Successful economies fail when success is seen as a birthright. The spectacular emergence of China as a global industrial power has put an end to most complacency in advanced economies.
The bigger risk at this stage may be defeatism. Take manufacturing. The demise of manufacturing industry in high-wage societies has long been predicted.
Economists and others have argued for years that advanced economies will evolve into service economies, because when people grow more affluent their consumption pattern becomes increasingly skewed towards services.
Now, many say, the outlook for Western manufacturers is grimmer still, as huge numbers of low-wage, increasingly well-educated workers in China, India and other emerging economies flood into the global labour market.
But both arguments are wrong. Western consumers have not lost interest in manufactured goods. In the US, manufacturing purchases have accounted for a constant share of (increasing) household expenditures since the 1980s, and this share may even have risen recently.
There are plenty of successful, profitable manufacturing firms to dispel the notion that US and European manufacturers can no longer compete in global markets.
What is clear is that routine, rule-based work in the manufacturing sector is under great pressure in advanced economies. The pressure comes from low-wage Asian rivals, but also from automation at home.
So how can Western manufacturers survive? The key is innovation. Firms that continually develop innovative new products, find new markets for them, and improve on their production and delivery processes, will not only survive but prosper.
Firms that fail to innovate, even those in high-tech sectors, will not survive.
The Apple iPod demonstrates innovation's benefits while revealing other important lessons about what it takes to succeed in manufacturing.
Apple makes almost none of the iPod itself, relying instead on components designed and manufactured by suppliers around the world.
The iPod supply chain stretches across the globe, and most of the manufacturing is done overseas. Even so, about $163 of the $299 retail value of a typical iPod sold in the US flows to American firms and workers, according to a recent study by researchers at the University of California, Irvine.
Moreover, with the iTunes music downloading service, Apple found a creative and profitable way to combine its product with a value-added service.
The old distinction between manufacturing and services is in practice rapidly disappearing.
Innovation is the key to competitiveness in both.
So how can a country like Ireland ensure its place at the world's innovation table? As Irish economic leaders continue to develop their innovation strategies, they should keep three points in mind. First, innovation isn't just about research and discovery. It also entails commercialisation, then the initial adoption of the new product or service, and then diffusion, or adoption at scale. Critical to the entire process is the ability to attract financial capital, and an innovative workforce.
Second, the widespread perception of manufacturing as a declining sector in advanced economies is mistaken.
The huge and growing appetite for manufactured products, as well as the increasingly fragmented supply chains which produce them, are creating new opportunities for firms and workers.
Finally, for high-wage societies, there are no sunset industries only sunset activities. Globalisation and automation are inflicting a devastating one-two punch on standardised, labour-intensive production in both manufacturing and services.
What's left in these economies, will be those activities that are not rule-based and that benefit from proximity to each other and to consumers. And as long as enough of these activities are associated with innovation, a healthy future lies ahead for both manufacturing and services in high-wage economies.
Prof Richard Lester is director of the Industrial Performance Center at the Massachusetts Institute of Technology.
