welfare of societies.
The origin of the study of differences in growth from the local goes back to
the definition of Marshall (1931) of industrial districts as the "concentrations of
specialized sectors in a specific locality" that favor appropriate labor markets,
suppliers, and even a favorable environment.
For Porter, Furman, & Stern (2000), innovation plays a central role in
national and regional competitiveness, which implies identifying how a
government provides an environment in which its companies can improve and
innovate more quickly than their foreign rivals, in a specific sector.
The importance of innovation at the regional level arises with the study of
the participation of a variety of actors and internal and external factors to
companies that interact with each other (Dosi, 1988), such as the development of
collaborations within a geographical area where there are organizations that
build and disseminate knowledge, agencies that transfer technology, and a
culture of innovation that involves companies and the system as a whole
(Doloreux, & Parto, 2004).
Social Inclusion and the Future of Work
28
Thus, Rodríguez-Pose & Wilkie, (2016) study the importance of making
local institutions and society supporters of innovation; Meanwhile, Valdéz
Lafarga & Balderrama (2015) and Hudec & Prochádzková (2015), highlight
having a government quality concerned with preventing corruption, maintaining
the rule of law and improving its efficiency.
Academic interest in the subject is also in the condition of the
competitiveness of achieving better standards of living for its population,
introducing the importance of the favorable role of the institutions that come
from Dosi studies, (1988); Stern, Porter & Furman, (2000); and Doloreux and
Parto, (2004) who highlight the relevant role of the government as a guarantor of
market protection, the stimulation of interactions that promote learning and the
exchange of knowledge and the existence of policies, social and business groups
favorable to Competitiveness and innovation improvements.
The difficulty of measuring the environment is addressed by Stern, Porter
& Furman (2000) who recognize that the common innovation infrastructure is
quite susceptible to measurement but that capturing the aggregate environment
for innovation in a nation's industrial groups is difficult because of both the
subtlety of the concepts involved and the lack of systematic international data.
In studies carried out in Mexico, one of the factors that appear most in the
investigation of the determinants of innovation is the importance of the
environment and with it the governmental efficiency and the socioeconomic
conditions, (Rodríguez-Pose & Villarreal, 2015; Rodríguez-Pose & Wilkie, 2016;
Pérez, Lara, & Gómez, 2017; Ríos & Ocegueda, 2018)
Given the theoretical importance that in various studies maintain the
favorable conditions of the environment in which innovation is developed and
the uncertainty about the effects that adverse conditions may have on it, the
relevance of having approximations to this issue are framed in the strategic
intervention of Companies, which may be affected. Taking into account that in
1990, for example, companies financed between 40 and 60 percent of R&D in
most of the most developed countries and that in Japan and Switzerland
companies financed more than 70 percent of the R&D expenditure (Porter, 2003).
OBJECTIVE
Identify the adverse effects of violence and crime on innovation in developed
and emerging countries. The 5 most competitive countries in the world,
Switzerland, Singapore, United States, Finland, and Germany were included; in
front of 5 nations in Latin America, Panama, Costa Rica, Mexico, Brazil, and
Peru. The information source of the 8 variables was the Global Competitiveness
Index (ICG) of the WEF for the period 2011-2016, the method applied was the
Innovation for the Future of National Well Being
Galicia-Haro, E.; Coria-Páez, A. & Ortega-Moreno, I.
29
econometric panel data and as a theoretical reference the endogenous growth
theory.
The selected variables were:
As dependent variable patents.
As regressors, those corresponding to 2 essential indicators in the
theoretical bases of the new theory of growth, business expenditure on R&D and
availability of scientists and engineers, and two variables grouped determinants
of the institutional environment and determinants of government performance.
The institutional environment constituted by commercial costs of
terrorism, commercial costs of crime and violence, organized crime, and ethical
behavior of companies. Government performance by waste of public spending
and burden of government regulation.
The general hypothesis is that the variables corresponding to the
technological advancement components (business expenditure on R&D) and
knowledge (availability of scientists and engineers) have a positive and
significant influence on innovation, while the variables grouped institutional
environment and Government performance determinants have a negative and
significant influence when there are conditions of violence or inefficiency on
innovation measured as the increase in the creation of patents.
