The Potential Economic Impact of the Fourth Industrial Revolution
Date: 19 February 2016 Share on Twitter Share on Facebook
Disruptive technologies such as the internet, robotics and artificial intelligence are developing at the fastest pace in human history. The so-called ‘Fourth Industrial Revolution’ is already underway with cloud platforms, remote-sensing, self-driving cars, and other emerging smart technologies that are changing the global economic landscape.
These topics were addressed by the world’s top businessmen and leaders at the annual Davos Economic forum in January. Davos – a venue for the world’s richest and most powerful to discuss pressing issues – has only existed in a modern context, before the steam ship transformed the 18th century, electricity and mass production in the 19th century, and electronics in the 20th. Today, the Internet of Things and the opportunities it has brought along with it are pushing the world to the brink of a fourth industrial revolution. This revolutionary period differs from the others in the fact that the technology isn’t completely new, but rather evolving from current developments.
The internet has slowly been taking over since it was made available to the public in the 1990s. People no longer book their vacations through a travel agent, but instead reserve a room with a few clicks and find the best airfare on an aggregator. Before, one needed an accountant to file their taxes, now a plethora of software is available for download.
Of course, digital technology is only a trigger in the massive revolution of Big Data, drones, and 3D printing: in 2015, some of the most long anticipated technologies such as “sense and avoid” drones, distributed manufacturing and precise genetic-engineering techniques finally came to be. Needless to say, a virtual data room is very much the result of development of the same digital technologies.
While it all sounds like a chapter out of Brave New World, a novel written during the Depression in 1931 imaging a futuristic London in 2540 with stem-cell research, education through hypnosis and over-production, many of the unimaginable technologies depicted in the book exist to some degree today.
Like the steamship and the automobile revolutionized the monetary world in their eras, the economic impact of the next one will be just as massive.
Automated factories will be good for developed countries and bad for developing economies. There will be less investment in factories in developing nations, as well as fewer low-wage and low-skill jobs.
At the moment, most smart phones are assembled by cheap labor in developing countries, but it’s just a matter of time before the low-end manufacturers switch to robotics. Robots can work 24/7, whereas humans have physical limits.
Countries like Germany and the US will reap the benefits of high-quality and cheaper products. This will affect global trade patterns and supply chains. In theory, manufacturing will no longer be be geographically dependent.
Ripples will be felt beyond the economic sphere: social lives will be changed forever. More and more people will meet their partners on smart phone applications, and similarly, break up over an SMS. The amount of devices connected to the internet with GPS and data tracking will continue to multiply, thus decreasing our level of privacy.
The education system will change. Medical schools will close as there is less demand for full-time practicing doctors, and patients will consult an online bot and have the medicine either delivered by drone or directly by their 3D printer, which will be affordable enough for mass consumption and use. Cross-country truck drivers will be out of work, and once self-flying technology is perfected, so will airplane pilots.
But it’s not all doom and gloom. Klaus Schwab, a Professor of Business Policy at the University of Geneva who first gathered leaders at Davos in 1971, wrote a report detailing how advancements that the 4th industrial revolution will improve the quality of life for populations around the world.
Previous revolutions that brought advancements in transport, electronics, and information technology have all empowered the consumer, making goods more readily available and cheaper.
Despite the numerous concerns that previous industrial revolutions have raised (such as unsafe work conditions, wage depreciation, and even child labor), humanity still managed to overcome these challenges. It’s time we get ourselves ready for the next one.