4th Industrial Revolution: Essay & Important Notes

Evolution of the fourth industrial revolution.

The Fourth Industrial Revolution finds its foundations laid on the third industrial revolution. With the changing technologies and innovations being made throughout the different revolutions, the fourth revolution was bound to take place. The term Fourth Industrial Revolution was coined by Klaus Schwab, the founder and executive chairman of the World Economic Forum.

Technologies Driving Change in the Fourth Industrial Revolution

The 4 th revolution is dominated by a myriad of technologies. These include:

Artificial Intelligence

AI is being used in many ways in different aspects of life. AI can recognize complex patterns, reach voluminous information, and also take decisions on a logical basis. The advent of AI has reached a level wherein people can control appliances in their homes by just giving instructions.

Blockchain is a secure and decentralized manner of recording and sharing data. With this technology, it is possible to improve and track the supply chain, secure sensitive data, and also combat frauds. The best example of this technology being uses these days is the use of cryptocurrency.

Virtual Reality and Augmented Reality

These technologies enable people to experience anything digitally. The use of these technologies has enabled people to overcome the boundaries between the virtual and physical worlds. A good example is how many stores allow their customers to try and experiment with products before making a purchasing decision.

Biotechnology

Biotechnology has made it possible to develop new medicines and drugs to cure life-taking illnesses. These have also made it possible to process and produce cleaner and greener energy, thereby enhancing the chances of a sustainable world.

The design and use of robots for personal and commercial purposes have become commonplace these days. Robots are being used in several industries to enhance efficiency and productivity and reduce human effort.

Internet of Things

Internet of Things has made it possible to connect devices used daily with the internet. With the help of IoT, it has become easy to track different aspects of businesses and industries. An example is the use of IoT by farmers to monitor the quality of fertilizers.

Pros and Cons of Fourth Industrial Revolution

The Fourth Industrial Revolution has brought several advantages for society and businesses including:

  • Increased productivity
  • Improved quality of life
  • Lower barriers to entrepreneurship
  • New markets for businesses

However, the industrial revolution propagated by technology also has some cons too. These include:

  • Inequality: The industrial revolution is beneficial for those who have access to the technologies and can use it for their benefit in the right way. People, businesses, and societies that cannot access technologies lag behind others and cannot benefit from the revolution in any manner.
  • Cybersecurity risk: With the increasing technological innovations, the threat of cybercrimes has also increased. Gadgets, robots, computers, and every technology are prone to attacks by unknown people.
  • Increased competition: The advent of technologies and their subsequent use in different industries and businesses has increased competition and businesses have to do more to survive the competition. Additionally, it also brings forth the issue of ethics as businesses make use of any means to survive the competition.

The Fourth Industrial Revolution radically impacts the daily life of people. The era can be that of knowledge, growth, and improvement in the manner in which people, businesses, and societies work and operates.

Important Notes

  • The Fourth Industrial Revolution is dominating the society and businesses of today.
  • Technological innovations have brought about changes in the way people live and carry out everyday activities.
  • There are many advantages of the Fourth Industrial Revolution as it brings about improvements in the lifestyle and also improves productivity.

With the increasing use of technologies, there are issues related to ethics and unequal access to technologies

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The Fourth Industrial Revolution

What is the fourth industrial revolution.

The Fourth Industrial Revolution (4IR), also known as Industry 4.0, is a new era of development in which digital, physical and biological systems converge, fundamentally transforming industries, economies and societies.  

The term Fourth Industrial Revolution was coined by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum (WEF). He introduced this concept in his book, The Fourth Industrial Revolution, published in 2016. In it, he discusses how emerging technologies like artificial intelligence (AI), the Internet of Things (IoT) and robotics have begun to merge with the physical, digital and biological worlds and, thus, have revolutionized economies, industries and societies in the process.   

 In this video, discover how the 4IR is transforming the world: 

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The 4IR’s alternate name, Industry 4.0, is usually referred to in the context of the manufacturing and industrial sectors. This term highlights the revolution's focus on the integration of digital technologies into the heart of industry to create smart factories that embody the convergence of the physical and digital worlds. 

This revolution is distinguished by its unprecedented speed, scope and impact on human life—it offers immense opportunities for progress but also poses significant challenges, including ethical considerations and the potential for increased inequality. Klaus Schwab argues that this era is more than just a technological upgrade—it’s an opportunity to help everyone, including leaders, policymakers and people from all income groups and nations, to harness converging technologies in order to create an inclusive, human-centered future. The 4IR compels us to rethink how we create, exchange and distribute value, with particular emphasis on the need for global cooperation and inclusive policies to harness its potential for the betterment of humanity. 

The 4IR expands upon the breakthroughs of the Third Industrial Revolution, also known as the digital revolution, that occurred from the 1950s through the early 2000s. During this time, innovations like computers, diverse electronic devices, the Internet and numerous other technological advances emerged. 

Fourth Industrial Revolution: Integration of Design and Technology 

The 4IR is marked by the integration of technologies like AI, IoT, robotics and VR, which demands a holistic design approach that considers not only the form and function but also the interconnectedness and intelligence of products and systems. 

The Apple Vision Pro epitomizes the convergence of design, technology, AI and VR—it’s a significant release of the Fourth Industrial Revolution. This device combines Apple's renowned design ethos with cutting-edge virtual reality capabilities to offer users immersive experiences that blur the line between the digital and physical worlds. The Vision Pro is powered by sophisticated AI to deliver personalized, intuitive interactions—it’s expected to set a new standard for how technology interfaces with human behavior.  

Watch Apple’s first announcement video for the Vision Pro: 

 As technology becomes more embedded in everyday life, design in the 4IR emphasizes user-centric solutions and personalized experiences, enabled by data analytics and machine learning. There's also a growing focus on sustainable and circular design principles driven by global challenges like climate change and resource scarcity. 

The complexity of 4IR technologies requires designers to work collaboratively across disciplines, integrating insights from engineering, biology, computer science and psychology. This interdisciplinary approach is crucial for innovation and for addressing the ethical, social and environmental implications of new technologies. 

The 4IR encourages designers to engage in speculative and critical design practices, exploring future scenarios and the societal impact of emerging technologies. This approach helps to envision potential futures and guide the development of technology in a responsible and human-centered direction. 

What Are the Key Technologies of the 4IR 

An illustration that shows the key technologies of the Fourth Industrial Revolution

© Interaction Design Foundation, CC BY-SA 4.0

Artificial Intelligence (AI) and Machine Learning 

AI involves machines and programs capable of performing tasks that typically require human intelligence. Machine learning, a subset of AI, enables computers to learn from data and improve over time. These technologies are revolutionizing sectors by enhancing decision-making, automating tasks and creating new services and products. 

In this video, AI Product Designer Ioana Teleanu discusses AI’s impact on the world:  

 Learn more about machine learning in this video: 

Internet of Things (IoT) 

IoT refers to the network of physical objects embedded with sensors, software and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet. This interconnectivity enables more efficient processes and improved data analytics, which impacts everything from home automation to industrial manufacturing.  

Smart lighting product, Philips Hue, uses IoT technology to offer a wide range of smart bulbs, lamps, and light fixtures that can be controlled via the Philips Hue app or through integration with other smart home systems. These lights can change color, brightness, and even sync with media content for an immersive experience. See how Philips uses IoT in their product expansion, Philips Hue Secure, in this video:   

Robotics technology involves the design, construction, operation and use of robots for various tasks. With advancements in AI and machine learning, robots are becoming increasingly sophisticated, capable of performing complex tasks autonomously or augmenting human capabilities in industries like manufacturing, healthcare and services. 

 In this video, Robotic company Boston Dynamics demonstrates how their robot Atlas can aid in construction:

Blockchain 

Blockchain is a decentralized ledger of all transactions across a network, which enables secure, transparent and tamper-proof record-keeping. While it underpins cryptocurrencies like Bitcoin, its applications extend to secure transactions, smart contracts and supply chain management. 

Organizations like IBM's Food Trust network uses blockchain to trace the production, processing, and distribution of food products to enhance safety and reduce waste.   

Quantum Computing 

Quantum computing represents a significant leap forward in computing power—it uses principles of quantum mechanics to process information at speeds unattainable by traditional computers. This technology has the potential to revolutionize fields such as cryptography, drug discovery and complex system simulation. 

Google's quantum AI lab is researching how quantum computing could accelerate machine learning tasks by processing complex data more efficiently than classical computers. Learn more in this video:    

3D Printing and Additive Manufacturing 

3D printing builds objects layer by layer from digital models. This offers unprecedented flexibility in manufacturing. It enables rapid prototyping, custom manufacturing and complex designs not possible with traditional methods which impacts industries from healthcare (with prosthetics and organ printing) to aerospace and automotive. 

 In this video by Mayo Clinic, 3D printing is used to create more hygienic and effective casts and splints for a patient with fractures and other injuries:  

Biotechnology and Genetic Engineering 

Advances in biotechnology and genetic engineering have enabled us to manipulate living organisms or their components to develop or make products, which improves healthcare, agriculture and environmental sustainability. Techniques like CRISPR-Cas9 gene editing have opened new possibilities for disease treatment and precision medicine. 

Learn more about gene editing in this video by TED-Ed:

Nanotechnology  

Nanotechnology manipulates matter at the atomic and molecular scale and promises significant advancements in materials science, medicine and electronics. Its applications range from more effective drug delivery systems to water treatment processes that remove contaminants at a molecular level. 

 In this video by Johns Hopkins Institute for NanoBioTechnology, learn how nanotechnology can be used to fight cancer:  

 Augmented Reality (AR) and Virtual Reality (VR) 

AR and VR technologies are changing the way we interact with digital environments. AR overlays digital information onto the physical world, while VR creates immersive digital environments. These technologies have applications in education, training, entertainment and beyond. 

 Learn more about VR, its history and its future in this video: 

Cyber-Physical Systems (CPS) 

CPS are integrations of computation, networking and physical processes. Embedded computers and networks monitor and control the physical processes, with feedback loops where physical processes affect computations and vice versa. This integration is foundational for smart grids, autonomous vehicle systems and smart factories. 

 In this video watch how a Tesla vehicle drives itself:   

These technologies are not only transformative in their own right, but are also interrelated. They often converge to create innovative solutions and opportunities across a variety of sectors and different levels of society and the economy. The potential of the 4IR lies in how these technologies are harnessed to drive forward human progress, address global challenges and reshape the world for the better. 

The Impact of the 4IR: Case Studies 

Environmental protection: iot for monitoring and conservation .

Rainforest Connection transforms recycled smartphones into solar-powered acoustic devices that monitor rainforest sounds. AI algorithms analyze these sounds to detect illegal logging and poaching in real time, enabling rapid response to protect wildlife and forests. This case study highlights how 4IR technologies can be creatively applied to combat environmental destruction and biodiversity loss. 

 Learn more about Rainforest Connection’s work in this video:  

Agro 4.0: More Efficient Farming 

The World Economic Forum’s (WEF) Centre for the Fourth Industrial Revolution (C4IR) introduced technology to small and medium farms in Colombia. The technology includes soil, water and climate sensors, as well as AI, cloud computing and drones. The project managed to reduce the farmer's costs by 30% and increase their yields by 20%.  

 Watch the C4IR video to learn more   

Healthcare: AI-Driven Diagnostics and Personalized Medicine 

Google's DeepMind developed an artificial intelligence system that can accurately detect over 50 types of eye diseases from 3D scans. Scientists from Google's DeepMind division, University College London (UCL) and Moorfields Eye Hospital developed software through deep learning techniques that can detect numerous prevalent eye conditions from 3D scans and subsequently recommend treatment options for the patient. This technology enables early diagnosis and treatment to potentially prevent vision loss in millions of people worldwide. Not only does it improve diagnostic accuracy and patient outcomes, but it can also reduce healthcare costs.  

© UCL, Moorfields, DeepMind, et al, Fair Use

What are the Impacts of the 4IR? 

The 4IR is not just a technological revolution; it's a catalyst for comprehensive change—how we live, work and relate to one another. Here are some of the major impacts and implications of the 4IR: 

Economic Transformation 

Productivity and efficiency : The integration of technologies like AI, robotics and IoT significantly boosts productivity and operational efficiencies across industries. In most cases, this leads to reduced costs, improved production rates and enhanced product quality. 

New business models and markets : The 4IR has enabled new, innovative business models (e.g., platform-based economies like Airbnb and sharing economies like Uber) and the creation of markets that didn't exist before, particularly in the digital and service sectors. 

Job displacement and creation : While automation and AI have displaced many traditional jobs, particularly in manufacturing and routine white-collar tasks, they also create new jobs that require advanced digital skills and competencies in technology development, data analysis and cybersecurity. 

Societal Changes 

Education and skill development : There's a growing need for education systems to adapt and an emphasis on STEM education, critical thinking, creativity and lifelong learning to prepare individuals for the jobs of the future. 

Inequality and digital divide : The benefits of the 4IR risk being unevenly distributed, which could exacerbate income inequality and widen the digital divide between those with access to new technologies and skills and those without. 

Enhanced connectivity and communication : The global proliferation of the internet and mobile devices has led to unprecedented levels of connectivity to enable new forms of social interaction, collaboration and information exchange. 

Technological Advancements 

Accelerated innovation : The rapid pace of technological advancement in fields like biotechnology, nanotechnology and quantum computing has already begun to revolutionize healthcare, energy and other industries.  

Cybersecurity challenges : As more devices and systems are connected, vulnerabilities to cyber-attacks increase. Data privacy and system security are increasingly critical challenges. 

Environmental Considerations 

Sustainable development : Technologies emerging from the 4IR offer promising solutions to environmental challenges, including more efficient resource use, renewable energy technologies and smarter, more sustainable cities. 

Climate change mitigation : Advances in technology are crucial for monitoring environmental changes, improving energy efficiency and developing new methods for carbon capture and storage to combat climate change. 

Ethical and Governance Issues 

Ethical considerations : The development and application of technologies like AI and genetic engineering raise profound ethical questions about privacy, consent and the nature of human identity. 

Regulation and governance : There is an increasing need for effective governance frameworks to ensure that the development and deployment of new technologies are aligned with societal values and ethical principles. Policymakers are challenged to keep pace with technological innovation while safeguarding public interests. 

The History of the World’s Industrial Revolutions 

The 4IR is built upon the foundation laid by the three previous industrial revolutions, each marked by a significant leap in technological capabilities that transformed societies and economies. It's important to understand these precursors as they provide essential context to grasp the scale and scope of the changes the 4IR represents. 

An illustration showing all the industrial revolutions and their key technologies

First Industrial Revolution: Late 18th to Early 19th Century 

The first Industrial Revolution’s start and end date are widely debated, but the general consensus is that it spanned from about 1760 to 1840. It was characterized by the transition from hand production methods to machines through the use of steam power and water power. The textile industry was among the first to be transformed, with the invention of the spinning jenny and the power loom. This era saw the rise of mechanized factories, which significantly increased production capabilities and led to urbanization as people moved to cities for work. 

An old photography during the period of the 4th industrial revolution that shows a factory.

A factory from the First Industrial Revolution. The machinery harnessed steam and water power.

© National Geographic, CC BY-SA 4.0

Second Industrial Revolution: Late 19th to Early 20th Century 

This period is roughly dated between 1870 and the beginning of World War I in 1914. The Second Industrial Revolution was marked by the introduction of electricity—this transformation led to more advanced manufacturing and production technologies. The development of the assembly line, notably used by Henry Ford in the mass production of automobiles, drastically increased efficiency and made goods more accessible to the masses. This period also saw significant advancements in chemical, electrical and steel production. 

An old photograph showing a Ford Model T assembly line.

The Ford Model T assembly line circa 1913-1914. Henry Ford was one of the first to use an assembly line for mass production. When a Model T left the assembly line at Ford's Highland Park plant to be shipped by rail, it was not fully assembled. In this photograph, workers temporarily place bodies onto a chassis. At the loading dock, bodies and wheels would be removed and packed separately to conserve freight car space. Full assembly took place at branch plants closer to the vehicles' final destination.

© The Henry Ford, CC BY-SA 4.0

Third Industrial Revolution: Mid-Late 20th Century  

Also known as the Digital Revolution, this era started around the 1950s-1970s. It’s defined by the move from analog electronic and mechanical devices to digital technologies. The invention of the personal computer, the internet and information and communications technology (ICT) transformed the way people live, work and communicate. It laid the groundwork for the globalized, interconnected world of today. The Third Industrial Revolution transitioned into the Fourth Industrial Revolution around the early 21st century, so there is no definitive end date for this period.  

A photograph of Steve Jobs with the Apple II circa 1977.

Steve Jobs with the Apple II. It was released in 1977 and is an example of an early personal computer.

© Alamy, CC BY-SA 4.0

Fourth Industrial Revolution: 21st Century 

The 4IR builds on the digital revolution and is marked by a fusion of technologies that blur the lines between the physical, digital and biological. It’s characterized by breakthroughs in a range of areas including AI, robotics, the Internet of Things, genetic engineering, quantum computing and others. Unlike previous revolutions, the 4IR evolves at an exponential rate, transforming almost every industry and many aspects of human life. 