METHOD
The application of this proposal is done through a quantitative methodology that
allows us to provide an objective approximation of the differentiated effect that
two representative variables of the endogenous growth theory have: R&D and
knowledge, and four representatives of the environment characterized by
violence, corruption, and Government efficiency.
The first corresponds to pillar 12 called innovation, which according to its
methodology focuses on technological innovation and knowledge construction,
while the rest are in pillar 1: Institutions (World Economic Forum, 2011-2017).
The approach is based on the method of econometric research that allows
integrating the proposals of economic theory and the empirical measurement of
economic phenomena, using as a link to statistical inference as one of the
definitions of econometrics points out “the quantitative analysis of economic
phenomena real, based on the simultaneous development of theory and
observation, related by appropriate methods of inference”(Gujarati & Porter,
2010).
A multiple panel data regression model represented by a data set that
integrates a time dimension and a cross-sectional dimension of individuals has
been used. Considered adequate since it takes into account these indicators that
provide information on the degree of effectiveness that the explanatory have on
Social Inclusion and the Future of Work
30
the creation of knowledge, by overcoming the problems presented by simple
linear regressions that prevent the study of individual effects, and the
overcoming of the inconsistency and the possibility of unbiased estimators
(Labra, & Torrecillas, 2014).
That is, there are repeated observations over time of a selected group of
individual units. The regression analysis obtained describes the change of the
mean in the different subgroups of the population specified by the values of the
regressors, which allows estimating multiple regression coefficients that would
not be possible with only cross-sectional data or series data only. temporary
(Arellano, 1992).
Baltagi (mentioned by Gujarati, 2010) points out among the advantages of
these models the presence of heterogeneity given the existence of specific
variables per subject; and due to its transversality, a greater amount of
informative data is obtained, more variability, less collinearity between variables,
more degrees of freedom, and greater efficiency; allowing to study more complex
behaviors.
In this type of econometric approximation, several types of panel data
models located, the ones considered most common, are the so-called fixed effects
and the so-called random effects.
Fixed effects should be used when the existence of unobservable
heterogeneity between each of the units of analysis is assumed, and they do not
change over time (they remain fixed). That is, a fixed-effects model examines
group differences in interceptions, assuming the same slopes and constant
variation between entities or subjects.
Random effects are appropriate when the observed effect can be
characterized as randomly drawn from a given population if the unobserved
effect is distributed independently of the variables xi (Dougherty, 2016).
From this longitudinal cross-section database, it is possible to identify the
behavior of the 5 nations with the best performance in competitiveness,
compared to the behavior registered by 5 Latin American economies studied
throughout the period from 2011 to 2017. The development of the model used
STATA 12.0 software.
The model used was as follows:
p𝒂𝒕𝒆𝒏𝒊𝒕 = 𝜶𝟎 + 𝜷𝟏 spendRD 𝒊𝒕 + 𝜷𝟐 AvailCEi𝒕 + 𝜷𝟑 EntInstvio𝒊𝒕+
𝜷𝟒 Entinstgub𝒊𝒕 + 𝒖𝒊𝒕
Where it means:
patent value registered by the patents of each country
spendRD business spending on R&D
Innovation for the Future of National Well Being
Galicia-Haro, E.; Coria-Páez, A. & Ortega-Moreno, I.
31
AvailCE availability of scientists and engineers
EntInstvio Institutional Entity
Entinstgub government performance
RESULTS
The general characteristics of the model correspond to a strongly balanced panel
based on the fact that there is no loss of information on the seven variables
included in each group of 5 nations for the period 2011-2017.
Being competitive nations with different levels of development, with very
diverse social and cultural profiles, it is possible to assume the existence of
heterogeneity not observable in Latin American countries, not derived from the
model variables between each of the countries.
While given the characteristics of uncertainty and wide lapses in the
generation of innovation, it is assumed that unobservable effects do not change
over time, which gives the pattern to assume that fixed effects (FE) will be the
model that best suits adapt to this group.
