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A fundamental transformation of services is underway, driven by developments in information and communications technology (ICT) tools, the uses to which they are being put, and the networks on which they run. Services were once considered a sinkhole of the economy, immune to significant technological or organizational productivity increases. Now, they are widely recognized as a source of productivity growth and dynamism in the economy that is changing the structure of employment, the division of labor, and the character of work and its location. Yet, the actual character of this transformation is often obscured by the increase in jobs labeled as services and by a focus on the digital technologies that, certainly, are facilitating this transformation. This transformation, central to the growth of productivity and competition in the economy, poses basic policy and business choices.

The core of our story of the services transformation is not about the growth in quantity or value of the activities labeled services, the conventional emphasis of much of the writing about services. Nor is it about the revolution in digital technology. Rather, it is about how the application of rule-based information technology tools to service activities transforms the services component of the economy, altering how activities are conducted and value is created.

There are significant implications for how firms compete. Services are increasingly the way that firms pursue value-added activities to avoid ever-faster commoditization of products, that is to avoid competition based solely on price when market offerings are relatively similar. However, the unbundling of services activities themselves accelerates this commodification, since competitors have the same efficiency-enhancing business process and infrastructure services available to them. Firms increasingly become bundles of services purchased on markets, and at the same time some of those in-house business functions that are maintained are then offered as services. A consequence is that the distinction between products and services blurs, as manufactured products are increasingly embedded within and recast as services offerings. Clearly, traditional sectoral boundaries break down, as information and services offerings bring previously unrelated firms into direct competition.

Likewise, the consequences for business organization, production, and work are profound, just as work was transformed by the evolution of manufacturing. The automation of basic activities both frees, but also requires, professionals to perform more advanced tasks. And the analytical tasks of managing information flows generated by ICT-enabled services often require a different set of skills than providing the service itself.

Capturing the possibilities from the services transformation presents new policy challenges for governments and regions. Services are deeply rooted in social rules, conventions, and regulations. Consequently, capturing the value possibilities inherently means recasting the rules, regulations, and conventions in which the services are embedded.

The development and deployment of ICT-enabled services should be considered a form of production. As ICT has become integral to the creation and delivery of services, ICT-enabled services have taken on the characteristics of production normally assigned solely to manufacturing. ICT systems that deliver the services have to be designed, developed, built, and implemented and they are very much open to innovation and productivity increases. Investments are often industrial in scale.

ICT-enabled services are the latest phase in a long history of production innovation. The history of manufacturing production progressed along distinct epochs, each with distinct manufacturing processes, management structures, labor practices, productivity, and outputs. The development of ICT tools and their application to services activities has driven a shift to the latest epoch.

The advent of Cloud Computing, emerging as the next dominant computing platform, accelerates the transformation of services. Cloud Computing, a distinct set of business models and performance attributes (not simply a code-word for everything online), enables new business models, transforms existing strategies, lowers the bar for new entrants, and raises a myriad of policy issues.

From a policy standpoint, the question is how to conceive, design, develop and build and deploy the new system. The “good” jobs, high value added functions, are in the innovative development and deployment of these systems. Policy makers need to employ strategies that will help communities and firms to develop the competencies required for this new form of production.

The continuing debate in political, economic and public policy circles about the relative value of manufacturing jobs and service-sector jobs is increasingly irrelevant to policy debates in the real economy. Just as it is inaccurate to assume that manufacturing jobs are secure and well paid, it is also inaccurate to consider service jobs to be dead-end, low-wage, unskilled positions. 

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Oxford University Press in "The Third Globalization: Can Wealthy Nations Stay Rich in the Twenty-First Century?"
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Kenji E. Kushida
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Cloud Computing is rapidly transforming not only computing, but the very fundamentals of how we process, store, and use information—and information is the very basis of civilization.  Cloud Computing is historically unique by simultaneously being an innovation ecosystem, production platform, and global marketplace. While the technology and business models are almost inherently global in scale, national politics and regulations will powerfully influence how Cloud Computing unfolds across the world. Critical issues such as information privacy (who gets to see and use information), security (how to protect information from unauthorized access), and communications network policy (the political economy of broadband and wireless networks) will be settled at the national or regional level. There are powerful tensions as US-based multinational firms are rapidly taking over the global Cloud Computing industry. What are the appropriate frameworks to understand how the competitive dynamics are unfolding? What are the options for national-level players? How should we understand the policy issues as they unfold? What is the role of Japan and Asia as this transformation unfolds?

Kenji Kushida is the Takahashi Research Associate in Japanese Studies at the Walter H. Shorenstein Asia-Pacific Research Center. He holds a PhD in political science from the University of California, Berkeley, and was a graduate research associate at the Berkeley Roundtable on the International Economy. Kushida has an MA in East Asian studies and BAs in economics and East Asian studies, all from Stanford University.

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Former Research Scholar, Japan Program
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Kenji E. Kushida was a research scholar with the Japan Program at the Walter H. Shorenstein Asia-Pacific Research Center from 2014 through January 2022. Prior to that at APARC, he was a Takahashi Research Associate in Japanese Studies (2011-14) and a Shorenstein Postdoctoral Fellow (2010-11).
 