Each industrial revolution brought about drastic changes in economic structures, social systems and the global order. While the first three revolutions introduced and then expanded upon mechanization, electrification and digitization, respectively, the 4IR stands out for its potential to integrate cyber-physical systems and impact all disciplines, economies and industries on a global scale.  

How the Industrial Revolutions Have Impacted Design 

The industrial revolutions have profoundly influenced design. The technological, social and economic shifts of each era have shaped how, what and why humans design. Here's how each industrial revolution has impacted design: 

First Industrial Revolution 

Mass Production : The advent of steam-powered machinery enabled the mass production of goods, leading to product standardization. Design during this period focused on functionality and manufacturability, often at the expense of aesthetics and individuality. 

essay on 4th industrial revolution

This British printed cotton textile is an example of the 1820 is an example of Regency design.

Second Industrial Revolution 

Industrial design : The introduction of assembly line manufacturing and advancements in materials and processes, such as steel production and electrical engineering, birthed the discipline of industrial design. Designers began to focus on the user experience, ergonomics and aesthetic appeal of products and thus recognized the value of design in marketing and brand differentiation. 

essay on 4th industrial revolution

A Singer sewing machine circa 1880.

© Singer, Fair Use

The Singer sewing machine is a pivotal and recognizable invention from the 19th Century. Isaac Merritt Singer, an American inventor, patented the first practical sewing machine in 1851. Their machines were a combination of practical functionality with elaborate Victorian aesthetics. Its design not only made sewing more efficient and less labor-intensive but also turned the sewing machine into a desirable household item. In 1889, they released the first electric sewing machine. The Singer Company's innovations in mass production and global marketing strategies are classic examples of Second Industrial Revolution practices.  

essay on 4th industrial revolution

An advertisement for the Singer 99k-13, the first electric sewing machine released in 1889.

Third Industrial Revolution 

Digital design : The Digital Revolution introduced computers and digital technology which revolutionized the way designers work. Computer-Aided Design (CAD) and other digital tools enabled more complex and precise designs to foster innovation in product development, architecture and graphic design. The rise of the internet also opened new avenues for digital and web design and emphasized user interface (UI) and user experience (UX) design. 

essay on 4th industrial revolution

Milton Glaser's "I Love NY" logo was designed in 1977 for a New York State advertising campaign—it’s one of the most iconic works in graphic design. With its simple yet impactful composition, the American Typewriter font paired with a heart symbol replacing the word "love", Glaser's design captured the essence of New York City's resilience and appeal during a time of economic hardship and social unrest. This logo revitalized New York's image and showcased the power of graphic design in shaping public perception and fostering a sense of community and pride. Although the Digital Revolution was in its nascent stage, the impact of evolving technologies on design practices was becoming increasingly apparent.

© Milton Glaser, Fair Use

Learn More About the Fourth Industrial Revolution 

Read Klaus Schwab’s book The Fourth Industrial Revolution . 

Visit the World Economic Forum’s Centre for the Fourth Industrial Revolution .  

Read McKinsey and Company’s piece, What are Industry 4.0, the Fourth Industrial Revolution, and 4IR?  

Read about the World Economic Forum’s various 4IR projects . 

Check out National Geographic’s collection on the Industrial Revolution .  ​​​​

Questions about The Fourth Industrial Revolution

Emerging technologies such as AI and IoT are fundamentally transforming the design industry through the introduction of new capabilities for automation, personalization and connectivity. AI is being leveraged to automate routine design tasks, generate innovative design options and provide data-driven insights that can enhance efficiency and creativity. For example, Autodesk's Dreamcatcher is an AI-based generative design system that enables designers to input design goals along with parameters such as materials, manufacturing methods and cost constraints. The system then explores all the possible permutations of a solution and quickly generates design alternatives. IoT, on the other hand, integrates physical objects with sensors and software to allow designers to create interconnected products that can communicate with each other and with users in real-time. A notable example is the Philips Hue lighting system, which allows users to control light settings from their mobile devices, creating personalized environments.  

 Learn more about how AI is changing design and the world in this video with AI Product Designer, Ioana Teleanu:  

In the 4IR, essential skills for designers extend beyond traditional design competencies to include digital literacy, an understanding of emerging technologies and the ability to work with data. Proficiency in tools and platforms that leverage AI, IoT, VR/AR and 3D printing has become increasingly important. For instance, designers must be adept at using AI for user experience personalization and predictive analytics, as seen in platforms like Adobe Sensei, which helps automate and enhance creative tasks. Additionally, critical thinking, creativity and problem-solving remain foundational and enable designers to devise innovative solutions to complex problems. Collaboration skills are also vital, as the multidisciplinary nature of 4IR projects often requires working closely with engineers, data scientists and other specialists. The ability to continuously learn and adapt is crucial, given the rapid pace of technological change.  

 Learn more about essential skills for the 4IR in our courses AI for Designers , UX Design for Virtual Reality and UX Design for Augmented Reality .

The 4IR has significantly impacted UX and UI design practices by pushing the boundaries of customization, interactivity and user engagement. With the integration of technologies such as AI, IoT, VR and AR, designers are now able to create more personalized and immersive experiences. AI and machine learning offer the ability to analyze user data in real-time which enables the creation of interfaces that adapt to user behaviors and preferences. For example, Spotify uses machine learning to tailor music recommendations to individual tastes to enhance the user experience through personalization. 

 In addition, VR and AR technologies are redefining user interactions with digital products by offering immersive experiences that were previously not possible. AR apps like IKEA Place allow users to visualize furniture in their homes before making a purchase, merging digital and physical realities to improve decision-making and satisfaction. These advancements demand that UX/UI designers not only focus on traditional design principles but also on understanding and leveraging these emerging technologies to create seamless, intuitive and engaging user experiences. The emphasis on user-centered design has never been more critical as designers strive to ensure that technological advancements enhance rather than complicate the user experience. 

 Learn more about UX and UI Design for AR, VR and XR in our courses UX Design for Virtual Reality and UX Design for Augmented Reality , as well as our Master Classes How To Craft Immersive Experiences in XR and How to Innovate with XR .

Virtual and Augmented Reality (VR/AR) are transforming product design by enabling designers to create immersive and interactive prototypes which enhances the design process, user testing and user engagement. This capability is invaluable for industries such as automotive and architecture, where designers and engineers can virtually walk through a building or experience a car's interior before any physical prototype is built. For example, Ford uses VR to simulate car designs to allow for rapid iteration and testing of ergonomic and aesthetic features without the need for physical models. 

AR, on the other hand, overlays digital information onto the real world to enhance a user's perception of reality. This technology is particularly transformative in retail and interior design, as seen in. IKEA's AR app, IKEA Place. 

VR and AR technologies offer powerful tools for designers to not only improve the efficiency and effectiveness of the design process but also to create products and experiences that are more aligned with user needs and expectations. These technologies facilitate a more iterative design process, where feedback can be gathered and implemented quickly and lead to higher-quality and more user-friendly products. 

Learn more about UX Design for VR and AR in our courses UX Design for Virtual Reality and UX Design for Augmented Reality .

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum (WEF) coined the term term the Fourth Industrial Revolution. He introduced this concept in his 2016 book of the same name. It remains the most influential book on the topic.   

Schwab, K. (2016). The Fourth Industrial Revolution. Portfolio. 

In the 4IR, data analytics plays a crucial role in design—it empowers designers with insights that drive more informed, user-centric decisions. Through the analysis of large datasets, designers can uncover patterns, trends and user behaviors that inform every stage of the design process, from conceptualization to final product development. This data-driven approach enables the creation of products and services that truly meet user needs and preferences. 

For example, in UX/UI design, data analytics can optimize user interfaces based on actual user interaction data and lead to more intuitive and effective designs. Companies like Netflix use data analytics to tailor content and recommendations to individual users, which enhances user experience. In product design, data analytics can inform feature development, usability improvements and even predict future trends, to ensure products remain relevant and competitive.  

Additionally, in the context of sustainable design, data analytics can identify areas where resources can be optimized or reduced, contributing to more environmentally friendly design solutions. Overall, data analytics bridges the gap between user expectations and design outcomes, making it an indispensable tool in the 4IR design toolkit. 

Learn more about data-driven design in our course Data-Driven Design: Quantitative Research for UX . 

Designers can leverage machine learning (ML) and AI in their work to enhance creativity, efficiency and user experience. One primary way is through the automation of routine tasks such as data analysis, which allows designers to focus more on the creative aspects of their projects. For example, Adobe Sensei, Adobe's AI and ML technology, automates complex processes like image editing and pattern recognition, to speed up the design workflow. 

Additionally, ML and AI can generate design alternatives and suggest improvements by learning from vast datasets of design elements and user interactions. This capability supports designers in exploring a wider range of options and making informed decisions based on predicted user preferences and behaviors. 

AI can also personalize user experiences in real-time by adapting interfaces, content and recommendations to individual user needs. Streaming services like Netflix and Spotify use AI to analyze viewing or listening habits, respectively, to deliver highly personalized content recommendations, to improve user satisfaction. 

Additionally, designers can use AI for more accurate user testing and feedback gathering. Tools powered by AI can simulate how users interact with designs to provide valuable insights without the need for extensive user testing sessions. 

Learn more about AI and ML, especially in the context of design, in our course AI for Designers . 

Watch the trailer here:  

In the Fourth Industrial Revolution, designers face several ethical considerations that stem from the increased use of emerging technologies like AI, IoT and big data analytics. Key ethical considerations include: 

Privacy and data protection : With the extensive collection and analysis of user data, designers must ensure they respect user privacy and comply with data protection laws. This involves designing systems that are secure by default and transparent about how user data is collected, used and stored. 

Bias and fairness : AI and machine learning algorithms can inadvertently perpetuate biases present in their training data, leading to unfair or discriminatory outcomes. Designers must strive to use diverse datasets and regularly audit algorithms to minimize bias. 

Accessibility and inclusiveness : The 4IR offers opportunities to make designs more accessible to a wider audience, including people with disabilities. Designers have a responsibility to ensure their products and services are inclusive, providing equal access and opportunities for everyone. 

Sustainability : With the growing concern over environmental issues, designers must consider the ecological impact of their designs. This includes choosing sustainable materials, designing for energy efficiency and considering the entire lifecycle of products to minimize waste. 

Accountability and transparency : As AI systems become more autonomous, designers must ensure that these systems are transparent in their decision-making processes and that there are mechanisms in place for accountability, especially in critical applications like healthcare or autonomous vehicles. 

User autonomy and manipulation : Designers need to be mindful of not creating manipulative designs that exploit user psychology for profit, such as dark patterns that trick users into making decisions against their interests. 

An example of ethical design in practice is the development of AI in healthcare, where designers and developers are working to ensure systems are transparent, explainable and free from bias to recognize the critical impact these systems have on patient care and outcomes. Ethical considerations in the 4IR are complex and evolving, requiring designers to stay informed and engaged with the latest developments in technology ethics. 

Learn more about the ethics and transparency in AI in the article AI Challenges and How You Can Overcome Them: How to Design for Trust .  

The role of human-centered design (HCD) is evolving significantly with the advent of the 4IR technologies, such as AI, IoT, VR/AR and big data analytics. HCD's core principle is to design with a deep focus on the needs, wants and limitations of end-users. That remains intact, but the scope and impact of this approach have expanded dramatically. 

In the 4IR, HCD is not just about products and services that are easy and intuitive to use; it's increasingly about how designers can leverage technology to make life better, work more productive and societies more inclusive. For example, AI and machine learning are being used to create more personalized experiences in everything from healthcare apps that provide tailored health advice, to educational platforms that adapt to the learning pace of individual students. 

In addition, HCD in the 4IR means designing for ethics and sustainability—to consider not just the immediate impact of a design on users, but also its long-term effects on society and the environment. This includes using IoT to create smart cities that enhance the quality of life, employing VR to train medical professionals without the need for physical resources and applying big data analytics to tackle complex social issues like poverty and climate change.  

Learn more about HCD in our Master Class Human-Centered Design for AI and our article Human-Centered Design: How to Focus on People When You Solve Complex Global Challenges . 

The Fourth Industrial Revolution has had a profound impact on sustainable and inclusive design—it’s offered new opportunities and challenges to create solutions that are environmentally friendly and accessible to all. The integration of technologies such as AI, IoT, VR/AR and big data analytics into the design process enables more informed decision-making, which leads to designs that can better address environmental concerns and social inequalities. 

In terms of sustainability, 4IR technologies allow for the optimization of resources and energy efficiency in product design and manufacturing processes. For example, AI can be used to analyze and predict patterns in energy consumption, which leads to the development of smarter, more energy-efficient buildings. Similarly, 3D printing technology enables the production of components with minimal waste and the use of sustainable materials further reduces the environmental footprint of manufactured goods. 

From an inclusivity perspective, 4IR technologies are breaking down barriers for people with disabilities and those in marginalized communities. For instance, AI-powered assistive devices can improve the quality of life for people with visual or auditory impairments, while AR and VR technologies offer new ways to experience content and services for those who may be physically unable to access them in traditional ways. 

Moreover, big data analytics play a crucial role in identifying and addressing gaps in accessibility and inclusivity and enable designers to create products and services that cater to a wider range of needs and preferences. This data-driven approach ensures that design decisions are based on real-world insights for more effective and impactful solutions. 

Learn more about sustainable design in our piece What is Sustainable Design? Take our course Design for Better World with Don Norman for an in-depth learning experience. 

Literature on The Fourth Industrial Revolution

Here’s the entire UX literature on The Fourth Industrial Revolution by the Interaction Design Foundation, collated in one place:

Learn more about The Fourth Industrial Revolution

Take a deep dive into The Fourth Industrial Revolution with our course Design for a Better World with Don Norman .

“Because everyone designs, we are all designers, so it is up to all of us to change the world. However, those of us who are professional designers have an even greater responsibility, for professional designers have the training and the knowledge to have a major impact on the lives of people and therefore on the earth.” — Don Norman, Design for a Better World

Our world is full of complex socio-technical problems:

Unsustainable and wasteful practices that cause extreme climate changes such as floods and droughts.

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The Fourth Industrial Revolution Essay

The fourth industrial revolution, changes in technology, adapting to technological changes, challenges posed by the fourth industrial revolution, preparedness in society, real-life examples, recommendations.

The term the Fourth Industrial Revolution was coined by Professor Klaus Schwab who is an executive chairperson. The definition describes the world where individuals move between digital realms and offline reality by using connected technology. The First Industrial Revolution transformed the lives of people from the handicraft and agricultural economy to the one that was dominated by machines and industries. The emergence of the industrial revolution meant that information technology became the main engine that was used to automate all forms of production. Although scholars classify each industrial revolution differently, the fact is that they comprise a series of events that were built upon the innovations of the previous revolutions (Schwab, 2017). This sequence of innovations led to the advancement of the forms of production in all economic sectors.

The Fourth Industrial Revolution was written in 2017 by Professor Klaus Schwab who is an authority in leadership matters. He has a doctorate in economics and a master’s degree in public policy and has received several awards both nationally and internationally for his prominent work. The book contains relevant information because it concerns issues that are pertinent to society. The writer mainly focuses on how new technologies driven by artificial intelligence are changing all social spheres (Schwab, 2017). The way everything is done today has changed drastically due to new technologies that drive governments, individuals and organisations.

The book begins with the discussion of the major revolutionary trends starting with artificial intelligence, the biotechnology of the autonomous vehicles, nanotechnology, the Internet of things and robotics. The author does not emphasise individual technologies but rather the overall changes that the Internet has presented to society (Schwab, 2017). He states that the transformation has not penetrated into society comprehensively because the revolution has just begun (Schwab, 2017). Leaders in different sectors try to institute changes in the structure of their organisations so that they could utilise the benefits of changes. The rest of the book unravels broader opportunities and challenges for society, business, governments, individuals and other institutions globally (Schwab, 2017). The author strives to answer the concerns of the majority of people whether the revolution will lead to massive unemployment or create prosperity (Schwab, 2017). The outcome is predicted to be a balance between technology and human workforce.

When one hears the term an industrial revolution, they think of the emergence of railroads and the steam engine invented in the 1800s. When compared with the previous transformations, the current changes are transforming the world but rather in a more common way. It is moving on a larger scale and, at the same time, more rapidly. Such contemporary technologies as self-driven cars are part of the Fourth Revolution. According to Schwab (2017), even those areas that were not touched before have joined the technological advancement, thus producing outcomes which could not be imagined a few years before. Since the revolution marks the start of a new period, everyone needs to have a deep understanding of what it will mean to human life.

This is upon everyone to be privy to the current changes and adapt to them so that no one stagnates. Schwab (2017) does not only highlight the changes the Fourth Revolution will bring to day-to-day operations but goes ahead and gives suggestions on what one needs to do so that they could receive maximum benefits from such transformations. The main message that the author wants everybody to understand is that collaborative growth is vital in this era of new technologies (Schwab, 2017). Schwab (2017) further says that, after leaders have addressed all the obstacles new technology brings, they should utilise them for the advantage of people. Thus, the Fourth Industrial Revolution is a comprehensive and fascinating dialogue highlighting challenges and benefits that the transition to advanced developments will make available (Schwab, 2017). People who are in a dilemma with unanswered questions will have their issues resolved if they read this book because it addresses all the concerns about the uncertainty of new technological territories.