When carrying out the autocorrelation and heteroscedasticity tests, the
existence of both was verified, so to correct them, the estimators with Standard
Corrected Errors for Panel (PCSE) were considered, correcting the model. The
results are presented in Table No. 1
In the present study it is observed that in the case of the two groups of
countries, the expenditure of companies in research and development has a
positive influence and is the most significant variable in both models, with a
direct relationship towards the creation of patents.
In the group of more developed the concentration of pertinent quantities
of human resources, materials and efficient suppliers maintains the results
obtained in recent empirical studies in particular of the European Union as
detailed above.
In the case of the variable taken as a reference of knowledge, the
availability of scientists and engineers is positive and significant at 10%
confidence in the most competitive countries, which is also consistent with
previous studies. On the contrary, in Latin Americans, the influence is positive
but not significant.
These two variables have a behavior similar to that indicated in the
empirical studies that state that it is unlikely to find similar behaviors in both
variables.
Social Inclusion and the Future of Work
32
Table 1. Panel data estimates with corrected standard errors
Source: Own elaboration using Stata 12.
The result obtained in the pooled indicator related to the institutional
environment regarding violence in the most competitive countries has a positive
influence since its measurement is carried out based on an assessment that is
high to the extent that the violent environment is poorly perceived.
Moreover, it positively influences the performance of the country and falls
if it influences adversely, its expected result confirmed as significant. In Latin
American countries, the influence is harmful for a reason stated above on the
valuation of this environment, which reinforces the empirical evidence that
points to nations with high quality in the operation of policies that strengthen the
peace and state environments of law as those that best create adequate conditions
for the development of innovation.
In the case of the grouped variable that assesses government efficiency in
both groups, it is negative. What implies that respondents observe a lack of
efficiency and waste in government action with the fundamental difference that
those developed do not present significance as long as in Latin Americans.
Variables
PCSE
PCSE
patent
More competitive
Latin American
spendRD
130.4067
1.5259
0.0000
0.0000
AvailCE
25.4921
0.1186
0.0910
0.6580
EntInstvio
41.6942
-0.1654
0.0260
0.4070
Entinsgub
-16.5233
-1.0790
0.2260
0.0000
_cons
-801.0281
-0.1995
0.0000
0.8420
R2
0.6050
0.6155
Number of
countries
5
5
Number of
observations
35
35
Innovation for the Future of National Well Being
Galicia-Haro, E.; Coria-Páez, A. & Ortega-Moreno, I.
33
In the case of the grouped variable government efficiency in both groups,
it is negative, implies that respondents observe a lack of efficiency and waste in
government action. The difference is that those developed do not present
significance as long as in Latin Americans, yes, it is.
On the other hand, the variable that has the greatest positive impact on
innovation is the private expenditure on R&D that is consistent with the
empirical evidence both in countries with higher performance and in those with
lower economic progress as indicated by Schumpeter, (1992); Solow, (1957);
Arrow, (1962); Freeman, Chris & Soete, (1997) and Dosi, (1988) and empirically
the studies of Kang & Dall’erba, (2016) and Samandar Ali Eshtehardi, Bagheri, &
Di Minin, (2017)
Likewise, in the case of high-specialty human capital, what is indicated by
Arrow, (1962); Pavitt, (2016); Freeman, (1997); Romer, (1994); Nelson & Winter,
(1982) on the great influence that this driver of innovation has in particular in the
more developed countries compared to the smaller and conditioned ones, to
have high-quality institutions, in the countries of lesser development.
The statistical results of the model show a slightly higher adjustment
(61%) in both cases. What allows us to identify some behaviors that reiterate the
need for policies that attend, not only to the important human aspect but also, to
the adverse effect it has when curbing innovation.
From the general hypothesis that the innovation measured by the
coefficient registered in patents in the WEF report, was positively and
significantly influenced by the expenditure of business in R&D is valid for both
groups of countries. While the availability of scientists and engineers is only
accepted at 10% confidence in the group of the most competitive, in Latin
Americans it cannot be verified as it is not significant.
The results of the institutional environment characterized by violence
show that, in effect, the countries with the lowest records of terrorist acts, crimes,
and acts of violence, as well as the existence of organized crime and good ethical
behavior of companies, correspond to nations with greater competitive
performances and that its result is significant for the increase in the creation of
patents.