Kushida’s research and projects are focused on the following streams: 1) how politics and regulations shape the development and diffusion of Information Technology such as AI; 2) institutional underpinnings of the Silicon Valley ecosystem, 2) Japan's transforming political economy, 3) Japan's startup ecosystem, 4) the role of foreign multinational firms in Japan, 4) Japan's Fukushima nuclear disaster. He spearheaded the Silicon Valley - New Japan project that brought together large Japanese firms and the Silicon Valley ecosystem.

He has published several books and numerous articles in each of these streams, including “The Politics of Commoditization in Global ICT Industries,” “Japan’s Startup Ecosystem,” "How Politics and Market Dynamics Trapped Innovations in Japan’s Domestic 'Galapagos' Telecommunications Sector," “Cloud Computing: From Scarcity to Abundance,” and others. His latest business book in Japanese is “The Algorithmic Revolution’s Disruption: a Silicon Valley Vantage on IoT, Fintech, Cloud, and AI” (Asahi Shimbun Shuppan 2016).

Kushida has appeared in media including The New York Times, Washington Post, Nihon Keizai Shimbun, Nikkei Business, Diamond Harvard Business Review, NHK, PBS NewsHour, and NPR. He is also a trustee of the Japan ICU Foundation, alumni of the Trilateral Commission David Rockefeller Fellows, and a member of the Mansfield Foundation Network for the Future. Kushida has written two general audience books in Japanese, entitled Biculturalism and the Japanese: Beyond English Linguistic Capabilities (Chuko Shinsho, 2006) and International Schools, an Introduction (Fusosha, 2008).

Kushida holds a PhD in political science from the University of California, Berkeley. He received his MA in East Asian Studies and BAs in economics and East Asian Studies with Honors, all from Stanford University.
Kenji E. Kushida Takahashi Research Associate in Japanese Studies Speaker Shorenstein Asia-Pacific Research Center, Stanford University
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For several decades, Southeast Asia’s tracts of dense, old-growth rainforest have served as fertile ground for lumber, and much land has been converted to agriculture. Now, palm oil plantations are being planted where forests once stood.

In 2011, Indonesia, one of the region’s most prosperous countries, instituted a two-year moratorium on clearing new areas of forest, which is set to expire this May and has been criticized as having several loopholes. Other countries, including Cambodia and Myanmar, are losing forests rapidly.

Out of concern for climate change, international initiatives such as Reduced Emissions from Deforestation and forest Degradation (REDD+) have aimed to promote conservation and sustainable development in countries with significant forest cover. But these efforts do not always support local needs, and can inadvertently have negative impacts.

Tim Forsyth, a Lee Kong Chian NUS-Stanford Distinguished Fellow, speaks about the gap between conservation efforts and economic and social development in Southeast Asia. He is visiting Stanford this quarter from the London School of Economics and Political Science where he is a reader in environment and development at the Department of International Development.

What major types of forest management do we see across Southeast Asia today?

A number of countries have put laws in place to restrict illegal logging, and have established national park areas. These are usually old-growth rainforests that restrict logging and agriculture. The problem with national parks is that they put so many restrictions on land use that the vulnerable populations living around them either suffer or are forced to cut other trees. I have spent some years working in poorer villages in Indonesia and Thailand on the edge of protected forests, and usually conservation policies avoid the fact that people need to get livelihoods somehow. Government policy should acknowledge how these people are vulnerable to changes in crop prices and the availability of land, or else these people might be forced into breaking the rules of national parks.

There is also production forest, which usually includes forest plantations. These can include softwoods such as pine, or hardwoods such as teak — and increasingly oil palm for food and biofuels. Forest plantations are attractive to governments and businesses because they earn money and can provide timber for construction and exports. Sometimes, plantations also gain carbon credits, although this is not a lot of money so far. In terms of conservation, destroying old-growth forest and replacing it with a monoculture plantation is not good for biodiversity. It also does not benefit those local people who want to harvest forest products or use part of the land for agriculture.

Finally, there are community forests that are supposed to be places where people can grow food, live, and have forest cover. The definition of “community forest,” however, varies from place to place. In Thailand, for example, the way the government defines it is not very different from a conservation area, and consequently there is not much space for agriculture. The Philippines, on the other hand, is more decentralized and local people can shape the nature of the forest landscape more. Corruption, however, is a problem.

Is there an ideal model that successfully supports sustainable development? How does your research approach this issue?

There has been much progress in collaborations that involve willing governments, international advisors, and local actors — often in accordance with an international agreement such as the Convention on Biological Diversity. These collaborations are more useful than a single actor working alone, and they acknowledge a wider range of objectives.

