Humankind is at the threshold of a new industrial revolution driven by the confluence of a staggering range of emerging technologies. How will it transform politics, economies and societies?
- The interconnection of devices — the Internet of Things — will become more widely used in industry and manufacturing.
- This development will streamline manufacturing, from design to delivery.
- Developed economies will benefit the most from new technologies, which will destroy some jobs and create new ones.
- Developing countries will suffer once the need declines for cheap labor in low-end manufacturing.
- China will adapt to the new technologies because of long-term concerns.
- Cybersecurity will become even more important as "smart" technologies become more integrated with manufacturing.
The term "eco-efficiency" was promoted five years later, by the Business Council (now the World Business Council) for Sustainable Development, a group of forty-eight industrial sponsors including Dow, Du Pont, Con Agra, and Chevron, who brought a business perspective to the Earth Summit. The council presented its call for change in practical terms, focusing on what businesses had to gain from a new ecological awareness rather than on what the environment had to lose if industry continued in current patterns. In Changing Course, a report released just before the summit, the group's founder, Stephan Schmidheiny, stressed the importance of eco-efficiency for all companies that aimed to be competitive, sustainable, and successful over the long term. In 1996 Schmidheiny said, "I predict that within a decade it is going to be next to impossible for a business to be competitive without also being 'eco-efficient'—adding more value to a good or service while using fewer resources and releasing less pollution."
World Economic Forum secret goal.
World Economic Forum in Davos today gather industrial leader and experts from think tanks to decide how to prevent catastrophic impact of new technologies on global economy and stability.
The main Impacts
The Developed World: Do The Rich Get Richer?The countries set to adopt new technologies first and most effectively will see the largest benefits. This means the Industrial Internet will help create a manufacturing renaissance of sorts for low-end manufacturing in developed countries and reinforce high-end manufacturing in countries such as Germany and Japan. In short, wealthier countries are best suited to take advantage of this process.
Even in places where the benefits will be the strongest, there will be significant disruption. Jobs will be created and destroyed. Countries like the United States and Germany have already seen most of the job destruction possible in the manufacturing sector, largely due to outsourcing. In a sense, there is not a lot to lose. However, the same is not true of the impact of the Internet of Things (and the Internet itself) on related industries. Automated vehicles, for example, will have a huge impact on the transportation of goods and services.
The Developing World: Will the PC-16 Exist?On the opposite end of the spectrum, the industrial revolution will largely harm the developing world. More efficient, adaptive manufacturing located closer to end users is eroding the benefits of low labor costs. Interest in much of the developing world, where low-end manufacturing is prevalent, will decrease. In countries where it is not widespread, such as most of Africa and the Middle East, the potential for a larger low-end manufacturing industry will be limited. Of course, there will always be a large market for cheap labor-produced, low-end manufactured goods — even if the Industrial Internet is widely implemented and perfected — but developing countries will not be able to attract as much investment in low-end manufacturing.
The change in the developed world's manufacturing process will disrupt the 20th century's most consistent and widely used path for the complete modernization of a developing country. For Japan, South Korea, Taiwan, China and even Germany, low-end manufacturing was crucial in developing their economy's industrial base quickly so they could catch up to — if not surpass — more developed economies. With cheap labor being offset by technology, fewer countries will be able to use low-end manufacturing as a growth catalyst.
China: A Unique CaseThe impact of the Industrial Internet of Things on China is quite nuanced because Beijing is trying to balance two conflicting interests. On the one hand, Beijing's biggest fear is social unrest, and managing the social effects of any changes on its large migrant work force is Beijing's top priority. On the other hand, Beijing also knows that in many coastal cities labor costs are becoming exceedingly high. Many low-end manufacturing jobs cannot remain in China with labor costs in other countries, principally Southeast Asia, lagging far beyond coastal China's.
Beijing knows it must adapt to prevent its own version of offshoring, so it has made it a high priority to elevate the sophistication of its industry to the same level as neighboring South Korea, Taiwan and Japan. China is the world's fastest growing market for industrial robots. It is quickly becoming the country with the most Internet-connected devices and is making significant strides in the adoption of additive manufacturing. However, the risk for Beijing is that these changes happen too quickly, causing short-term labor disruptions that require Beijing's swift intervention.
For China, the integration of the Internet into the manufacturing process can be thought of as an extension of the recent, rapid development of its technology, information and communications technology sectors. Although China lags behind the West in many areas of science and technology, it is becoming more competitive in engineering and high technology and could very soon rival all but the United States in those areas. China already has a robust startup culture in first-tier cities, whose technology corporations are performing well internationally. Weibo, the Chinese blogging site, even created a computer that bested Google and Microsoft in an artificial intelligence competition in May.
China's end goal is to leapfrog traditional evolutions in the manufacturing process, like South Korea and Japan did, and move directly to a highly automated, integrated and flexible manufacturing process that can compete in all strands of manufacturing with any country. Regardless of the short-term labor disruptions, if Beijing does not adapt, more jobs are likely to be lost, aggravating the Chinese economic slowdown and potential unemployment problems.
Cyberattacks: The Modern Arab Oil Embargo?The biggest limitation on the Industrial Internet may not come from governments, policies or the development of the technologies, but rather the safety, integrity and security of companies' operations. Although machine-to-machine communication has been prevalent in manufacturing for decades, historically the network for that communication was closed and thus not as susceptible to external threats as networks connected to the Internet.
Some industries already are coping with the threat of cyberattacks that go beyond bringing down websites or stealing information.
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Founder and Executive Chairman, World Economic Forum, he invites us to see video report on discussion topics the next industrial revolution related.