The opposite happens in Latin American countries where the result is an
opposite impulse in which the greater increase causes less growth in the creation
of patents without significance for the explanation of their creation.
In the case of the grouped variable of government performance, the results
are similar in the two groups, the inefficient adverse performance of the
government is perceived that plays against the creation of patents, however, in
the developed ones the impact is of greater weight but It is not significant, in
Latin Americans, on the contrary, the weight is less and very significant.
Social Inclusion and the Future of Work
34
It is interesting, in this variable, to observe that in the most competitive
countries the greatest impact, being positive and significant, is in the institutional
environment and even when inefficient government performance is reflected, the
impact is less. While in Latin Americans the greatest negative effect on
innovation comes from the inefficiencies of the government rather than the
effects of the violent institutional environment.
CONCLUSIONS
The drivers of innovation, technological advancement, and knowledge even in
adverse environmental conditions maintain their positive momentum in favor of
the growth of innovation.
The element with the best performance is the technological progress,
observed in both blocks of countries with the particularity of concentrating on
the expenditure made by the businesses. Knowledge is driving only in advanced
nations; in Latin American countries it seems to have the obstacle indicated in
previous research of the lack of high-quality research centers linked to the
productive sector.
Although the results point to the verification that the existence of adverse
conditions both in the social environment and in the operation of governments
negatively affects the progress of innovation, it is necessary to deepen the issue
of the effects that violence and corruption has one of the most important
components of competitiveness.
To be able to analyze with more detailed information the components of
the commercial costs of terrorism, organized crime, and the ethical behavior of
companies, it may give greater elements not only to combat existing phenomena
but to curb their expansion and prevent their onset.
To the low government performance due to waste of public spending, the
economic valuations of corruption should be added to provide objective
elements to the current debate that faces the proposals of whether this is the
biggest and most significant problem that slows the growth of smaller nations
development.
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Photo by!Gary Butterfield!on!Unsplash
Chapter 3
Socioeconomic
Development: the Steel
Like a Crucial Key
Socioeconomic Development:
The Steel like a Crucial Key
Lourdes-Fabiola Espinoza-Parada
Universidad Autónoma de Nuevo León, Mexico
Rosario-Lucero Cavazos-Salazar
Universidad Autónoma de Nuevo León, Mexico
Jesús-Gerardo Cruz-Álvarez
Universidad Autónoma de Nuevo León, Mexico
INTRODUCTION
o measure socioeconomic development and standard of living in any
country, the level of per capita steel consumption is treated as one of the
most important rates (Pervej & Anjum, 2017).
According to Mitra & Dilip (2010), the steel industry is crucial for
the development of any economy and is considered to be fundamental support
for human civilization.
Steel is a product that has a large technologically complex industry with
processes that represent great challenges forward and backward links in terms of
material flows and income generation. It has been the key material with which
the world is in continuous development. It is also essential for a world with a
strong need for transportation, construction, housing, and power generation.
Worldwide, according to the World Steel Association (2018), the steel
industry ranks second, after oil and gas, with a gross steel production volume of
1.689 billion tons.
In Figure 1. The evolution of international raw steel production from 1950
to 2017 can be observed, where we can find a gradual increase over the years,
which raises the relevance of this industry in both international and national in
any country.
T
Socioeconomic Development: The Steel like a Crucial Key
Espinoza-Parada, L.; Cavazos-Salazar, R. & Cruz-Álvarez, J.
39
Figure 1. Raw steel production 1950 to 2017 (Millions of tons)
Source: Own elaboration in support with World Steel Association (2018).
According to the sustainability indicators data of the World Steel
Association on 2016, based on 125 steel companies and 6 associations, the steel
industry is essential in every sector of the economy because the new products of
steel are lighter and stronger than before, contributing other industries to
decrease their environmental footprint.
Likewise, this industry adopted responsibility measures because of the
environmental regulations are a requirement for acceptance by society to
continuously reduce the environmental impact. In 2016, it contributed around
1.029 billion dollars, 98.8% of its income, to society, directly and indirectly.
Human capital is a key asset worldwide, 6 million people work for the
steel industry. In 2016, steel companies provided each employee with 7.0 days of
training on average. This has also worked to achieve zero incidents with a
frequency rate of 1.0 an improvement of 78% since 2006.