The term revolution means a sudden change in the manner of doing things. The Fourth Industrial Revolution, therefore, performs the same functions since it covers the territories that were not known before (Schwab, 2017). At the same time, the previous revolutions mainly concentrated on computer control, mechanisation, automation and mass production while the fourth one entails a range of both existing and new technologies. Furthermore, the changes will be across all the economies and industries, which means that various stakeholders will be affected (Schwab, 2017). The book surpasses being an introduction of a term but goes further and addresses social concerns and what can be done to ensure that this new phenomenon becomes exciting and is embraced by humanity.

Professor Schwab has been at the epicentre of the affairs affecting people for more than four decades. Through his book, The Fourth Industrial Revolution , he authoritatively explains that the world is at the beginning of a revolution that will tremendously change the way human beings are currently living, working and relating to one another (Schwab, 2017). The book considers the issues that are relevant today and gives insights on how individuals can handle the future that is unfolding at a high rate (Schwab, 2017). The author gives finer details on how people’s collective responsibility can ensure that everyone accrues the benefits associated with the current changes (Schwab, 2017). Prior industrial revolutions freed humanity from relying on animal power to perform their duties. Through information technology, people developed digital capabilities that made mass production of goods broader and easier. However, according to Schwab (2017), this revolution is profoundly different from the previous one. It consists of several technologies that combine the digital, biological and physical worlds, which affect all the sectors of humanity.

Industries and economies will be immensely affected by the transformation to a level where it questions the existence of humanity. Schwab (2017) argues that the revolution has led to changes, disruptions and shifts, which means that individuals live at a time full of great peril and promises. As the author notes, the world is now capable of connecting billions of people to the digital platform, thereby improving the operations of organisations, governments and individuals (Schwab, 2017). Even assets are managed in a manner that engages the natural environment, which undoes all the misdeeds of the preceding revolutions.

However, as an ambiguous idea, the hypothesis is presented that some organisations might find it difficult to familiarise to the immense changes introduced by the digital transformation. Schwab (2017) remarks that governments are likely to be unwilling and unable to regulate and employ new technologies to capture the benefits associated with the new beginning. In addition, the shifting power will create unique security concerns; societies will fragment, and inequality will widen (Schwab, 2017). The author goes further to put the recent changes in technology into the historical perspective by outlining the most important technologies that drive the Fourth Revolution (Schwab, 2017). He discusses the impacts of new technologies on civil society, businesses, individuals and the regimes and provides reasoning on how these interested parties should respond (Schwab, 2017). At the core of his analysis, the researcher is convinced that the Fourth Industrial Revolution is under control as long as there is collaboration across all the sectors, geographies and disciplines (Schwab, 2017). Working together is necessary and critical so that the opportunities gained could be easily accepted and exploited for full benefits.

Due to the imminent changes and challenges the revolution will bring, cooperation between citizens and leaders is considered beneficial to shape the future that will work for them. Schwab (2017) states that all individuals should be empowered and constantly reminded that new technologies are made by people themselves and for their advantage, which is a good opportunity that needs to be seized. The author argues that the pace at which individuals, organisations and governments embrace changes is crucial (Schwab, 2017). If they are slow to adapt, their very existence will be in jeopardy. The technological changes have prompted the author to raise the issue at the World Economic Forum Annual Meeting that was held in 2016 (Schwab, 2017). At the meeting, one of the main agenda was to learn the current technological advancements and how people can benefit from the transformations brought by the revolution.

Schwab further explains that modern technological progress will have immense impacts on society (Schwab, 2017). The effects include inequalities because the labour market is biased towards people who have technical skills. Another impact is the emergence of society referred to as self-centred (Schwab, 2017). The belief that one belongs to society will be defined by personal interests and values rather than work and family norms. The author argues that the Fourth Revolution is different from the previous revolutions in terms of complexity, scope and scale. (Schwab, 2017). The idea is promoted that individuals have ample opportunities to shape the revolution because there is no another way humanity can go without adjusting.

The book says that artificial intelligence is already in use and ranges from the operation of drones, supercomputers, 3D printing, virtual assistants, wearable sensors, DNA sequencing and minute microchips to smart thermostats. These are systems that control the way businesses and operations are run. Therefore, Schwab (2017) explains that the changes in technology are already in operation, although most people have not seized an opportunity to capitalise on this (Schwab, 2017). The author outlines his ideas boldly on how transformations can be harnessed to shape the future for the benefit of humanity (Schwab, 2017). He remarks that one of the advantages of technology is empowering individuals rather than replacing them, as most professionals argue (Schwab, 2017). Technology makes societies progress rather than disrupts them, and innovators of such changes respect the ethical and moral norms of introducing transformations. Therefore, the thesis is offered that everyone has a chance to make contributions to the development of society due to new technologies.

In the book, the framework is offered, which leaders in any sector can use to meet the challenges posed by the changes and maximise on the profound adjustments. Schwab (2017) has had a deep understanding of this topic for more than forty years of uniting civil society, the private sector and the government, which gives him hands-on experience on the issue. The author begins a discussion on how each person can ensure that the revolution is for the advantage of humanity (Schwab, 2017). During this revolution, organisations that will survive are those that are driven by values and purposes because this is through these attributes that they can grasp the benefits of economic, social and technological changes.

Although there is social excitement due to the changes the revolution will bring in control over countries, industries and companies, history teaches that any major disruptions to the economy come with other implications. According to the researcher, some of the effects of the revolution include political and social changes that require different ways of organising, thinking and working (Schwab, 2017). Thus, this is important for the revolution to act as an eye-opener so that nobody could be lagging behind because the consequences of not conforming are dire.

In Schwab’s book, the beginning of the Fourth Industrial Revolution is explained comprehensively. This stage of human development is presented as the phenomenon that alters the way goods are manufactured from smart industries, synthetic biology and autonomous operations. The other changes include how people communicate with quantum and ubiquitous computing. Schwab (2017), therefore, proposes that new ways of doing things have to be formulated to guide people through the revolution. Everyone has the responsibility of others to positively contribute to harnessing the benefits of the existing transformations.

Intelligence machines play a major role in any conversation regarding the Fourth Revolution. For most people, this is one of the concerns of the new wave of technology. The changes have, therefore, aggravated the already existing fears in society about the role of human beings in the future workforce. Schwab (2017) discusses this topic in detail and tries to dispel the concerns that the workforce in factories will be replaced with robots. He explains that industrial facilities are developing ways in which computer applications will work together with the traditional workforce (Schwab, 2017). The author states that the rapid increase of intelligent machines does not pose a dilemma on whether computers will replace human beings or not (Schwab, 2017). He articulates that contrary to common beliefs, the revolution will enhance workforce capabilities (Schwab, 2017). Thus, leaders should start preparing their employees and cultivate a model where they will work with robots.

The major concern arising from the analysis of the book is whether society will be able to control the new wave or not. Although the revolution has the potential of changing the way people work and live, its success lies in the combined efforts of citizens, governments and organisations. Schwab (2017) argues that if the authorities fail to promptly regulate and employ the revolution technologies, and organisations fail to adapt, society will face severe problems. By considering this issue, the author requests citizens and leaders in different fields to reshape the future by providing the conditions under which people come first (Schwab, 2017). To ensure that individuals are given priority, they should be empowered and reminded constantly that new technologies are for the common good.

The Fourth Industrial Revolution is majorly driven by the levels of development in science, biology and digital technology. The First Industrial Revolution changed the world, particularly the means of production, by replacing humans with mechanical power driven by a steam engine. The Second Industrial Revolution made mass production possible through the invention of assembly lines and electricity. The Third Industrial Revolution was mainly powered by the Internet and digital computing, which automated the production process. According to Schwab (2017), the Fourth Revolution advances these technologies but does not eliminate their use. Therefore, the existing and new developments will be utilised alongside each other.

The book is a worthwhile toolbox that can help governments and individuals to manoeuvre this endeavour. The Fourth Industrial Revolution clearly describes how innovations in technology have shaken societal and industrial fundamentals. Schwab (2017) explains the main 23 shifts that every human is going to face. Although the author talks about technological changes in society, the book is not about technology since the information in the author’s mind is about people, their intelligence and the qualities that are needed to utilise the revolution (Schwab, 2017). The researcher makes clear points on how diversity is essential because this is one of the most vital resources for everyone (Schwab, 2017). He states that good leadership, including contextual intelligence and personal health during this transformational period, is pertinent (Schwab, 2017). Schwab (2017) further explains that the treasure trove of data, the powerful visions for humanity and unique insights will be highly required to meet the challenges of the revolution. One of the theses is the idea that for any individual or organisation to remain relevant, massive adjustment is required.

The fact that the Fourth Industrial Revolution is moving at lightning speed is understood because today, the world is closely interconnected and rich in technology. The transformation has an exponential evolvement; however, this does not happen linearly. For instance, Schwab (2017) offers to consider a smartphone: the iPhone was invented in 2007, but by 2016, a mere nine years later, there were more than two billion users of smartphones. Within the same period, the smartphone technology developed to unprecedented levels that would not be thought of in 2007 when it was invented (Schwab, 2017). Thus, technologies are transforming the world at a rate that was not expected.

In his book, Schwab (2017) takes readers on a tour of the economic, social and technological revolutions. The writer explains the opportunities and challenges that humans can face in the near future. The book is written in bullet points, which is the method that is commonly used by think tanks when presenting their reports. The author does not provide many discursive arguments, opinions and illustrations. Schwab (2017) utilises the executive jargon that is specifically meant for those leaders who wish to know how to navigate the period of rapid disruptive changes. As an essential argument, the suggestion is made that for people to overcome the challenges of disruptive changes, they should avoid linear thinking.

The best approach that may help people overcome the difficulties is to formulate new forms of employment and social contracts. Schwab (2017) makes his position known when he challenges individuals and organisations that face the revolutions to design news ways that will accommodate the adjustments. The journey will require the honesty and flexibility of organisations to inculcate agility and speed in their operations. To understand the aim and purpose of this book, one needs to consider the work of Davos. Most of his writings have a holistic approach to what is currently happening in society and what challenges are anticipated (Schwab, 2017). The book enlightens readers so that they could have a deep understanding of the fourth revolution.

This is a book that is recommended for reading because it offers readers to assess different benefits and challenges that people are expected to encounter during this revolution. It shows that the Fourth Industrial Revolution leads society to unfamiliar territories. Therefore, one needs to be prepared by having a deep understanding of what the current transformations entail and how one can capitalise on it (Schwab, 2017). Leaders need to know how to cushion society from this new disruptive technology because it will change the way people live today.

The book in question is useful to read to understand how society will adapt to the changes that are taking place today. Other forms of transformations will occur at the workplace and at the family level, thereby proving Schwab’s (2017) assumptions about the implications of the revolution on everyone. Therefore, one should read this book to understand the scope of changes and the measures to mitigate some potentially negative implications. In addition, the economic and political scopes of people will be affected, and the book contains relevant discussions. As Schwab (2017) notes, after one gets equipped with this information, they will be better placed to design strategies that will prevent them from the negative effects of transformations. Therefore, the book may be of interest to those who are eager to know where they are heading to as both individuals and society members.

The book is valuable for policymakers, corporate leaders and citizens who want to gain the skills on how to navigate the challenges ahead, which have been brought by the changes in technology. Schwab (2017) argues that the profound transformation explained in the book will affect all the sectors of society handled. The information in the book reminds society that through collective power, the revolution is sustainable and inclusive. The digital tools applied will define how individuals conduct their businesses and identify global issues, for instance, climate problems (Schwab, 2017). Technology will be the key factor in determining how humanity will live.

As a result, for a good understanding of how society is changing technologically, this is the best book to read. Schwab (2017) uses a language that is easy to understand, and the examples given are relevant to contemporary society, which makes the book a useful source of information. The author is an authority in the field of leadership and has been dealing with governments, civil society and the private sector for more than forty years. Therefore, most of the information is based on Schwab’s (2017) personal experience. If one wants to enter the future while informed comprehensively, they should read this book.

The book addresses pertinent transformational matters that have already begun affecting individuals, organisations and governments. Therefore, all the social sectors need to adjust the way they operate so that they do not find themselves in a situation when they cannot function properly. If all the spheres get prepared in advance, this may simplify the transformation process, and technological changes can bring essential gains to utilise for the benefit of human development.

Schwab, K. (2017). The Fourth Industrial Revolution . Broadway Business.

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Fourth Industrial Revolution

Last updated on January 19, 2023 by ClearIAS Team

fourth industrial revolution

We are in the midst of a technological revolution that is fundamentally altering how we live, work and relate to the world.

This transformation is different in scale, scope, and complexity compared to history.

The response to such a revolution should be integrated and comprehensive, involving all stakeholders on the global level, from the public, private sectors to academia and civil society.

Table of Contents

History of industrial revolutions

The first industrial revolution.

It used water and steam power to mechanize production. The implementation of new technologies took a long time, the period between 1760 and 1820, or 1840 in Europe and the United States. Textile manufacturing was the first to adopt such changes and saw profound consequences. Eventually, the iron industry, agriculture, and mining were taken over. It also had societal effects with an ever stronger middle class.

The Second Industrial Revolution

It used electric power to create mass production. This is also called the technological revolution and is the period between 1871 and 1914. It resulted from extensive railroad and telegraph networks, which allowed for faster transfer of people and ideas, along with electricity. Electrification allowed factories to develop the modern production line. It was a period of great economic growth, with an increase in productivity. But it also caused a surge in unemployment since many factory workers were replaced by machines.

The Third Industrial Revolution

used electronics and information technology to automate production. It is also called the digital revolution and occurred in the late 20 th century after the end of two world wars. The slowdown of industrialization and technological advancement pushed for this revolution. The production of the Z1 computer (which used floating-point numbers and Boolean logic ) was the beginning of digital development. The supercomputer was the next significant development in communication technologies. And with the extensive use of computer and communication technologies in the production process; machinery began to replace the need for human power.

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The Fourth Industrial Revolution is a continuation of the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.

This was coined by the World Economic Forum founder and Executive Chairman Klaus Schwab.

The Fourth Industrial Revolution is a fusion of technologies like artificial intelligence (AI) , robotics, the Internet of Things (IoT) , 3D printing, genetic engineering, quantum computing, and other technologies. It’s the collective force behind many products and services that are fast becoming indispensable to modern life. These are rapidly changing the way humans create, exchange, and distribute value.

Technologies of the fourth industrial revolution

A better way to understand the Fourth Industrial Revolution is to focus on the technologies driving it:

Artificial intelligence

AI defines computers that can think like humans. They can recognize complex patterns, process information, draw conclusions, and make recommendations. AI has many applications, from spotting patterns in huge piles of unstructured data to powering the autocorrect on your phone, to the smallest chip to a big manufacturing process.

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Blockchain is a secure, decentralized, and transparent way of recording and sharing data, with no need to depend on third-party intermediaries. The digital currency Bitcoin is the best-known blockchain application. However, the technology has other applications like traceable supply chains, securing sensitive medical data anonymously, and combating voter fraud.

Faster computer processing

New computational technologies are making computers smarter as they enable computers to process vast amounts of data faster than ever before. The advent of the cloud has allowed businesses to safely store and access their information from anywhere with internet access. Quantum computing technologies will eventually make computers millions of times more powerful. These computers will have the potential to enhance AI, create highly complex data models in seconds, and speed up the discovery of new materials.

Virtual reality an d augmented reality

Virtual Reality (VR) offers immersive digital experiences (using a VR headset) that simulate the real world, while augmented reality (AR) merges the digital and physical worlds. Examples include makeup apps, which allow users to digitally experiment with makeup products before buying them, and the Google Translate phone app, which allows users to scan and instantly translate street signs, menus, and other text.

Biotechnology

Biotechnology utilizes cellular and biomolecular processes to develop new technologies and products for developing new pharmaceuticals and materials, efficient industrial manufacturing processes, cleaner, more efficient energy sources, etc. Another example is our ability to edit the blocks of life has recently has been massively expanded by low-cost gene sequencing and techniques such as CRISPR.

It refers to the design, manufacture, and use of robots for personal and commercial use. While the use of robot assistants in every home is still to be a reality, technological advances have made robots increasingly complex and sophisticated. They are used in fields as wide-ranging as manufacturing, health and safety, and human assistance.

The Internet of Things

The IoT describes everyday items from medical wearables that monitor users’ physical condition to cars and tracking devices inserted into parcels connected to the internet and identifiable by other devices. Businesses can collect customer data from constantly connected products, allowing them to better gauge how customers use products and tailor marketing campaigns accordingly. There are also many industrial applications, such as farmers putting IoT sensors into fields to monitor soil attributes and inform decisions such as when to fertilize.

3D printing

3D printing allows manufacturing businesses to print their parts, with less tooling, at a lower cost, and faster than via traditional processes. Designs can be customized to ensure a perfect fit.

Impact of the fourth industrial revolution

In the future, technological innovation will lead to a supply-side improvement, with gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.

There are four main effects that the Fourth Industrial Revolution has on business: on customer expectations, on product enhancement, on collaborative innovation, and organizational forms.