A new initiative is Reducing Emissions from Deforestation and forest Degradation (REDD+). This is meant to encourage governments to slow down deforestation by rewarding them financially through carbon credits. But REDD+ has a number of challenges. The main problem is that the value of the credits is so low at the moment. REDD+ also overemphasizes forest cover, rather than forest quality. This means that if a satellite image of a country shows a lot of forest cover, that is good according to REDD+. But this gives no indication as to the biodiversity or the diversity of livelihoods inside a forest. It is a green light to all of the people who want fast-growing tree plantations, which makes them money and supplies them with wood for construction. In addition, it keeps a government happy because it supplies their country with timber and tax revenue, but this is not necessarily what you would call sustainable development.

There are elements of good models in different places, and it really depends on one’s viewpoint. Nepal offers a good example of community forestry because, in principle, it aims to engage local people more effectively and equally, and so can combine local development with the protection of national forests. From a development perspective, some forms of conservation can hurt poorer people and actually undermine conservation efforts. Therefore, in my work, I try to promote policy that acknowledges the needs of the more vulnerable populations. My research tries to make climate change policy more relevant to development processes in Southeast Asia. In my current project, I am seeing how policy recommendations about forests can be reshaped and reinterpreted locally in developing countries in order to address local interests. My goal is to understand how expert knowledge about climate change can be governed more effectively in order to enhance both development and conservation in Asia with better outcomes for everybody.

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What can people do in their everyday lives to help combat climate change?

The practical problem of dealing with forest destruction and climate change in Southeast Asia is also a function of social and economic trends. As countries become more prosperous, more and more people live in megacities, drive cars, live in air-conditioned apartments, and frequent shopping malls.

A couple of years ago in Bangkok, I took lots of photographs of t-shirts printed with global warming messages and of people carrying reusable bags. When I was there recently, all of these things had disappeared. In other words, there is a tendency for people to think of conservation efforts as a fashion trend.

I do not think that any city in Asia is doing enough. We have to start planning cities in ways that use fewer greenhouse gases, and also to encourage people to realize that they can be real agents of change. At the moment, many urban citizens believe they can implement climate change policy by managing rural and forested landscapes. Instead, they need to realize the problems of these approaches, and to see what they can do themselves.

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Tim Forsyth stands in a cleared section of national parkland in Sumatra, Indonesia. | Courtesy Tim Forsyth
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Officials, scholars, and activists have long believed in improving environmental policy in developing countries by fostering desirable values and practices through networks of experts. Tim Forsyth will question this faith by arguing that all too often such networks ignore the limitations of global environmental assessments and the politics involved in producing and using expert opinion. Using preliminary evidence from Indonesia and Thailand, he will show how Procrustean advice and local agendas affect efforts to mitigate climate change, and what that can mean for the generation of greenhouse gas (through energy use) and its absorption in sinks (through forest conservation). Forsyth argues that more deliberative institutions of environmental information, judgment, and decision can better accommodate local knowledge and vulnerabilities, strike productive balances between mitigation and adaptation, and thereby address climate change in Southeast Asia in more timely and effective ways.

Tim Forsyth is Reader in Environment and Development in the Department of International Development at the London School of Economics and Political Science. He has published widely on matters of politics of environmental science and policy in Southeast Asia including Critical Political Ecology: The Politics of Environmental Science (Routledge, 2003); Forest Guardians, Forest Destroyers: The Politics of Environmental Knowledge in Northern Thailand (with A. Walker, Washington University Press, 2008); and International Investment and Climate Change: Energy Technologies for Developing Countries (Earthscan, 1999). He was a co-author of the chapter on climate change in the international Millennium Ecosystem Assessment (2005).

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2013 Lee Kong Chian NUS-Stanford Distinguished Fellow
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Tim Forsyth joins the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC) during the 2012–13 academic year from the London School of Economics and Political Science, where he is a reader in environment and development at the Department of International Development.

His research interests encompass environmental governance, with particular reference to Southeast Asia. The main focus is in implementing global environmental policy with greater awareness of local development needs, and in investigating the institutional design of local policy that can enhance livelihoods as well as mitigate climate change. Fluent in Thai, Forsyth has worked in Thailand, Indonesia, the Philippines and Vietnam. He will use his time at Shorenstein APARC to study how global expertise on climate change mitigation is adopted and reshaped according to development agendas in Southeast Asia.

Forsyth is on the editorial advisory boards of Global Environmental Politics, Progress in Development Studies, Critical Policy Studies, Social Movement Studies, and Conservation and Society. He has published widely, including recent papers in World Development and Geoforum.He is also the author of Critical Political Ecology: The Politics of Environmental Science (2003); Forest Guardians, Forest Destroyers: the Politics of Environmental Knowledge in Northern Thailand (2008, with Andrew Walker); and editor of the Routledge Encyclopedia of International Development(2005, 2011).

Forsyth holds a PhD in development from the University of London, and a BA in geography from the University of Oxford.

Timothy Forsyth 2013 Lee Kong Chian NUS-Stanford Distinguished Fellow Speaker
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The governor of the Bank of Japan, the country's central bank, recently announced he will be stepping down before his term expires. Stanford economist Takeo Hoshi spoke with Quartz on the future of Japan’s monetary policy.
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A pile of Japanese yen, October 2009. | Flickr user [Jim]
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