Likewise, as Romanian-German (2016) mentions, the steel sector currently
has an important place throughout society, since its demand is very wide and the
momentum of the global economy favors its imports and exports, but its
maintenance It depends on the identification of new production and alloy
techniques, to guarantee the reduction of production costs in the midst of
improving the properties and utility of steel.
Ocheri and others (2017) in its studies indicate that the steel industry will
continue to serve as a stimulus for the national development of a country since
the benefits of having a functional steel industry will translate into a country
Social Inclusion and the Future of Work
40
with a greater economic contribution. It should also be noted that the steel sector
will contribute to all facets of the economy.
In 2017, according to the World Steel Association, the production of raw
steel in the world growth 6% compared to 2016. Most of the countries reported
positive growth, highlighting Vietnam that went from 5 million to 10, Turkey
with a growth of 13%, Argentina and Brazil with 12% and 10% respectively, and
finally China, India, and Mexico, which grows at the same level as the world
average.
Table 1. Principal steel producers across the world
Source: Own elaboration (World Steel Association, 2017).
China leads the production list with more than 50% of production, as
shown in Table 1. Main steel producers worldwide, followed by Japan, India, the
USA, Russia, and South Korea, who together represent 80% of steel production.
The study of the strategies that China implements in the steel industry is
relevant because according to the data of the World Steel Association (2017) its
production is incomparable with any other country.
POSITION
COUNTRY
PRODUCTION (Millions Ton.)
1
China
831.7
2
Japan
104.7
3
India
101.4
4
USA
81.6
5
Russia
71.3
6
South Korea
71.0
7
Germany
43.4
8
Turkey
37.5
9
Brazil
34.4
10
Italy
24.1
11
Taiwan, China
22.4
12
Ukraine
21.3
13
Iran
21.2
14
Mexico
19.9
15
France
15.5
16
Spain
14.5
17
Canada
13.6
18
Vietnam
11.5
19
Poland
10.3
20
Austria
8.1
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CHINA IN THE STEEL INDUSTRY
According to IberChina (2017), the steel industry is one of the pillars of the
Chinese economy, and it is also one of the sectors with the greatest excess
capacity.
In 2015, the country produced a total of 803 million metric tons of steel.
50% of world production. The Chinese steel industry exported 13.7% of the steel
produced in 2015. China, with 110 million tons of steel produced in 2015, was the
world´s leading steel exporter.
Figure 2. Chinese steel production (Millions of tons)
Source: Own elaboration (World Steel Association, 2019).
China´s raw steel production constantly increased between 2016 and 2018.
In 2018, production increased 12% to 928.3 million metric tons of 831.7 million
tons in 2017. The gap between production and apparent consumption (a steel
demand measure) was reduced to 52.7 million metric tons in 2018.
Between 2009 and 2016 China´s steel export as a proportion of production
more than triple from 4% to 13.2% before declining in 2017 in 2018, the export
share of production was further reduced by 1.6 percentage points to 7.2%.
China is the world´s largest steel exporter. In 2018, China exported 66.9
million metric tons of steel, a 9% decrease from 73.3 million metric tons in 2017.
China´s exports accounted for about 16% of all steel exported worldwide in 2017.
China´s volume 2017 steel export was almost double that of the world´s
second-largest exporter, Japan, and more than double that of the third largest and
fourth-largest exporters, Russia and South Korea. In terms of value, steel
accounted for only 2.2% of the total amount of assets China exported in 2017.
Social Inclusion and the Future of Work
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Figure 3. Gross steel export (millions of tons)
Source: Own elaboration (World Steel Association, 2019).
As seen in Figure 4. Around 90% of the production of Chinese plants has
been absorbed in the country, but domestic consumption peaked in 2013. As the
economic growth in China's growth slows, construction infrastructure and
properties reach a saturation point, it seems that more steel is about to flow to
world markets.
Figure 4. Consumptions and exportation of Chinese steel (Millions of tons)
Source: Own elaboration with data of the World Steel Organization, National
Bureau of Statistics, China Custom Administration, Financial Times World Steel
Association (2016).