  • It will tremendously improve the services and business models.
  • The productivity of the businesses will be continuous hence lore reliable.
  • There will be more security in the IT sector and the resources will be better utilized for customer satisfaction.
  • The working conditions and safety of machines and workers will improve with the increased sophistication of the technology.
  • With technology enabling businesses to offer greater personalization and more valuable, connected experiences across sectors, customer experience will transform for the better.

India and the industrial revolution

The earlier industrial revolutions came late to India to the colonial past of the country. Indian textile industry was dominating the global market till the 18 th century. It came crashing down when the industrial revolution came to England in the 1760s.

The third Industrial Revolution started in India in the 1980s. The increase in the application of personal computers, the internet, and ICT marks the transformation of this phase.

In India, the Industrial Revolution 4.0 is based on Big Data and Artificial Intelligence. The fourth revolution is expected to affect the Indian sectors inside out from villages to big industries.

  • It will help provide better and affordable health care through AI-driven diagnostics, personalized treatment, etc.
  • It can enhance the farmer’s income by introducing technologies for crop improvement, better yield, real-time advisory, advanced detection of pest attacks, and prediction of crop prices to inform sowing practices.
  • It will help strengthen infrastructure and improve connectivity from villages to cities- bridging the urban divide.
  • The ease of living and ease of doing business will improve by the use of smart technologies.
  • The smart city mission , drone policies, Gati Shakti scheme , etc, are the evidence of the revolution influencing the policy-making in the country.

Like the previous revolutions, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. But it has its fair share of concerns and negatives too.

The revolution could yield greater inequality, particularly in its potential to disrupt labour markets.

  • As automation substitutes for labour across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labour.
  • Inequality represents the greatest societal concern associated with the Fourth Industrial Revolution. The gap between those dependent on capital and labour will increase.

Unemployment

Technology is one of the main reasons why incomes have stagnated, or decreased.

  • For a majority of the population in high-income countries- the demand for highly skilled workers has increased while the demand for workers with less education and lower skills has decreased.
  • The result is a job market with a strong demand at the high and low ends, but a hollowing out of the middle.

On the other hand, it is also possible that the displacement of workers by technology will, in the aggregate, result in a net increase in safe and rewarding jobs.

Threat to privacy

The pervasiveness of digital technologies and the dynamics of information sharing typified by social media are also causing concern and discontent among the public.

  • More than 30 percent of the global population uses social media platforms.
  • This can also create and propagate unrealistic expectations as to what constitutes success for an individual or a group, as well as offer opportunities for extreme ideas and ideologies to spread.

Policymaking

Current systems of public policy and decision-making evolved alongside the Second Industrial Revolution.  But the rapid changes of the fourth revolution demands broader regulations with the inclusiveness of customers, developers, and the public at large.

Security threat

The fourth industrial revolution will also affect national and international security. The relationship between warfare and technological innovation is well established.

  • New technologies such as autonomous or biological weapons become easier to use, individuals and small groups will increasingly join states in being capable of causing mass harm.

Latest News

Hyderabad will host India’s First Fourth Industrial Revolution on Healthcare and Life Sciences.

  • The establishment of the Center for the Fourth Industrial Revolution (C4IR) will be done in cooperation with the independent World Economic Forum (WEF).
  • With an emphasis on the life sciences and healthcare, C4IR will be the 18th centre in the WEF’s fourth international relations network, which spans four continents.

Way forward

Ultimately, the ability of government systems and public authorities to adapt will determine the impact on public life.

If they prove capable of embracing a world of disruptive change, subjecting their structures to the levels of transparency and efficiency that will enable them to maintain their competitive edge, they will endure. If they cannot evolve, they will face increasing trouble.

The advances in technology have the potential to reduce the scale or impact of violence, through the development of new modes of protection, for example, or greater precision in targeting.

Each one of us is responsible for guiding the evolution of this technological revolution. It depends on the decisions we make daily as citizens, consumers, and investors. We should take the opportunity and power we have to shape the Fourth Industrial Revolution and direct it toward a future that reflects our common objectives and values.

To achieve this we must develop a comprehensive and globally shared view of how technology is affecting our lives and reshaping our economic, social, cultural, and human environments.

“In the end, it all comes down to people and values. We need to shape a future that works for all of us by putting people first and empowering them. In its most pessimistic, dehumanized form, the Fourth Industrial Revolution may indeed have the potential to “robotize” humanity and thus deprive us of our hearts and soul. But as a complement to the best parts of human nature—creativity, empathy, stewardship—it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny. It is incumbent on us all to make sure the latter prevails.” – Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

-Article written by Swathi Satish

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The Oxford Handbook of the South African Economy

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The Oxford Handbook of the South African Economy

23 South Africa and the Fourth Industrial Revolution

Bhaso Ndzendze, PhD, is a senior lecturer and head of department in the Department of Politics and International Relations at the University of Johannesburg. His areas of research and teaching include technology dynamics in, international relations, digital policy, and the Fourth Industrial Revolution. He holds certificates in executive programs on artificial intelligence and blockchain from the Massachusetts Institute of Technology and a PhD in international relations from the University of the Witwatersrand.

Tshilidzi Marwala, PhD, is vice-chancellor and principal of the University of Johannesburg and a full professor in its Faculty of Engineering and the Built Environment. An author of over fifteen books and hundreds of articles on artificial intelligence, machine rationality, social science, and leadership among others. He also serves as deputy chairperson of the South African Presidential Commission on the Fourth Industrial Revolution and is a member of the Namibia Fourth Industrial Revolution Task Force.

  • Published: 08 December 2021
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The Fourth Industrial Revolution (4IR) is widely predicted to transform what have been manual-labour-dominated sectors in the production of goods and offering of services while driving wages down. South Africa is largely no exception, although we also note some unevenness and contradictory trends in this chapter. 4IR also presents numerous opportunities for the South African government, businesses, and consumers in terms of economic growth, efficiency, and cost-effectiveness. We conduct a review of recent trends in the 4IR worldwide and focus on such trends in South Africa through wages, key sectors, corporate sentiment, as well as government expenditure in research and development. There is indication that the country has a mismatch in the skills being produced and those required by the 4IR, while its GERD is substantially below the global average for 4IR leadership and equitable participation. 4IR Commission recommendations propose reforms, but over them looms the slow rate of implementation due to past poor execution of other plans in the digital and communications spheres.

23.1 Introduction

The Fourth Industrial Revolution (4IR) refers to the oncoming ubiquity of technology, which will redefine society. As an industrial phenomenon, the 4IR is widely predicted (based on present trends) to transform what have been manual-labour-dominated sectors. Due to advances in robotics, sensors, and artificial intelligence, factories, farms, and mines are seen as being likely to be run autonomously, with little human input in terms of manual labour. Furthermore, advances in 3D printing are likely to eliminate the manufacturing process as it has been for centuries through mass transformation of the manufacturing process from being subtractive to being additive.

From past developments and present trends, it is clear that South Africa’s path towards the 4IR entails household, private-sector, and government incentives with prospects for new forms of employment, a resuscitation and diversification of the South African economy in a future-proof manner, and more efficient service delivery. Risks also persist, however. Among others, these include growing unemployment, encroachment on decent wages, and pressure on the fiscus. The aim of taking advantage of the 4IR while minimizing its risks by government, businesses, and individuals, highlights its own imperatives in terms of urgent reforms in governance to address gaps in education, connectivity, infrastructure, energy, and inequality in access (along the lines of gender, wealth, and between rural and urban areas) which pose major challenges.

In the first section, the chapter offers an overview of the concept of an industrial revolution, and briefly reviews past industrial revolutions. We then discuss more recent global industrial trends around 4IR technologies becoming more ubiquitous and converging with one another. The second section reviews the implications for the South African economy. In this regard, we look at the country’s economic prospects in the 4IR based on recent trends, academic and policy literature, and historical experiences with the first three industrial revolutions. In this section we ponder the implications for a decent wage, also conduct sectoral analyses of industries and the extent to which they have already been impacted by the 4IR, and prospects for further change under the 4IR. We also take stock of the adoption of various 4IR technologies by government, business, and consumers in comparative perspective. This entails a comparative analysis of South Africa’s performance vis-à-vis peer and globally leading countries, and proceeds to a discussion of the country’s 4IR aspirations at the highest level, with emphasis placed on the 2020 published recommendations of the Presidential Commission on the Fourth Industrial Revolution before turning to an analysis of potential obstacles and challenges ahead in the country’s publicized vision of an inclusive 4IR future. In the final section, the chapter concludes with a summary of the key issues covered in the chapter.

23.2 The Fourth Industrial Revolution

Popularized in the English-speaking world by British economic historian Arnold Toynbee (1852–83) 1 in his posthumously published lectures at the University of Oxford (1880–81), the term ‘industrial revolution’ denotes the concept of a major shift in productive processes. While deindustrialization indicates a debilitation or collapse of industries due to underuse, industrial revolution refers to the introduction of new machines and systems of production which result in greater output and efficiency ( Van Creveld 2010 : 16). This is inevitably accompanied by social changes as well as new patterns of migration and class structures that emerge given the deep shifts to the world of work. Such a phenomenon began with the first industrial revolution (nominally referred to as the Industrial Revolution) in mid-eighteenth-century England. Before the Industrial Revolution, the industry was mostly manual, rural, and small scale rather than mechanized, urban, and large scale. As such, men and women moved across industries with relative ease; ‘there was much coming and going between manufacture and agriculture; and mines, furnaces, and cottage workshops suspended their activities in the summer and early autumn so that the workers could help with the harvests’ ( Ashton 1967 : 49). Why did the Industrial Revolution take place at the time it did? While the Industrial Revolution led to social change, it was itself the product of social antecedents; while there had been some ingenuity in the early eighteenth century, industry ‘had to wait until the idea of progress—as an ideal and as a process at work in society—spread from the minds of the few to those of the many’ ( Ashton 1967 : 57). This was signified by the growth of capital in large enough quantities, which made it possible to construct large buildings and appliances. The process was all-encompassing, with not only the invention of new gadgets, but complimentary innovations in agriculture, transport, trade, and finance which surged in concert. As T. S. Ashton puts it in The Industrial Revolution, 1760–1830 , the process was characterized by the application of science to industry, and ‘with a more intensive and extensive use of capital’ (1967: 142). For this reason, the Industrial Revolution is to be seen as a movement instead of a period of time or a singular event.

A set of new, higher-order innovations that marked a second industrial age are noted to have begun around the 1870s and proceeded until the middle of the twentieth century. The second industrial revolution (2IR) has come to also be known as the technological revolution. It was a period of rapid industrial development and growth for pre-existing industries from the first industrial revolution, brought about by several key factors, primarily in countries such as Britain, Germany, France, Italy, Japan, and the United States. These inventions include mass electrification (with the emergence of new sources of energy such as electricity, petroleum, and oil); the expansion of long-haul networks of railroads; the development of chemical synthesis that introduced synthetic fabrics, dyes, and fertilizers used in agriculture; widespread telecommunication over long distances with the electrical telegraph; and the assembly line ( Lambrechts, Sinha, and Marwala 2021 ). The third industrial revolution (3IR) took shape in the 1960s with the advent of semiconductors and computing and got a further boost with the arrival of the Internet in the 1990s ( Schwab 2017 : 7).

First postulated by the German government in its 2011 ‘Industrie 4.0’ (Industry 4.0) national strategic initiative, the observation that the world is in the process of entering a fourth industrial revolution has become a commonly held view among policymakers and economists. Its origins as an aspirational and projected future have resulted in it being seen as less of a pattern. Thus, a disputed concept (as we shall review in the next section), it nonetheless entails some defining features which represent new modes of production, consumption, and provision of services. The defining technologies of the 4IR, which have a production and service delivery component, include artificial intelligence (AI), 3D printing (also known as additive manufacturing), new materials (such as graphene), the Internet of Things (IoT), and blockchain. Within AI, the specialized areas of robotics, machine learning (the fastest growing area of AI with the claim to the majority of new patents and funding), and natural language processing (NLP) stand to accelerate the nature of automation in manufacturing, transform the process of invention, and erode human relevance in customer care respectively. Among these, it has been suggested that there is nothing in them which precludes human–machine interaction. For its part, 5G is prognosticated (given its early deployment so far) to be a key infrastructural technology which will enable the realization of smart homes, self-driving cars, and smart cities ( Guerrera and Cheein 2020 ). The convergences of these technologies thus provide the basis of the observations and predictions about the future ubiquity of these 4IR technologies. Thus, many identify that the exceptional and growing computational power and Big Data will become the distinguishing factor of the current age of AI from previous ‘AI winters’ in which technology experienced major setbacks in funding (roughly from 1974 to 1980, and again from 1987 to 1993).

These technologies have already changed the manufacturing process, with countries such as China, South Korea, Japan, and the United States seeing rapid growth in smart factories in the last ten years. These are factories that consist of relatively lower numbers of personnel as they take advantage of automation. What most distinguishes them, however, is their ability to effectively communicate with one another in unison through sensors that lead to a cyber–physical integration which are the bases of the IoT. In a 2019 estimate by PricewaterhouseCoopers, Machine learning (ML) alone was noted to represent about $2 trillion of today’s global economy and was predicted to reach some $16 trillion by 2030 (roughly 10 per cent of current world GDP) given growth in patent applications—being the third fastest-growing category of all patents granted and representing nearly 60 per cent of all new investment in AI. New avenues of AI are led today by the private sector. These include the likes of Amazon (advantaged by owning one the world’s largest data storage facilities, AWS); Google (through DeepMind and the reinforcement learning-based AlphaZero); Huawei (through Ascend 910 and Mindspore, which aims to uncover a new frontier in open access, AI-based app development); IBM (through Watson); and Samsung (through a self-professed focus on the IoT through Bixby and other facets of natural language processing and device-driven AI).

23.3 The Fourth Industrial Revolution and the South African Economy

Different scholars have problematized the degree to which the country, and the continent it is located in, ought to even consider the 4IR as relevant to them. In their article in Technology Analysis and Strategic Management , Ayetimi and Burgess ask, for example, ‘to what extent is the 4IR relevant to sub-Sahara Africa where there is a large informal economy, limited public infrastructure, where technical skills levels are low, and advanced technology can be found in only a few sectors that are dominated by foreign multinational companies and staffed by expatriate workers?’ ( Ayentimi and Burgess 2019 : 641). Sutherland firmly asserts that ‘4IR is not the result of careful historical analysis, rather it is a flag to rally and a rhetorical device for those trying to create particular economic and commercial futures, hoping to ride waves of Schumpeterian economic disruption caused by “extreme automation and extreme connectivity” ’, asserting that ‘this has been combined with strong lobbying by manufacturers and the WEF, seeking to persuade governments to change their policies to support the deployment of 4IR technologies and to mitigate their adverse socio-economic effects. The consequences of these neo-liberal efforts potentially destroy jobs, depress wages and increase inequality’ (2020: 233). A similar line of argument is adopted in chapter 5 of the NPC’s 2020 draft report ‘Digital Futures: South Africa’s Digital Readiness for the Fourth Industrial Revolution’.

However, in all of these texts there is a recognition that the onset of the roll-out and adoption of the 4IR is an inevitability precisely because of its alignment to powerful interests in the form of large corporations of the Global North and the East. Indeed, these critiques are cognizant of the 4IR and understand it instead as a harbinger of inequality, rather than an imagined or overhyped phenomenon. Moreover, some go so far as to see it as presenting opportunity for South Africa and the broader continent. For example, a 2019 paper notes that ‘the 4IR presents an important and valuable opportunity to drive social and economic growth and leverage development across nation states, regardless of their location or state of development—and this applies particularly to the sub-Saharan African region’ ( Ayentimi and Burgess 2019 : 641). Others have included suggestions that South Africa’s lack of a steady supply of electricity, among others, could be an opportunity to leapfrog into alternative sources of energy, with some highlighting that 5G is in any case set to bypass the current forms of connectivity which are lagging. Indeed, the latter point is commonly made with much emphasis on the notion that if the country is not an active participant, it could find itself retrospectively fitting foreign-developed technologies into its domestic contexts. Moreover, many see opportunities for more efficient governance, with the 4IR being potentially utilized for better service delivery and for the realization of smart cities and smart villages. For example, 4IR technologies such as AI and blockchain could be utilized to curtail the loss of agricultural produce in transit, as high as 90 per cent in some African countries to below 20 per cent, and thus assist small-scale rural farmers. On the other hand, sociologist Grace Khunou argues that 4IR technologies can bridge the fatherhood gap which has come about in South Africa with the advent of the migrant labour system and other forms of absenteeism through enhanced connectivity, though she highlights the lack of affordability for the many ( Khunou 2018 ).

Ayentimi and Burgess ultimately argue that its global origins mean that ‘the 4IR has the potential to impact on all industries and all nations, regardless of their location or state of development’ ( Ayentimi and Burgess 2019 : 646). On the other hand, in their 2019 article (‘Review of Preparedness of Rural African Communities Nexus Formal Education in the Fourth Industrial Revolution’) in the South African Review of Sociology , Uleanya and Ke find that South Africa is ‘not preparing for the envisaged industrial revolution like other western nations; rather, the focus remains on issues such as decoloniality, decolonization and glocalisation’ (p. 91). History indeed casts a long shadow and this is to be expected, given that South Africa’s industrial prospects are shaped by its historical experience with industrialization. This is briefly considered below. Emanating from such a historical review are the related and overlapping issues of domestic innovation (and thus innovation policy, including the relative merits of openness compared to protectionism), inclusivity, economies of scale, and human capacity development.

