Global Perspective: Economies around the world are preparing for the opportunities and challenges brought about by the next industrial revolution
07 Sep 2018
The global economy is entering the Fourth Industrial Revolution (4IR), or Industry 4.0, based on the application of new digital and automated technologies in production processes and service delivery. These changes are presenting emerging markets with opportunities such as improved productivity, as well as risks, namely reshoring and the displacement of human labour by automation. Wealthier emerging markets, such as the Gulf states, that have the resources to invest in new technologies, and those with better established manufacturing sectors, such as the countries in Southeast Asia, appear best placed to reap the benefits of the 4IR. Many of these economies are putting in place strategies to manage and encourage the transition towards Industry 4.0. Meanwhile, other regions have shown signs of so-called premature deindustrialisation. In particular, Latin America and Africa seem more vulnerable to threats arising from technological changes and at greater risk of being left behind. To avoid such a fate, they need to adopt new innovative strategies that will allow them to leapfrog existing stages of industrial and infrastructure development.
Klaus Schwab, founder and executive chairman of the World Economic Forum (WEF) and author of the book The Fourth Industrial Revolution, states that the world has already gone through three industrial revolutions. The first involved water- and steam-powered mechanisms, followed by electricity-powered mass production. The third industrial revolution is also referred to as the digital revolution. Schwab argues that the world is currently entering into the fourth industrial revolution, which is “characterised by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres”. A number of emerging technologies are expected to play significant roles in the upcoming revolution, including robotics, artificial intelligence (AI), the internet of things (IoT), machine-to-machine (M2M) communication, virtual reality and 3D printing.