Socioeconomic Development: The Steel like a Crucial Key
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43
Likewise, it is observed in Figure 5. That of the domestic consumption in
the country 42% is destined for the realization of assets, 25% for infrastructure.
15% for machinery, 7% for other industries, 6% for car production, 3% for
shipbuilding, and 2% for home appliance production.
Figure 5. Steel consuming sectors in China
Source: Own elaboration (CEIC, 2015).
China Baowu Group (the results of a merger between the Baosteel Group
and Wuhan Steel Group) is China´s steel production company. China´s steel
production extends through many companies, with the top 10 producers in the
country representing only 310.5 million metric tons, or 37%, of total production
in 2017, based on available data.
The corrective trade measures in the steelmaking sector have been anti-
dumping (AD), countervailing (CVD), associated suspension agreements and
safeguards are often collectively referred to as trade remedies.
These mechanisms are internationally agreed to deal with the effects that
distort the market for unfair trade or serious damage or the threat of serious
damage caused by an increase in imports. Unlike anti-dumping and
countervailing measures, safeguards do not require verification of these rights or
measures, countries investigate accusations and can remedy or alleviate the
damage caused to national production.
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MEXICO IN THE STEEL INDUSTRY
This section describes the statistical information of the Mexican steel industry;
the data described below were taken from infographics of the National Chamber
of the Iron and Steel Industry (2004).
Figure 6. Participation of the steel sector for GDP
Source: Own elaboration (CANACERO, 2017).
The national steel production from 2007 to 2016 was 18.8 million tons with
an installed capacity of 29.6 million tons. The production of steel in monetary
terms was 369 thousand 182 million pesos in 2016, which represents 10.6% of
manufacturing GDP, 6.2% of industrial GDP, and 1.9% of National GDP as shown
in Figure 6.
For investments, until 2006 the sector maintained and investment program
aimed at the replacement, rehabilitation updating, maintenance, and expansion
of production plants. In Figure 7. Investment of the steel industry according to
CANACERO (2018) It is observed that from 2007 to 2009, an investment plan for
3 thousand 363 million dollars was applied.
The growth in investment remained from 2010 to 2013 at 1,110 million
dollars. The investments made in the 2007-2016 period total of 14 thousand 83
million dollars.
Socioeconomic Development: The Steel like a Crucial Key
Espinoza-Parada, L.; Cavazos-Salazar, R. & Cruz-Álvarez, J.
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Figure 7. Investment of the steel industry
Source: Own elaboration (CANACERO, 2018).
Likewise, the number of people employed, the total jobs in the Mexican
steel industry are observed (Figure 8). From 2015 to 2016 the industry has made
enormous efforts to avoid mass layoffs, however, it has a significant decline over
the years.
Figure 8. Number of people employed
Source: Own elaboration (CANACERO, 2017).
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Figure 9. Steel production by state
Source: Own elaboration (CANACERO, 2017).
The steel industry in Mexico is of vital importance since its production is
closely linked to the dynamics of the economy as a whole; steel products are
indispensable in the production chain for the generation of consumer durables.
Also, steel companies constitute a fundamental part of the fixed capital
available to the country due to the high investment requirements involved in its
operation and production.
Likewise, it has devices distributed in 11 municipalities of the country in
which 3 federative entities (Coahuila, Michoacán, and Nuevo León) contribute
more than 60% of the production, as can be seen in Figure 9. Steel production by
state.
Steel consuming sectors in Mexico, mostly 61.5% correspond to the
construction sector, followed by metal products and the automotive industry
(Figure 10).
Socioeconomic Development: The Steel like a Crucial Key
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Figure 10. Steel consuming sectors in Mexico
Source: Own elaboration (CANACERO, 2018).
Due to the relevance of the sectors that use this raw material, there is no
doubt that the production of this input contributes significantly to both national
and international competitiveness.
Mexico experiences a different commercial scenario in comparison with
China. The export of Mexican raw materials to that country is small compared to
other Latin American countries. Chinese industrial exports grew 441% from 2003
to 2014, which represented a greater boost than total exports. Which grew 435%
during the same period. Mexican manufacturer is a strong competitor for its
domestic market and the North American Free Trade Agreement (NAFTA)
market.