The general industrial history of the country is summarized by Carien du Plessis and Martin Plaut as follows: ‘from the beginning of colonialism in the seventeenth century until late in the nineteenth century, the world regarded South Africa as not much more than an outpost on the way to somewhere more useful’ ( du Plessis and Plaut 2019 : 111). It was regarded as ‘a place of agricultural output’ (and conflicts). This underwent a transformation in the late 1800s with the discovery of diamonds and gold in Kimberley and the Witwatersrand basin. Subsequently, the country, united after 1910, saw roughly four distinct phases. These entailed basic industrialization after the First World War, secondary industrialization after the Second World War, ‘growth and then stagnation under apartheid’, and the developmental policies under the African National Congress which have seen mixed results typified by growing unemployment.

From 1912 to 1939, the country saw value-added private manufacturing rise from £8 million to £53.8 million. This was in large part due to industrialization policies put in place in the interwar period (1919–39) during which the country’s governments had enacted the establishment of the Electricity Supply Commission (Eskom) in 1923, the privately-owned AE&CI (African Explosives and Chemical Industries) in 1924, and the now-privatized ISCOR in 1928. The 1932 Carnegie Commission of Investigation on the Poor White Question in South Africa identified the existence of 300,000 poor whites mostly in the Afrikaner community (out of 1.5 million Afrikaners). The government sought to close this gap by creating jobs through the expansion of secondary industries. Thus, whereas in 1919 agriculture and industry were roughly equal in terms of output, by 1939 industrial output was about two-and-a-half times that of agricultural output. This was greatly aided by the tariff regime, put in place in 1925. The onset of the Second World War also presented an opportunity for further industrialization and manufacturing. As the British South Africans, who were the country’s commercial base, went to fight in the Second World War, they left open vacancies which were filled by the increasingly urbanizing African population and manufacturers responded favourably to the opportunities created by wartime shortages of imported products and the demands of the war economy (du Plessis and Plaut 2019: 112). This saw the volume of outputs double, with the number of people employed in private manufacturing growing from 440,000 in 1948 to 1.16 million in 1971. In the post-Second-World-War period, the country saw continued growth (by an average annual rate of 4 per cent until the 1970s, and by as much as 5.8 per cent in the 1960s [ Freund 2019 : 191]) and diversification (though not to the same levels as other contemporaneous ‘miracles’ such as Germany and Japan).

However, South Africa’s inward orientation and semi-isolated global status were its downfall: it caused a limited reach in the international market, for example more advanced military weaponry was being produced elsewhere, all while domestic demand for technology was confined to the well-off white minority as a result of the country’s apartheid policy. With neither extensive international nor domestic markets, the country’s negative incentives depressed the expansion of whatever capacity for innovation might otherwise have been commercially exploited (as evidenced by the innovative oil-from-coal techniques pioneered by SASOL in 1950, the tellurometer in 1954, and nuclear medicine from 1965 [ Majozi and Marwala 2020 ]):

In general, South African manufacturing firms had no reputation for genuine product innovation. Engineers were known for their ability to modify products and processes, and South African manufactured products were and continue to be made under license to intellectual property rights holders in the advanced industrial economies. This is not surprising as the nature of South Africa’s protectionist regime encouraged licensing and copying for the domestic market, not world class innovation. ( Hirsch 2005 : 148)

Du Plessis and Plaut similarly observe that:

Displacement of more complex intermediate and capital goods was severely constrained by several factors, including the small scale of South Africa’s domestic market, the lack of necessary skills and technological capabilities, and the inability to raise protection of these industries sufficiently to displace imports without doing great damage to other domestic industries. The desperate poverty of the black urban population also effectively closed off another possibility touted by some: ‘inward industrialisation’. (du Plessis and Plaut 2019: 115)

How much can South Africa’s economy be said to be meeting the prerequisites of the 4IR or already observing large-scale use of 4IR technologies and what are the implications for the fiscus and decent wages? In line with this, what has been the policy response of the government? These questions are reviewed below.

23.3.1 Decent Wages, Industrial Maturity, and the Fiscus: Economic Effects and Implications of the 4IR in South Africa

We have noted the thinly spread benefits of second and third industrial revolutions manifest in the problems of policy. These are compounded by globalization and the incapacity of South African firms to compete without the protectionist policies of the apartheid era. This has been noted to be a major cause of inequality during apartheid and of growing unemployment in the post-apartheid era. There is, therefore, cause for some concern regarding the country’s capability to meet certain prerequisites in order to be viable in the 4IR. The notion that a country needs to meet certain prerequisites holds substantial purchase in the literature ( Hantraisa, Allin, Kritikos, Sogomonjan, Anand, Livingstone, Williams, and Innes 2020 : 2). South Africa’s own National Planning Commission argues that:

There is a core set of indicators that all organisations require, and all have identified the need for demand-side data (via nationally representative surveys) to supplement administrative supply-side data and the limited set of ICT indicators from the census and the annual national household survey conducted by Stats-SA. Historically, all data has been collected on an ad hoc basis when resources could be secured. This needs to be regularised, standardised and institutionalised and framed within the context of an open-data policy that safeguards privacy rights and makes anonymised data enable the free flow of information required for more effective planning by government and service delivery entities, for private use by entrepreneurial and innovative enterprise. ( NPC 2020 : v)

A mainstay among these criticisms is the lack of a stable supply of electricity, given the country’s chronic shortages known as load-shedding. This criticism is justified: electricity is crucial for the AI value chain, as it entails the use of energy to cool data centres (with some 1–1.5 per cent of global electricity consumption used to cool computers the world over [ Energy Innovatio 2020 ]). Added to this is the observation that a considerable (albeit shrinking) portion of the country (43.7 per cent of the population in 2020) does not have access to the Internet; the country’s higher-than-average connectivity costs (at 148 out of 228 countries on mobile data prices); and the rural–urban divide in digitization, for example only about 1.2 per cent of households in the rural areas of Eastern Cape have access to the Internet. Other provinces are not much better. For example, the KZN has a rural Internet penetration rate of 1.1 per cent, followed by North West (0.9 per cent), and Limpopo (0.5 per cent) according to the most recently available General Household Survey ( StatsSA 2015 ). Most rural regions are usually covered by one of the two dominant service providers—Vodacom and MTN—and are not the beneficiaries of competitive service offerings due to the absence of Cell C and Telkom, who are typically less expensive. ‘As in the case of the mobile network, competition in the fibre market is largely in the municipal areas and on the main transmission routes, with most residential areas remaining without fibre connectivity to the home, and with competition only on the main intercity transmission routes’ ( NPC 2020 : iv). This raises issues about fairness, however; rural customers are essentially paying the same prices as their urban counterparts for less service delivery. In this regard, the benefits of the 4IR such as faster transmission at the behest of 5G, as well as access to learning opportunities, are substantially stacked in favour of urban dwellers. In this regard, prerequisites are nuanced across regions within the same country. Other realities in the country, however, mean that the 4IR stands to not only ‘miss’ those in disadvantaged areas, but also subject others, particularly workers, to vulnerabilities.

23.3.1.1 Impact on Decent Wages

The role of technology as a long-term labour substitute has long been a concern. In the early twentieth century prominent economists, including John Maynard Keynes (1962 : 358), were pondering the implications of automation. A WEF Report, The Future of Jobs , has stated that the coming years will see new work roles emerging, some work roles remaining stable, and many becoming redundant. A 2018-published study by the Department of Arts and Culture, Nelson Mandela Metropolitan University and the South African Cultural Observatory noted that ‘by 2030 over 2 billion jobs as we know them today will have disappeared, freeing up talent for many and new 4IR fledgling industries, fundamentally changing the nature of work’, and estimates that ‘60 per cent of jobs that will exist towards the end of 2030, have not yet been conceived of or invented yet’ ( Adendorff, Lutshaba, and Shelverp 2018 : 2–3). This comes in a context in which the push for the minimum wage has been increasingly vocal. The National Minimum Wage for South Africa Research Initiative suggests that ‘in South Africa, the level of economy-wide output would be 2.1% higher with a national minimum wage (beginning at levels between R3 500 and R4 600) and the average GDP growth rate is projected to be 2.8%–2.9% instead of 2.4% without a national minimum wage’ (2016: iii).

One of the distinct trends according to the available data is the growth in average incomes in the manufacturing industry in South Africa. Using the 2017–20 period as a snapshot, we find that the country has seen consistent growth in wages, which have been in keeping with the inflation rates of 5.27 per cent, 4.62 per cent, and 4.13 per cent. 2 However, the onset of COVID-19 has caused a decline in manufacturing wages. A major force behind this rise in incomes has been collective bargaining by workers (of which 32 per cent are low earners [ Isaacs 2016 : iii]), which is threatened by automation. Automation will not only mean fewer workers, but also decreased bargaining power for the few remaining workers. Thus, government will be faced with the option of either allowing companies to operate relatively unimpeded (through relaxed labour laws) or prioritizing workers, possibly to the detriment of retaining (foreign and domestic) corporations. Global trends indicate that the former is more likely, given that ‘the 4IR is rewriting the rules of manufacturing because low-cost labor is not an effective strategy for attracting manufacturing investment as the cost of automation plummets,’ and ‘the 4IR facilitates the start of a trend toward reshoring manufacturing back to the rich world’ ( Lee, Wong, Intarakumner, and Limapornvanich 2020 : 409). Doing otherwise would possibly lead to a reduced fiscus. In section 23.3.1.2 , we note that among the principal concerns for directors is what they see as a lack of skilled workers in the country. This is true in various industries, as we shall see, with corporations looking to cut personnel costs and pursue the alternatives offered by the 4IR technologies.

In Figure 23.1 we compare the income levels in industries related to the 4IR (in black, first six bars) and those which are not (in grey, last nine bars). Those in black are in the robotics industry in particular. We note that the lowest paid among the sample (design engineers) earn substantially higher than the lower-paid non-4IR employees (retail store manager) and indeed above the average in the non-4IR careers. There is a high barrier to entry into these jobs, however, as these are highly trained specialists, requiring tertiary education (itself with very high cost inputs).

To be sure, there are areas of the 4IR which have a low barrier to entry and which require little formal education. One of these is annotation. This refers to the labelling of the physical objects in the physical world into a digital interface so that they may be used in algorithms by AI. This is a tedious but necessary task which requires punctilious human inputs. Engineers and company routinely outsource this work to low-income countries precisely due to this tedium. This could be a possible job creator. However, there are three drawbacks in this regard. The first is that the process requires a smartphone with connectivity. Second, it favours those who are English speaking. Third, it is not sustainable in the long run as the process is often project-based and works towards completion; as AI becomes more intelligent through ML, the extent of human annotation may also be less required as AI increasingly learns unsupervised.

4IR-related and non-related industrial wages in South Africa (annual, in ZAR)

23.3.1.2 Industrial Maturity

Many South African firms have engaged in strategies pertaining to the 4IR. Our review of the literature depicts an uneven landscape. Statistics South Africa (StatsSA) observed that in 2019 manufacturing constituted slightly over 13.53 per cent of the country’s GDP (or its fourth largest industry). Studies into this have posited that this had previously been higher but was declining due to trade openness and the subsequent impact of imports. Hirsch interjects with some circumspection, as he regards the extent to which the country engages in substantial manufacturing as overstated. He highlights that a large part of South Africa’s ‘manufactured’ products are basic metals, such as iron, steel, and aluminium as well as basic chemicals, wood pulp, and paper that represent manufacturing only in the narrowest sense according to international classifications. The processes rather entail final stages in the extraction of minerals than preparatory beneficiation, and South Africa is reliant more on the advantage brought on by its climate and abundance of natural resources ‘than on acquired skills or expertise’ ( Hirsch 2005 : 117). Noticeably, as recently as 2019, the top five sources of employment in the manufacturing sector are basic metals, fabricated products, and machinery equipment (at 22 per cent), followed by food, beverages, and tobacco (at 20 per cent), and coke, refined petroleum, and nuclear fuel (at 11.29 per cent), as well as wood and wood products (11.29 per cent), and transport equipment (9.83 per cent). Overall, within the country’s manufacturing sector, food and beverages constituted a share of 26 per cent, followed by petroleum and chemical products (at 24 per cent), basic iron and steel (at 19 per cent), wood products (at 11 per cent), and textiles (at 3 per cent). Advanced and semi-advanced manufacturing constituted slightly over 11 per cent, with motor vehicles (including parts and accessories) at 7 per cent, followed by electrical machinery and communications and professional equipment at 2 per cent each. In the 2010–20 period, imports as a percentage of domestic manufacturing sales have hovered above 59.86 per cent and reached a peak of 70.47 per cent in 2013.

Automation remains a minimal concern for directors, however, indicating a favourable view of this automated future. Rather, they emphasize the lack of specialized skill among South African workers. The Director Sentiment report, an annual survey of directors in the private sector (n = 475) active since 2016, notes in its 2019 edition that the key concerns for directors are shortage of skilled labour in the country, poor infrastructure, and policy uncertainty. Only 3 per cent of those surveyed stated that they were most concerned by automation, while another low 3 per cent expressed concern over high costs of IT infrastructure when expressing the main business challenges currently facing their industry ( Institute of Directors South Africa 2019 : 22). As seen, high costs of data connectivity mostly impact rural dwellers.

Promisingly, ‘the communications market has grown significantly in this uncertain environment, with tens of billions of Rands annually in private investments in the extension of fibre networks and upgrading of mobile networks to support the roll-out of data services. Despite the introduction of a horizontal licensing regime over a decade ago, the market remains structured around several integrated network and services operators. MTN and Vodacom, in particular, dominate the mobile telecommunications market, with a total market share of 78 per cent’ ( NPC 2020 : ii). In July 2020, MTN launched 5G coverage in 100 sites across multiple areas in Johannesburg, including Randburg, Bryanston, Fourways, Lonehill, and Fairland (its HQ), another in Bloemfontein (at the University of the Free State) and one in Cape Town (in Bloubergstrand) while Rain was the first network to launch 5G in South Africa. Rain is differentiated from MTN in its use of fixed-wireless applications instead of mobile ( McLeod 2020 ). On the other hand, calls for allocation of spectrum by the Independent Communications Authority of South Africa (ICASA) remain vocal, with ICASA having scheduled an auction for such an allocation in late 2020.

23.3.1.3 Sectoral Analysis

In the main, there is no universally adopted measure of whether a country meets a hypothetical 4IR threshold or scale and indeed such an index does not yet exist although the most widely regarded is a 10 per cent critical mass threshold for every technology. But one of the findings of the South African Presidential Commission on the Fourth Industrial Revolution (PC4IR) is the country’s relative lack of measurement despite much capacity for data-gathering by government agencies and private-sector players. Moreover, some discernible proxies exist. Below we briefly review patterns in some key sectors before turning to studying trends that may be termed 4IR indicators among peer countries.

23.3.1.3.1 e-Commerce

While e-commerce is not necessarily exemplary of the 4IR (Amazon, for example, was established in the 1990s), some aspects of its architecture are complimentary with numerous 4IR technologies such as blockchain (with payments via cryptocurrencies and tokens, for example), the IoT (especially the ability to track one’s order in real-time), and Big Data. The latter of the three, in particular, indicates the accumulation of data which can be used to build digital profiles of users and thus inform recommendation algorithms. This digitization of South African social and business life indicates a long-term shift away from a one-size-fits-all model of general retail towards individually customized retail, with implications for jobs and future skills requirements.

Retail represents some 15 per cent of South Africa’s GDP. South Africa’s online retail market was around Rand 14 billion in 2019, representing some 1.4 per cent of its total retail and 18.43 million e-commerce users ( Pillay 2019 ). Thus, the e-commerce market in South Africa has a high growth potential. The top three purchases consist of clothing, books, and beauty products. A 2019 study indicates that when South Africans are making online purchases, they often end up spending more than they commonly do in brick-and-mortar stores. Crucial to this is the incentive of free deliveries after reaching a certain price threshold ( Davis 2019 ). Moreover, the majority of these online purchases are on customers’ mobile phones:

As much as 18% (out of 29%) of South African internet users bought something online via mobile phone in the past month (We Are Social, 2018), so having a mobile-friendly online store is important. Since many South Africans are using their mobile phones to shop online, Visa has realised that one must make it easy for them to shop online on a small mobile screen and hold the phone in one hand. ( Davis 2019 )

‘The three most popular online shopping categories for South African consumers who shop online were clothing/apparel (53 per cent), entertainment/education (digital/downloadable) (51 per cent), and event tickets (51 per cent)’ ( Davis 2019 ). When shopping online, consumers mostly prefer local e-commerce platforms like Takealot (South Africa’s largest online retailer with over 10,000 parcel dispatches per hour [ Malinga 2019 ]) and Bidorbuy. Broadly, 84 per cent of purchases are from these local platforms ( Mkhosi 2017 : 2). The most popular platform for international purchases is Amazon.

In a nod to the growth potential of e-commerce for small and medium enterprises in the country, the government introduced the Electronic Communications and Transactions Act in 2002 in order, among other objectives, to facilitate and regulate electronic communications and transactions and promote human capacity development (skills) in this budding sector as well as prevent forms of abuse of information systems ( Republic of South Africa 2002 : 1). Nevertheless, the government is still challenged in the regulation and taxation of externalized funds due to the difficulty of tracking financial transactions. In this regard, ‘one of the responses emanating from the South African Reserve Bank is incentivising merchants to adopt 3D Secure (under the auspices of the Payment Association of South Africa; a division of the SARB)’ ( Mkhosi 2017 : 2).

23.3.1.3.2 Banking

The banking sector in South Africa exhibits contradictory trends towards the 4IR: digital inequality among its customers on one hand and incentives for cost-cutting through digitization on the other. Recently, South African banks have been cutting jobs in pursuit of lowering costs and keeping up with slow economic growth in the country and new competition in the industry from branchless (digital) competitors such as Bank Zero, TymeBank, and Discovery. In 2019, the SARB and the Intergovernmental Fintech Working Group initiated a programme to look into the appropriateness of policies and regulatory regimes as a result of the fintech innovation ( Marwala 2020 : 120). One of the key issues identified concerns the effects of income inequality and what these effects may mean for the increasing digitization of banking. A similar conclusion was drawn by the Centre of Excellence in Financial Services:

The country’s significant potential for digital innovation must be considered alongside concerns of whether this will be exclusionary, and whether the transformation will enhance or diminish domestic value creation.

Additionally, the report observes, digital banking still serves a ‘niche, relatively affluent and financially savvy consumer market,’ in spite of the growing penetration of smartphones. The country is still held back by considerable financial illiteracy ( Marwala 2020 : 120–1). At the same time, however, the gloomy prospects for banking, even before COVID-19, has made investors weary of the sector such that banks’ valuations declined by between 15 per cent to 20 per cent in 2019. As a consequence, banks will have to adapt. Fourth industrial revolution technologies, particularly AI, hold substantial promise ( Marwala 2020 : 121). In this regard, a 2019 PricewaterhouseCoopers report on the major banks in the country notes that ‘staff costs continue to comprise the majority of overall group costs, reflecting both the inflationary environment as well as the demand for critical talent in response to increasing specialization in the areas of risk, compliance and IT’. According to sectoral analysis, by the year 2030 AI technologies will see banks shed operating costs by some 22 per cent. A notable trend in South Africa has seen increases in IT expenditure, ‘as the banks grow their direct investments in their applications and systems infrastructure towards digitising their platforms’ (PWC 2019: 1). A transformation is underway in South African banking.

23.3.1.3.3 Construction

Given the decline seen in the industry in the years since 2017 ( StatsSA 2019 Q4) and across the world (with a McKinsey Global Institute study noting that it was twice as expensive in 2017 to construct a building than in 1970), a 2018 University of Johannesburg study found that construction professionals are increasingly willing to adopt robotics and construction automation. The study came to the conclusion that automation and the introduction of robots in the industry ‘would have positive effects on the delivery of the construction project by increasing quality of the construction product, enhancing supervision, improving working conditions, cost-effectiveness and it will also reduce construction accidents if adopted’. On the other hand, we note that the use of robotics will replace some manual labour, for example workers engaged in tasks such as excavation will be affected by the deployment of robots. The report concludes that ‘workers will need to be retrained to upgrade their skills to avoid replacement by automation and in fact to be the operators of the machineries. Training and education may be required for the construction professional that are threatened by the implementation of automation to become familiar with the use of new technology.’ A recent start-up, Build Robotics, has carved a niche of about Rand 1.3 billion worth of signed contracts as of 2019, with autonomous excavators that have lidar (a remote sensor method), GPS, and Wi-Fi to map and navigate surroundings ( Business Insider 2019 ).

23.3.1.3.4 Mining

Mining conglomerates have been retrenching workers due to a trade-off between profitability and ‘bloated’ workforces. There is some debate in this industry as to the desirability of 4IR technologies. Some note that automation, and technologically advanced machinery, can emerge as an alternative to human labour; although start-up costs are high, the running costs of machinery are far cheaper than wage-earning workers. Recently, the mining sector in South Africa has been facing challenges associated with cutting back large numbers of workers. The platinum sector has felt the highest impact. In 2018, Implats, the world’s second-largest platinum miner, stated that some thirteen thousand employees stood to lose their jobs within the following three years. Lonmin is also set to retrench roughly the same number of workers. The same trend is noted in the gold sector. In late 2018, Gold Fields retrenched up to 1,560 employees (or 30 per cent of its workforce) at its South Deep mine in Gauteng. In some important ways, however, the mining sector is fundamentally challenged in the extent to which it can adopt 4IR technologies. Particularly given the high temperatures (at around 50 o C), humidity (which causes the technologies to perform more slowly and their materials to rust), and vibration levels in underground conditions, semiconductor devices, such as an AI-powered robot, cannot operate efficiently or for very long ( Marwala 2020 : 54).

23.3.1.4 Policy Imperatives and the Fiscus: The South African Government and the 4IR

State involvement is one of the key accelerators of industrial change. This has been evident in past industrial revolutions and elements of it are evident in the current onset of the 4IR. This was demonstrated, for example, by the developmental experience of Japan, the ‘four Asian tigers’, and China and their resulting East Asian miracle (Lee, Wong, Intarakumner, and Limapornvanich 2020: 408). Similarly, the United States and China have close ties to technology companies, who in turn provide military and economic advantage. The early discourse on the 4IR was led by the government of Germany under the umbrella of ‘Industrie 4.0’ which was subsequently underpinned by the ‘Action Plan High-Tech Strategy 2020’, launched by the German Federal Government in 2010 to bring together the private sector, labour, research institutes, and even political organizations. This is especially crucial given the unchartered ethical, security, and legal territory presented by smart factories and its AI-saturated environment ( Banthien 2020 ).

COVID-19 has generally accelerated the adoption of 4IR technologies by governments world-wide. In a study for the journal Contemporary Social Science , Hantrais et al. gather evidence from different areas about the impacts of COVID-19 and show how ‘the pandemic supported changes in data collection techniques and dissemination practices for official statistics, and how seemingly insuperable obstacles to the implementation of e-health treatments were largely overcome … the pandemic accelerated the uptake of digital solutions’ ( Hantraisa, Allin, Kritikos, Sogomonjan, Anand, Livingstone, Williams, and Innes 2020 : 1–2). The South African government has similarly conceptualized its own role in the 4IR. The government of South Africa reviews the country’s readiness for 4IR and its recommendations for going forward are reviewed below before proceeding to a peer analysis.

23.3.1.4.1 PC4IR Recommendations and Potential Hurdles

President Cyril Ramaphosa established the Presidential Commission on the Fourth Industrial Revolution (PC4IR) in 2018, which appointed commissioners in May of 2019. The PC4IR presented its report in August of 2020, following two years of work characterized by hundreds of consultative sessions and stakeholder engagement traversing various aspects of the South African economy, and research undertaken to diagnose the country’s readiness for the 4IR and to identify opportunities as well as mitigate risks. In its diagnosis, the Commission’s report argues that:

The high-technology industries in which the country is seriously underperforming are those of artificial intelligence, Blockchain, virtual/augmented reality simulation environments, automatic data-processing machines, electrical and electronic goods, biotechnologies, storage/transmission, advanced materials, advanced sensor platforms as well as medicinal products and pharmaceuticals. (2020: 98)

On the basis of these identified gaps, the PC4IR has made eight core recommendations. These include investing in human capital, establishing an AI institute, establishing a platform for advanced manufacturing and new materials, securing and availing data to enable innovation, incentivizing future industries, platforms and applications of 4IR technologies, building 4IR infrastructure, reviewing, amending, or creating policy and legislation, and establishing a 4IR Strategy Implementation Coordination Council in the Presidency.

In the March 2019 Skills Development Summit, the Department of Higher Education and Training (DHET) noted that the 4IR ‘would have a significant impact on the future skills that South Africa requires, as well as how the country prepares to meet that skills demand through retraining people for future jobs’. Encouragingly, the DHET responded by supporting large-scale youth entrepreneurship programmes that took in some 1.1 million people in twenty-one Setas (sector education and training authorities) across the country, funded by some Rand 63 billion accumulated in the preceding five years from the Skills Development Levy—an additional 330,000 learners were financed by the National Skills Fund. There has been no impact assessment on these programmes, however. Indeed the DHET, through deputy minister Buti Manamela, admitted that these initiatives were not extensive enough. In terms of employment, the deputy minister noted that the number of learners who were successfully absorbed into full-time work following their education was higher in modes such as apprenticeships, learnerships, and internships while formal unemployment continued to rise. The government has also expressed awareness of the 4IR pioneers who have left the country, in addition to widespread concern that the PC4IR’s recommendations may not materialize ( Jenkinson 2020 ). These have been informed by past experience.

The National Integrated ICT Policy has long observed that for there to be a ‘vibrant and inclusive knowledge economy’ in the country there needs to be affordable access to communication (equity); increased accessibility of services, devices, infrastructure, and content to all citizens (accessibility), and proper data governance ensured (user protections). In turn, the NPC terms these ‘preconditions of an equitable digital economy and society’ (2020: ii). The issue of allocation of spectrum has already been mentioned. It is indeed exemplary of the characteristic delay in digital policy by the government.

Through SA Connect, the government sought to realize 90 per cent broadband access in the country by 2020 and 100 per cent by 2030 as part of the NDP and placed priority on connecting all schools, health centres, post offices, and Thusong Centres. ‘However, progress with the big broadband push has been limited and characterized by various uncoordinated initiatives’ ( Mzekandaba 2019 ). This 2012 initiative was followed by the adoption of the National Integrated ICT White Paper in 2016. The policy paper emphasized private-sector investment in the roll-out of seamless ‘critical infrastructure and services required for a modern economy’ ( RSA 2016 ). The implementation of this plan was delayed, however. At the same time, Connect SA’s initially ambitious goal was scaled down to become a connectivity project led by Broadband Infraco (termed an undercapitalized SOE) and with the Universal Service and Access Agency of South Africa providing limited connectivity ( NPC 2020 : ii). The NPC review places politics (especially the rapid turnover of ministers and directors general and the splitting of the Communications Ministry into two departments) at the centre of these failures, delays, and shifting targets.

With data extracted from Antonysamy (2019) , PricewaterhouseCoopers (2019) , Standard Bank (2020) , Mzakandaba (2020), Presidential Commission on the 4IR (2020) , Brothwell (2020) , and Traxcn (2020) we take stock of the prevalence of adoption of various 4IR technologies in South Africa up to 2020. What is evident from the analysis is that the 4IR—as a vision and as a set of technologies that can lead to efficiency—has seen uneven adoption, with more adoption towards AI and the IoT, and low adoption of blockchain and 3D printing, and with more leadership by the private sector and, by extension, consumers, than by government. Additionally, Big Data generated from South Africa has been accumulated and commercialized mainly by foreign multinational corporations such as Oracle, Uber, Google, Facebook, and their affiliates (e.g. Instagram and WhatsApp). However, we can also deduce that the 4IR is engendering increasing interest from government, business, and consumers, but that they are yet to cross the nominally used 10 per cent adoption threshold set by industry watchers (see WEF’s Deep Shift report, 2015).

In their survey-driven study published in the journal Political Research Exchange , Dermont and Weisstanner (2020 : 1) find that ‘technology entrepreneurs have endorsed a universal basic income (UBI) as a remedy against disruptions of the work force due to automation.’ Noting the same three years earlier, Vegter inferred that this is perhaps driven by a desire to create an insulating effect by Big Tech and automating corporations as ‘those who create automation technology want to avert a popular or regulatory backlash to what they’re selling’ (2017). On the other hand, David Autor of MIT argues that texts on automation which emphasize the future loss of employment ‘ignore the strong complementarities that increase productivity, raise earnings and augment demand for skilled labour’ ( Autor 2015 : 1). Frey and Osborne provide a quantifiable estimate of the number of jobs they anticipate as susceptible to automation: roughly 47 per cent ( Frey and Osborne 2013 : 1). This could provide a guide for policymakers and allow for targeted interventions. Disadvantageously, these studies are conducted in the European Union and the United States and data are scant on South Africa and the rest of Africa. This is an important area for future research. While the government of South Africa (driven by Minister of Social Development Lindiwe Zulu) has recently revived considerations of providing a UBI, such debates (which have their origins as early as Mandela’s presidency) have been revived by COVID-19 and not by automation. Originally planning to publish implementation plans in October 2020, the Ministry of Social Development has deferred such discussions. Globally, not a single country pays its citizens an unconditional UBI but it has been observed that ‘the economic crisis caused by the coronavirus has put the idea back on the table, even in fiscally conservative countries’ ( Toyana 2020 ).

23.3.1.4.2 Peer Country Analysis

The World Economic Forum’s Global Competitiveness Index (GCI), which annually tracks changes in countries’ performances across twelve pillars which contain a further 114 sub-pillars, is notable for its utility in comparisons. Indeed, its underlying methodology rests on the assumption that it is not a country’s policies and their results in isolation which matter, but the policies being taken by other countries as well and thus the relative placement of one country vis-à-vis almost two hundred others. The country’s performance compared to its self-identified peer countries, the BRIC countries, shows that South Africa is in fact outperforming them in terms of the WEF’s operationalized capacity for innovation. However, the country is unable to match these countries for scale in terms of exploiting and commercializing patents compared to the BRICS, while also being unable to match the more established industrialized countries in terms of private-sector investment as well as government expenditure on R&D. Moreover, they are more advantaged by their scale in line with Krugman’s theory. In 2020, the head of the Office of Digital Advantage at the CSIR, Akhona Damane, estimated that ‘South Africa spent 10 percent of its GDP on ICT goods and services, most of which are imported’ (see Jenkinson 2020 ). The relatively smaller members, such as Brazil and Russia, are able to compensate with their comparative strengths in energy, which is crucial for the operation of hyperscale data centres ( Carnegie Endowment 2019 ). While Russia relies on its oil abundance, Brazil on the other hand achieved energy self-sufficiency in 2007 from renewable energy resources and from the exploitation of offshore minerals since 2016.

Globally, leading states in terms of innovation also tend to invest more in R&D. Germany, the United States, Japan, Israel, and South Korea have a gross expenditure on R&D of more than 3 per cent of national GDP. The comparable national expenditure figure in South Africa stands at about 0.7 per cent as of 2019, which falls short of the government’s own target of an increase to 1.5 per cent.

23.4 Conclusions and Prospects

It is clear from the preceding analytical reviews that South Africa’s path towards the 4IR is real, and driven by consumer, private-sector, and government incentives. Moreover, it entails prospects for new forms of employment, a resuscitation and diversification of the South African economy in a future-proof manner, and service delivery. On the other hand, such aspirations highlight their own imperatives in terms of the urgency of reforms in governance to address gaps in education, connectivity, infrastructure, energy, and inequality in access (along the lines of gender, wealth, and between rural and urban), and curbing the prospects of a brain drain, given the rapid advancement of other countries towards the 4IR. This has been given further urgency by the COVID-19 pandemic, which has accelerated uptake of technologies and systems. Policy options over the next decade will increasingly be shaped by trends in automation as companies increasingly look to automation to be viable (and withstand competition by other, foreign companies), and as the government seeks to remain fiscally viable.

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The Fourth Industrial Revolution and digitization will transform Africa into a global powerhouse

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Njuguna ndung’u and njuguna ndung’u cabinet secretary, national treasury & economic planning - republic of kenya, former executive director - african economic research consortium, former governor - central bank of kenya landry signé landry signé senior fellow - global economy and development , africa growth initiative @landrysigne.

January 8, 2020

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Below is Chapter 5 of the  Foresight Africa 2020 report , which explores six overarching themes that provide opportunities for Africa to overcome its obstacles and spur inclusive growth. Download the paper to see the contributing viewpoints from high-level policymakers and other Africa experts.

Foresight Africa 2020 Chapter 5- Capturing the Fourth Industrial Revolution

So far, it does not appear that Africa has yet claimed the 21st century, 2 as it still lags behind in several indicators essential for a successful digital revolution (see Figure 5.1). 3

Improvements in Africa’s ICT sector have been largely driven by expanding mobile digital financial services: The region had nearly half of global mobile money accounts in 2018 and will see the fastest growth in mobile money through 2025.

But artificial intelligence (AI) and blockchain are also attracting interest in Africa, as they have the potential to successfully address social and economic challenges there. And there are so many other areas in which 4IR technology can be transformational.

Africa's ICT development indicators

The transformative potential of 4IR in Africa is substantial

Encouraging economic growth and structural transformation.

In recent years, the ICT sector in Africa has continued to grow, a trend that is likely to continue. Of late, mobile technologies and services have generated 1.7 million direct jobs (both formal and informal), contributed to $144 billion of economic value (8.5 percent of the GDP of sub-Saharan Africa), and contributed $15.6 billion to the public sector through taxation. 4 Digitization has also resolved information asymmetry problems in the financial system and labor market, thus increasing efficiency, certainty, and security in an environment where information flow is critical for economic growth and job creation.