The second is much more important than the first. The enactment of
NAFTA in 1994-1995 represented the formalization of a commercial trend already
underway between Mexico and the US. China's entry into the WTO marked a
slowdown in Mexican exports to the US. As is the case with other Latin American
economies, Chinese imports show a two-figure growth, while the corresponding
local sectors do not grow so rapidly
THEORETICAL FRAMEWORK
For an industry to become competitive, it is necessary to go through a series of
factors and strategies that provide stability in the market from the beginning of
its operations to the present.
For the World Economic Fund (2018), competitiveness is defined as “the
set of institutions, policies, and factors that determine the level of productivity of
a country. The productivity levels determine the rates of return on investments,
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which in turn play a fundamental role in the growth of the economy”. In this
way, an economy is more competitive when it manages to grow at higher
average growth rates than the rest of the economies in the long term.
According to Ivancevich and Lorenzi (1997), competitiveness is the
measure that a nation, under free and fair market conditions, is capable of
producing goods and services that can successfully pass the test of international
markets, maintaining and even increasing the real income of its citizens.
Although it can be affirmed that the idea of the competitiveness concept is
similar among the students of the subject, a generalized agreement regarding its
definition has not been found, but what is a fact, is that the author of constant
reference in the field of competitiveness is Porter (1999), who indicates that
competitiveness arises from the productivity in which companies employ in one
location the factors (labor or capital) to produce valuable goods and services.
Although the different definitions regarding competitiveness have a
microeconomic reference framework, today they include macroeconomic, socio-
economic, political and cultural elements that also influence the performance of
companies and the standard of living of the population, because they recognize
the correlation between the competitiveness of countries and the living standards
of their population (WEF, 2004).
One of the first studies on international competitiveness and today's most
widespread is the Global Competitiveness Report dating back to 1979 from the
World Economic Forum (WEF), hosted in Geneva. As of 2004, the Global
Competitiveness Index (GCI) is introduced, which takes into account
microeconomic and macroeconomic bases to measure the competitiveness of a
nation.
For the WEF, competitiveness is defined as the set of institutions, policies,
and factors that determine the level of productivity of a country. Productivity
levels determine the rates of return on investments, which in turn play a
fundamental role in the growth of the economy.
In this way, an economy is more competitive when it manages to grow at
higher average growth rates than the rest of the economies in the long term. The
indicator is constructed from 12 factors that explain the competitiveness and
positioning of countries and which are grouped into three stages: the first is
economies driven by increases in productive factors; the second is economies
driven by efficiency improvements, and the third is economies driven by
innovation. All are quantified according to the degree of development of the
countries through the gross domestic product (GDP) per capita.
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Table 2. The global competitiveness model
Source: Own elaboration based on the model published by Schwab (2018).
The WEF study contains 114 indicators where it groups the key factors
that lead a country to be competitive. Figure 11 shows the global competitiveness
model integrating the subscripts and competitive pillars. These indicators are
grouped into 12 pillars, which are divided into 3 subscripts according to BR
(Basic Requirements), ED (Efficiency Dynamizers), and IS (Innovation and
sophistication).
Under this scheme proposed and developed by the World Economic
Forum, aspects such as the macroeconomic environment, the efficiency of
financial markets, technological development, and innovation are taken into
account, leaving a total of 12 measurable elements or factors for each of the
nations.
The WEF study is annual and the information comes from surveys and
hard data that are summarized in statistical variables from international sources.
According to Huber-Bernal (2017) for the past five years, the GCI has maintained
91.6 percent of its indicators by holding 99, eliminating three, and incorporating
12 new ones. This gives some stability to those who take it as a reference for
monitoring public actions undertaken by national governments to raise their
levels of competitiveness in the medium and long term.
METHOD
This chapter compiles relevant research from databases such as EBSCO,
Scopus, Proquest, Science Direct in the years 2015 - 2019, which were used to
develop a theoretical framework of reference in which the research variables are
supported, to identify the industrial policies that the countries with the greatest
competitiveness studies use.
Additionally, a quantitative analysis work of comparative contrast
between the leader of the steel industry and Mexico is carried out according