Failure to recognize and capitalize on 4IR opportunities, conversely, will impose considerable risks on African stakeholders: Without attempts to move beyond existing models of innovation, entrepreneurship, and digital growth on the continent, African businesses risk falling further behind, exacerbating the global “digital divide” and lowering their global competitiveness. 5 Going beyond the existing models requires discipline in governance to allow an endogenous innovative environment. At the same time, institutions must protect the market through consumer protection laws and regulations that encourage competition.

Fighting poverty and inequality

The spread of digital technologies can empower the poor with access to information, job opportunities, and services that improve their standard of living. AI, the Internet of Things (IoT), and blockchain can enhance opportunities for data gathering and analysis for more targeted and effective poverty reduction strategies. Already, we have witnessed the transformational power of formal financial services through mobile phones, such as M-Pesa, reaching the underserved, including women, who are important drivers for sustainable poverty eradication. These financial services allow households to save in secure instruments to enlarge their asset base and escape cycles of poverty.

Reinventing labor, skills, and production

By 2030, Africa’s potential workforce will be among the world’s largest, 6 and so, paired with the needed infrastructure and skills for innovation and technology use, the 4IR represents a massive opportunity for growth. Indeed, the 4IR is dramatically changing global systems of labor and production, requiring that job seekers cultivate the skills and capabilities necessary for adapting rapidly to the needs of African firms and automation more broadly. Already, Africa’s working population is becoming better educated and prepared to seize the opportunities provided by the 4IR: For example, the share of workers with at least a secondary education is set to increase from 36 percent in 2010 to 52 percent in 2030. 7

Increasing financial services and investment

Digitization has impacted economic growth through inclusive finance, enabling the unbanked to enter formality through retail electronic payments platforms and virtual savings and credit supply technological platforms. 8 More broadly, digitization is enabling entrepreneurs and businesses to rethink business models that are more impactful, sustainable, and connected to other sectors of the economy. For example, with fintech, digitization has gone beyond the financial sector to affect the real sector and households, transforming product designs and business models across market segments. 9 Businesses are able to design products and trade online, and individuals are able to operate financial services and payments for shopping and investments. The government is also migrating to online platforms to conveniently provide public services.

Other 4IR technologies are also having impact. For example, in West Africa and Kenya, blockchain has enabled efficient verification of property records and transactions, and expanded access to credit in some previously informal sectors of the economy. 10 Since blockchains are immutable, fraud—and thus the cost of risk—is reduced. There are also immense opportunities for job creation in Africa. 11 Given the informal sector is estimated to constitute 55 percent of sub-Saharan Africa’s GDP 12 (with significant heterogeneity across countries), these tools can be transformational. Their consequences can cascade: Increased financial inclusion contributes to greater capital accumulation and investment, hence potential for employment creation. 13

Modernizing agriculture and agro-industries

Africa has yet to harness the full potential of its agricultural sector, and 4IR technologies provide an opportunity to do so. Farming alone accounts for 60 percent of total employment in sub-Saharan Africa, and the food system is projected to add more jobs than the rest of the economy between 2010 and 2025. 14 Farm labor and income is especially important in sub-Saharan Africa, where on-farm activities represent almost 50 percent of all rural income in countries like Ethiopia, Malawi, Nigeria, and Tanzania. 15 Information on competitive pricing, monitored crop information, disease prevention tips, and disaster mitigation support has the potential to transform the agriculture sector to improve income, production, and demand throughout the continent. Furthermore, as incomes rise across the continent, growing consumer demand for food and beverages will coincide with business-to-business growth in agro-processing.

Ghana-based companies Farmerline and Agrocenta offer farmers mobile and web technology for agricultural advice, weather information, and financial tips. Zenvus, a Nigerian startup, measures and analyzes soil data to help farmers apply the right fertilizer and optimally irrigate farms. 16 The “Sparky Dryer,” a dehydration machine invented by a Ugandan engineer, uses biofuel to dehydrate produce and reduce food waste. 17 African entrepreneurs and startups are also using the Internet of Things to help farmers optimize productivity and reduce waste through data-driven “precision farming” techniques.

Improving health care and human capital

African countries face numerous health challenges exacerbated by climate change, limited physical infrastructure, and a lack of qualified professionals. 4IR technology can help mitigate these threats and build sustainable health care systems, especially in fragile states.

Mobile technology has become a platform for improving medical data and service delivery: About 27,000 public health workers in Uganda use a mobile system called mTrac to report medicine stocks. The SMS for Life program, a public-private partnership, reduces medicine shortages in primary health care facilities by using mobile phones to track and manage stocks levels of malaria treatments and other essential drugs. 18 Rwanda became the first country to incorporate drones into its health care system, using autonomous air vehicles to deliver blood transfusions to remote regions. Technology has also improved disaster response: During the West African Ebola outbreak in 2014, WhatsApp became an easy method of dispersing information, checking symptoms, and communicating under quarantine. 19

Illness detection and pharmaceutical production have most immediately benefited from digitization. AI is being slowly implemented in Ethiopia to help medical professionals correctly diagnose cervical cancer and other abnormalities. 20 IBM Research Africa is also using AI to determine the optimal methods for eradicating malaria in specific locations and using game theory and deep learning data analytics to diagnose pathological diseases and birth asphyxia. 21 (For more on the promise of artificial intelligence in Africa, see the viewpoint on page 69 of the full report ).

Strategies for overcoming key challenges facing Africa during the 4IR

Clearly, the 4IR presents significant opportunities as well as challenges for Africa. The key issue for policymakers is how to position their economies to benefit from the 4IR while managing the challenges that it presents. Below are three strategies that leaders should prioritize.

Fixing the labor-skills mismatch

Since creating jobs for the burgeoning youth population is a priority in most African countries, many governments are reluctant to support technologies that threaten existing jobs. Some of the current technologies tend to replace low-skilled workers—of which Africa has an abundance—with higher-skilled workers, constraining participation in the 4IR to economies with relevant skills. 22 African governments must invest in education and reskilling programs to ensure that technology supplements, instead of replaces, labor.

Enhancing agile governance for secure, effective management of the 4IR and integration into global value chains

As innovation is at the heart of the 4IR, reinforcing state and institutional capacity to drive and support innovation and create an enabling business environment is essential for success.

A major regulatory challenge involves increasing cybersecurity. Most African countries lack a comprehensive legal framework and institutional capacity to address cybercrime. Instead, efforts to prevent cybercrime are appearing at the more local level or are implemented by private sector actors themselves. For example, between 2015 and 2016, there was a 73 percent increase in Information Security Management System-certified companies, from 129 in 2015 to 224 in 2016, with the majority in South Africa, Nigeria, and Morocco. 23 Adopting widely accepted and appropriate norms and regulations, such as these, is a first step to increasing cybersecurity. At the same time, companies should invest in their employees to develop cybersecurity skills and integrate cyber risk protection in their decision making process.

The African Continental Free Trade Agreement offers a unique opportunity to enhance governance around the 4IR. With aligned policies and procedures, the continent can adapt to the rapid changes of the 4IR and leverage it to accelerate participation in global value chains.

More broadly, the 4IR can actually empower service delivery, through, for example, national identification and a new generation of biometrics that can centralize data for a variety of uses and users.

Developing physical and digital infrastructure

Access to advanced technology in Africa is constrained by infrastructure parameters such as lack of electricity and low tele-density, internet density, and broadband penetration. 24 As a result, mobile phone and internet use remains low (Figure 5.2). (For more on strategies for upgrading Africa’s ICT infrastructure, see the viewpoint on page 71). Other technological bottlenecks include a lack of standardized application programming interfaces and common data languages for the increased integration of largely self-sufficient systems as well as exposure to the dangers of cyberattacks. Accelerating the physical connectivity of fiber-optic networks as well as the interoperability of virtual platforms is critical not only for upgrading technology on the continent, but also for reaching and lowering unit costs for the underserved.

Closing the gap in mobile phone and internet access

More broadly, adequate infrastructure development will drive and sustain economic transformation in Africa. With lower transport and communication costs, countries with suitable agro-ecological conditions can produce high-value products. Closing the internet connectivity and access gap with advanced economies will enable more African countries to enter service export markets. Small-scale manufacturers in Africa may also become more competitive with access to digital platforms for research, sales, and distribution.

To make the most of the 4IR, African governments and entrepreneurs need to recognize new niches for industry and leverage them to achieve sustainable, inclusive growth, and take decisive steps to close the gaps in digital skills, infrastructure, and research and development.

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  • Landry Signé. Africa’s Role in the Fourth Industrial Revolution: Riding the World’s Biggest Wave of Disruptive Innovation. Forthcoming. See the summary online: landrysigne.com.
  • World Bank, Can Africa Claim the 21 st Century? (Washington, D.C.: World Bank, 2000).
  • See the International Telecommunications Union’s Information and Communication Technology Development Index (IDI Index) conceptual framework and methodology: https://www.itu.int/en/ITU-D/Statistics/Pages/publications/mis2017/methodology.aspx
  • GSM Association, The Mobile Economy: Sub-Saharan Africa 2019 (London: GSM Association, 2019).
  • Rosanna Chan, “Rethinking African growth and service delivery: Technology as a catalyst,” in Foresight Africa: Top priorities for the continent in 2018 (Washington, D.C.: Brookings Institution, 2018), 88-9.
  • Jean Phibert Nsengimana, “How Africa Wins the 4th Industrial Revolution,” Forbes , October 10, 2018.
  • World Economic Forum, The Global Human Capital Report 2017 (Geneva: World Economic Forum, 2017).
  • Virtual savings products and short-term credit platforms include M-Shwari, KCB M-Pesa, and Equitel in Kenya; M-Pawa in Tanzania; and Mokash in Uganda and Rwanda, which has been extended to Côte d’Ivoire as MoMoKash.
  • Njuguna Ndung’u, “Next steps for the digital revolution in Africa: Inclusive growth and job creation lessons from Kenya,” Brookings Institution Working Paper 20 (2018).
  • Samuel Gebre, “Blockchain Opens Up Kenya’s $20 Billion Informal Economy,” Bloomberg, June 13, 2018.
  • Mobile technologies and services generated 8.6 percent of GDP in sub-Saharan Africa and supported almost 3.5 million jobs in 2018. The GSM Association projects that by 2023, mobile’s contribution will reach almost $185 billion, 9.1 percent of GDP. See: GSM Association, The Mobile Economy: Sub-Saharan Africa 2019 (London: GSM Association, 2019).
  • United Nations Economic Commission for Africa, Contribution to the 2015 United Nations Economic and Social Council Integration Segment (Addis Ababa: United Nations Economic Commission for Africa, 2015).
  • It is estimated that one additional technology job creates five new jobs in the local non-tradable sectors.
  • Simeon Ehui, “Why technology will disrupt and transform Africa’s agriculture sector in a good way,” in Foresight Africa: Top Priorities for the Continent in 2018 (Washington, D.C.: Brookings Institution, 2018), 96-8.
  • Food and Agriculture Organization of the United Nations, The State of Food and Agriculture: Leveraging Food Items for Inclusive Rural Transformation (Rome: Food and Agriculture Organization of the United Nations, 2017).
  • Ehui, “Why technology”
  • Harriet Kariuki, “Innovation is Key to Curbing Post-Harvest Losses in Africa,” Medium , August 19, 2018 .
  • Access to Medicine Foundation, Access to Medicine Index 2016 (Amsterdam: Access to Medicine Foundation, 2016).
  • Milicent Atieno, “How technology can improve healthcare in sub-Saharan Africa,” Innov8tiv , 2017 .
  • Cary Champlin, David Bell, and Celina Schocken, “AI Medicine Comes to Africa’s Rural Clinics,” IEEE Spectrum , April 27, 2017.
  • Victor Akinwande, “AI in health care: Where does Africa lie?” Techpoint Africa , March 26, 2018 .
  • Wim Naudé, “Entrepreneurship, Education and the Fourth Industrial Revolution in Africa,” IZA Institute of Labor Economics Discussion Paper 10855 (2017).
  • International Organization for Standardization, ISO Survey of Management System Standard Certifications (Geneva: International Organization for Standardization, 2018). 24 International Telecommunications Union, Measuring the Information Society Report 2018 , Volume 1 (Geneva: International Telecommunications Union, 2018).
  • International Telecommunications Union, Measuring the Information Society Report 2018 , Volume 1 (Geneva: International Telecommunications Union, 2018).

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The Fourth Industrial Revolution: Economic Impact and Possible Disruptions

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The Fourth Industrial Revolution: Economic Impact and Possible Disruptions

Author: Emmanuel Obijole, ([email protected]

Department of Economics, University of Ibadan, Ibadan, Nigeria

This is an essay of the writing workshop Nigeria’s Readiness for and the Effect of the Fourth Industrial Revolution , published July 2020

INTRODUCTION

Industrial revolutions often heralded disruptions in the operations of markets and economies. These disruptions are deviations from the status quo and are not always negative. From the first industrial revolution to the third, the productivity of the workforce in affected economies experienced a rapid boost. The fourth industrial revolution (4IR) is not expected to be any different. It is also argued that industrial revolutions result in technological unemployment and increased income inequality.

Whether these disruptions are overly beneficial to an economy or not hinges on the structure of the economy, as well as the roles policymakers play in managing the fallouts of the 4IR disruptions. Assessing Nigeria’s readiness for 4IR, this paper gives an overview of the fourth industrial revolution, presents the possible present and future disruptions in the Nigerian trade and transportation industry, labour market, and recommends realistic policies to manage possible scenarios which these disruptions could birth.

THE FOURTH INDUSTRIAL REVOLUTION AND POSSIBLE DISRUPTIONS

Episodes of technological revolutions have produced transformations transcending spheres of human existence. The first industrial revolution mechanised production using water and steam power. In the second, the discovery of electrical energy further boosted productivity. The third featured automation of the production process using electronics and information technology; and the fourth has been driven by technological breakthroughs in physical, digital, and biological spheres. Some drivers of 4IR include artificial intelligence, robotics, the Internet of Things (IoT), 3D printing, digital platforms, and blockchain technologies (Schwab 2016).

Nigeria, like every other nation, faces the realities of 4IR. With a population of over 200 million people, Nigeria is challenged with a slowdown in economic growth and high unemployment. GDP growth has been below 2% since the 2016 economic recession. The relative contribution of sectors to Nigeria’s economic performance has also changed over the years. While there has been growing investment in tech start-ups and telecommunications, agriculture and manufacturing have been growing below potential. In 2018, services accounted for 37% of GDP, agriculture 25%, trade 16%, manufacturing and construction 13%, and crude oil and solid minerals 9%. (NBS 2018a). Despite the expansion in some sectors, employment creation has lagged behind the fast-growing labour force. In 2018, the unemployment rate was about 23.1% while 20.2% of the labour force was underemployed. (NBS 2018b).

The level of utilization of 4IR technologies is not currently widespread in Nigeria. But there could be potential applications to various sectors of the economy, causing disruptions in industries across the country. (Lou et al. 2019). IoT and drone technologies are expected to be central to the future of agriculture. 3D printing is transforming manufacturing. Automation of jobs due to artificial intelligence and robotics will also cause tectonic transformations in the Nigerian labour market. Blockchains are increasingly finding applications in the financial markets and even international trade. Digital platforms are also transforming both trade and transportation industries as well as other markets.

While the technological revolution is poised to affect markets and segments of the Nigerian economy, it might not radically distort market mechanisms. Market mechanisms refer to the forces of demand and supply, the “invisible hands” regulating a free market economy. Contrary to the misconception that capitalism (accompanying the first industrial revolution) ushered market mechanisms, markets and market mechanisms existed long before (3rd century BC), did not arise with the first industrial revolution, and will not disappear in the evolving “post-industrial” economy (Lipsey 1994, 331). The impact of the fourth industrial revolution does not change the coordinating function of market mechanisms. However, like any other shock, technological changes introduce uncertainties and externalities, necessitating government intervention to correct these market excesses.

TRADE, TRANSPORTATION INDUSTRY AND THE TECHNOLOGICAL REVOLUTION

Over the years, industrial revolutions have bolstered trade. The comparative advantage from specialisation and mechanisation has promoted global growth, engendering international trade. Global supply chains have also increased with the rise of the internet. The current episode of technological change will impact trade via blockchains, digital platforms, IoT among several other drivers of these transformations. International trade has been faster using blockchains since it provides enough flexibility in making payments than the traditional letter of credit. These technologies could reduce shipping and customs processing times by 16-28%, boosting global trade by 6-11%. (Lund et al. 2019).

In Nigeria, the trade sector accounted for about 14% of her GDP in 2018 (NBS 2018a). This trend is expected to increase with greater application of these technologies. Digital platforms like Jumia, Konga, Alibaba, Amazon, and freelancing sites like Upwork and Fiverr are becoming more popular since they lower transaction costs involved in the search process, and connect buyers and sellers directly. Lund et al. (2019) estimate that with increased automation, trade in goods may reduce while trade in services is expected to increase in the future. Since the services sector is outperforming the manufacturing sector, this growth in trade of services is expected to contribute largely to Nigeria’s economic growth.

On transportation, 4IR is revolutionising the industry with the application of artificial intelligence in producing self-driving and smart cars. On-demand ride platforms have also automated and made regular transportation services more convenient. Nigeria’s transportation industry has been a very important sub-sector in the services sector, contributing about 4% of the sector’s output in 2018 (NBS 2018a). Digital platforms like Taxify, Uber, and Bolt are thriving in the transportation sector. With Nigeria’s growing population, increased industrialisation and commercialisation (due to 4IR), the demand for transport is expected to be on the increase. As firms become more competitive and enjoy economies of scale in the industry, transport costs will also be driven down. The revolution in the transportation and trade industry is also creating job opportunities for delivery agents, and freelancers via these digital platforms. A closer look at the labour market disruptions is undertaken in the next section.

LABOUR MARKET DISRUPTIONS

Along with Nigeria’s ever-increasing population, her labour force increased by 6.35% between Q3 2017 and Q3 2018. Meanwhile, employment marginally increased by 0.39%, and the unemployment rate also increased from 18.8% to 23.1% over the same period. (NBS 2018b). While this does not automatically translate to more job losses, it reflects that job creation has been slower than the expansion in the labour force. 53%, 35% and 12% of total employment in 2019 were employed in services, agriculture, and industry respectively. (World Bank 2020). There is a need to add and not reduce jobs, and the fourth industrial revolution could exacerbate this inherent challenge.

4IR is expected to change the future of work in the country, but a pertinent question to be answered is “Are workers going to be better off, or worse-off”? In the previous industrial revolutions, the introduction of machines and new technologies created new jobs demanding new skill-sets. However, lower-skilled employees were often affected: either losing their jobs or having to take wage cuts. The impact of 4IR in the Nigerian labour market depends on whether these technologies complement or substitute labour, and this varies from sector to sector.

Modern economic growth theories support that technological advancement often enhances growth in aggregate output. An important indicator of the likely changes in the labour market is how the growth in output translates to jobs (employment elasticity). PwC (2018) estimated the employment elasticity of the agricultural, manufacturing, and services sectors to be -0.1%, 0.3%, and 0.5% respectively. With businesses becoming more intense in their use of digital technologies, it is projected that there will be job growth especially in information and communication technology (ICT). Thus, a 1% increase in services output will on average increase employment in that sector by 0.5%. Though its employment elasticity is less than proportionate, its impact could be large since services contribute most to employment in Nigeria.

On the flip-side, WEF (2017) reports that about 46% of work activities in Nigeria are susceptible to automation. It is also estimated that about 6% of employers are wary of an inadequately skilled workforce, and this percentage is expected to increase in the future with changing the core skills required across jobs. Nigeria is ranked as having an average capacity to adapt to these disruptions and also averagely exposed to these future trends (compared to advanced economies). However, this will most likely change as these technologies increasingly find applications. This necessitates the role of the government in addressing the possible disruptions to the labour market.

POLICY RESPONSE TO RESOLVE LABOUR MARKET DISRUPTIONS

The burden to take advantage of the fourth industrial revolution is greater on overpopulated developing economies like Nigeria. 4IR ought to be harnessed to confront the nation’s development challenges. However, Nigeria had not developed a national strategy specifically addressing 4IR technologies. (Lou et al. 2019). The effects of the labour market disruptions are illustrated in two scenarios, with policy recommendations to address them. The first case is a situation with not-so-high unemployment but a labour market segregated into low-skill/low-pay and high-skill/high-pay jobs (slight case); and the second is a scenario where unemployment worsens as jobs losses significantly outstrips the new jobs created (extreme case).

To address the skills gap in the slight case, efforts should be made to prioritise education and to have a workforce skilled enough to be complimented and not substituted by 4IR technologies. To further enhance growth potentials, policies should be directed at promoting innovations, creating an enabling environment for businesses to leverage on the opportunities of 4IR, supporting research and development, adopting tax systems and regulations to ensure a smooth industry transformation. Schwab (2016) advocated this in what he termed “agile” governance, i.e. policymakers must be able to adapt regulations to the fast-changing environment, and collaborate closely with business and civil societies to harness the gains from 4IR.

Passive policy responses could put the labour market in the extreme case. As more workers lose their jobs or become underemployed, the returns on labour further lag behind that of capital. And as a result, unemployment and income inequality worsen. To address this in the short-run, social safety nets must be provided to those adversely affected. Over the long-run, policymakers must design frameworks to increase occupational mobility of labour as this will enable workers to easily transit to where their skills are required. Policymakers must ensure that the skills gap is closed and labour can work successfully with 4IR technologies.

The fourth industrial revolution will inevitably affect industries across economies. Given Nigeria’s developing services sector, 4IR could greatly engender economic growth in the future. Trade, transportation, and other market segments could benefit, and new rewarding jobs could also be created. There are however possible challenges of workers being displaced due to automation and widened income inequality. Nigeria must realistically anticipate, be positioned to harness the opportunities embedded in 4IR and adopt policies to cushion the negative effects of these technologies, towards maximising the net gains from the fourth industrial revolution. In the words of William Arthur Ward, “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

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Conclusion: The Fourth Industrial Revolution—Further Research Agenda

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Currently at the very beginning of the Fourth Industrial Revolution, many of its trends are difficult to imagine. The technologies of the Fourth Industrial Revolution affect firms of different sectors and economies to various degrees. The radical and dynamic changes in the global economic landscape generated by the Fourth Industrial Revolution set the questions for further research dealing with major international companies. There is a need for interdisciplinary research of different conceptual views at the intersection of management, marketing, international business, macroeconomics, and sociology. An important issue for possible future research is a new understanding of the role of the state. Studying and understanding the new types of firms and new business models generated by the digital revolution is of considerable interest. The Fourth Industrial Revolution leads to redistribution and overflow of wealth from traditional TNCs of developed countries to their competitors. It is necessary to analyze the difficulties faced by the largest TNCs in conducting digital marketing and management transformation. Modern technologies of the Fourth Industrial Revolution determine the network nature of modern firms and the modular nature of goods, services, and processes. An important research topic is the impact of digitalization on competitiveness and competition in the global market

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Konina, N. (2021). Conclusion: The Fourth Industrial Revolution—Further Research Agenda. In: Konina, N. (eds) Digital Strategies in a Global Market. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-58267-8_19

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How is the Fourth Industrial Revolution changing our economy?

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The middle class provide the majority of demand in the global economy. Image:  REUTERS/Thomas Peter

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Stay up to date:, education, gender and work.

The Fourth Industrial Revolution (4IR) upends current economic frameworks. Who makes money - and how - has changed. Demographics have changed. Even the skills that brought our society to where we are today have changed. Leaders must account for these transformations or risk leaving behind their companies, their customers and their constituents.

The top three economic frameworks in most urgent need of a 4IR overhaul include income generation, labour force participation and gross domestic product (GDP) measures. Let’s unpack these concepts one at a time and redefine what they mean as we advance bravely into the Fourth Industrial Revolution.

Making money in a world of increased automation

The global middle class will play an influential role in how we make money in the future. Today, more than 50% of the world’s 7.7 billion people live in middle-class households.

Wealth divisions and rates of middle-class growth differ from region to region. More advanced economies such as Europe and Japan see their middle-class markets growing by 0.5% each year. Rising economies, namely China and India, are expanding their middle classes at 6% each year. Perhaps most striking, however, will be the maturity of Asia’s middle class, which will soon constitute 88% of the world’s entire middle class.

The implications of these changes mark an inflection point in world history: no longer do the poor make up the majority of the world population. That title now belongs to the middle class – who also provide the majority of demand in the global economy.

essay on 4th industrial revolution

Despite the anticipated disruption and uncertainty of workers of nearly all skill levels, one thing remains clear: Workers are increasingly turning to alternative work arrangements like side hustles, freelancing, independent contracting and gigging.

In monetary terms, the size of the world’s gig economy exceeds $200 billion in gross volume, an amount that’s expected to more than double to approximately $455 billion by 2023.

The majority (more than 75%) of those currently generating income through alternative work arrangements do so by choice. For 86% of females in the gig economy, freelancing provides more than an opportunity to make a living – it’s an opportunity to receive equal pay.

Only 41% of female freelancers believe traditional work arrangements would offer them pay equity. This finding presents massive potential as the average gender pay gap is 16% at the global level; closing it and moving towards gender parity could unlock $12 trillion from the world’s economy.

What’s fuelling the global gig economy?

A host of factors contribute to the rise of the gig economy, including increased globalization, advancements in technology and static educational and institutional inertia that can’t keep pace with changing workforce demands.

It’s not only the alternative workforce that is impacted by these factors. Workers in every industry – women and men – will experience the transformation brought about by the 4IR, if they haven’t already.

Approximately 50% of companies worldwide predict that automation will trim their current full-time workforce by 2022. And, by that same year, researchers expect at least 54% of employees will need re-skilling and upskilling to complete their jobs.

The future economy cuts straight through the heart of gender equity

We cannot deny the role technology will play in the future of work. Indeed, the future of work is technology. However, no conversation would be complete without addressing how technology and the future of work affect half of the world’s population: women.

Never mind issues of fairness, or the fact that women make up 39% of the labour force and are the majority of university students in 97 countries . Failure to view the future of work in tandem with gender equity compromises the efforts of businesses and governments to prepare for the dynamic new economy.

Automation will replace 11% of the female labour force but only 9% of the male labour force over the next two decades. The explanation is simple: despite their making up less than half of the global labour force, many jobs often held by women (secretaries, cashiers, and fast-food workers) are 70% more likely to be replaced by automation.

These data contrast narratives put forth by the media that tend to portray technology and robots as overtaking “men’s work”.

In addition to “high risk” jobs, high paying jobs in technology are leaving women behind in the future of work. Information and communication technology (ICT) specialists are four times more likely to be male than female, and only 24% of ICT graduates in 2015 were women. An analysis of companies working with open-source software, for example, found that only 15% of their software authors are women.

Women are the majority of university students in 50% of the world’s countries at a time when we are experiencing a global labour force shortage of 40 million workers.

Considering the changing workforce and the advancement of technology, gender gaps in technology fields should send a signal to leaders. It doesn’t help that men earn higher returns on their digital skills than women, either. Something needs to change.

Measuring success in the fourth industrial revolution’s digital economy

As we examine how the Fourth Industrial Revolution will transform the global economy, it’s important to consider how we measure its success. We currently rely on GDP as an indicator of economic growth. GDP calculates a country’s production of physical goods, and policymakers use it to inform decision-making.

GDP works well as a performance indicator in a manufacturing society, but in a world of increased reliance on services and technologies, GDP fails to accurately capture the intricacy of the economy.

In the past 30 years , $1 put towards digital technology investment increased GDP by $20, whereas $1 put towards non-digital investment increased GDP by only $3. By 2025, nearly a quarter ( 24.3% ) of global GDP will come from digital technologies such as artificial intelligence and cloud computing. But how accurate are these estimates if they fail to capture the value of intangible assets such as networks, data, services and intelligence?

Depending on GDP as a measure of success in the Fourth Industrial Revolution will adversely affect policy decisions because technology as a product has a deflationary effect .

Instead of GDP, we should measure the health of our economy by what MIT calls GDP-B , where B estimates the benefits we obtain from digital goods and services. Analysts can calculate the value of B by determining how much money people are willing to pay to use zero-price digital services (such as Wikipedia, Instagram or Google Maps).

And just as the UN provides a gender lens to its global measurements (the Gender Development Index and the Gender Inequality Index ), so too should we add the gender lens to the digital economy’s GDP-B. After all, if 50% of our population is thriving while the other 50% is struggling, can we call that progress?

The Fourth Industrial Revolution for leaders

To adapt to the wave of changes that are transforming our economy, policy and business leaders should consider the following guidelines to ensure no one, male or female, is left behind.

First, we need to redefine work in the context of the digital economy. What constitutes work in an expanding gig economy? What social protections are in place to keep workers healthy? What about keeping them safe as they work from remote and informal environments?

Second, we must remember the changing labour force demographics and create solutions to support the workforce of the future.

Third, governments and businesses must take action now to proactively retrain their workforce. For example, the US government could re-skill more than three-quarters of its technology-displaced workforce with a $19.9 billion investment and generate a positive return via taxes and lower welfare costs.

Finally, we must apply the gender lens to all decision-making going forward – and not only because it’s the right thing to do. Gender equity is a $ 12 trillion global economic opportunity. So when we collect data, let’s gender-disaggregate it. And when we train and re-skill workers, let’s ensure women and girls aren’t being left behind.

The challenges of the Fourth Industrial Revolution have the potential to expand the economic pie for all and bend the arc of history toward inclusion. We have the choice to be stronger because of it.

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Descriptive Essay: The Industrial Revolution and its Effects

The Industrial Revolution was a time of great age throughout the world. It represented major change from 1760 to the period 1820-1840. The movement originated in Great Britain and affected everything from industrial manufacturing processes to the daily life of the average citizen. I will discuss the Industrial Revolution and the effects it had on the world as a whole.

The primary industry of the time was the textiles industry. It had the most employees, output value, and invested capital. It was the first to take on new modern production methods. The transition to machine power drastically increased productivity and efficiency. This extended to iron production and chemical production.

It started in Great Britain and soon expanded into Western Europe and to the United States. The actual effects of the revolution on different sections of society differed. They manifested themselves at different times. The ‘trickle down’ effect whereby the benefits of the revolution helped the lower classes didn’t happen until towards the 1830s and 1840s. Initially, machines like the Watt Steam Engine and the Spinning Jenny only benefited the rich industrialists.

The effects on the general population, when they did come, were major. Prior to the revolution, most cotton spinning was done with a wheel in the home. These advances allowed families to increase their productivity and output. It gave them more disposable income and enabled them to facilitate the growth of a larger consumer goods market. The lower classes were able to spend. For the first time in history, the masses had a sustained growth in living standards.

Social historians noted the change in where people lived. Industrialists wanted more workers and the new technology largely confined itself to large factories in the cities. Thousands of people who lived in the countryside migrated to the cities permanently. It led to the growth of cities across the world, including London, Manchester, and Boston. The permanent shift from rural living to city living has endured to the present day.

Trade between nations increased as they often had massive surpluses of consumer goods they couldn’t sell in the domestic market. The rate of trade increased and made nations like Great Britain and the United States richer than ever before. Naturally, this translated to military power and the ability to sustain worldwide trade networks and colonies.

On the other hand, the Industrial Revolution and migration led to the mass exploitation of workers and slums. To counter this, workers formed trade unions. They fought back against employers to win rights for themselves and their families. The formation of trade unions and the collective unity of workers across industries are still existent today. It was the first time workers could make demands of their employers. It enfranchised them and gave them rights to upset the status quo and force employers to view their workers as human beings like them.

Overall, the Industrial Revolution was one of the single biggest events in human history. It launched the modern age and drove industrial technology forward at a faster rate than ever before. Even contemporary economics experts failed to predict the extent of the revolution and its effects on world history. It shows why the Industrial Revolution played such a vital role in the building of the United States of today.

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The Fourth Industrial Revolution will be people powered

For many members of the world’s workforces, change can sometimes be seen as a threat, particularly when it comes to technology. This is often coupled with fears that automation will replace people. But a look beyond the headlines shows that the reverse is proving to be true , with Fourth Industrial Revolution (4IR) technologies   driving productivity and growth across manufacturing and production at brownfield and greenfield sites . These technologies are creating more and different jobs that are transforming manufacturing and helping to build fulfilling, rewarding, and sustainable careers. What’s more, with 4IR technologies in the hands of a workforce empowered with the skills needed to use them, an organization’s digital transformation journey can move from aspiration to reality.

In this special edition of the McKinsey Talks Operations podcast, host Daphne Luchtenberg brings you highlights from a panel discussion on the importance of building workforce capabilities and shifting mindsets for successful digital transformation. The discussion took place recently as part of Lighthouses Live, the flagship event of the Global Lighthouse Network—a World Economic Forum initiative in collaboration with McKinsey & Company.

The conversation was led by Francisco Betti, head of advanced manufacturing and value chains and member of the Executive Committee at the World Economic Forum. It also featured Revathi Advaithi, CEO of Flex; Robert Bodor, president and CEO of Protolabs; and David Goeckeler, CEO of Western Digital. The following is an edited version of their conversation.

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Daphne Luchtenberg: In this new world of work, the impact of technology means new skills and new roles are emerging as fast as other roles change.

David Goeckeler: You know, change can be opportunity for everybody. So I think we look at it through that lens. Change doesn’t have to be a threat; it’s just the opposite.

Daphne Luchtenberg: I’m Daphne Luchtenberg, one of your hosts for McKinsey Talks Operations , and that was David Goeckeler, CEO of Western Digital.

His comments were part of a conversation about the use of digital technologies in manufacturing and production, and how there is a need for training and development programs to teach workers the skills to use [these technologies].

So while there is a common perception that digitization and automation are a threat to the world’s workers, companies at the forefront of the technology frontier have actually created jobs—different, new roles that are much more high tech than the roles of the past.

And with the current labor mismatch being felt in many countries, the time is now to further engage workers for a digitally enabled future.

The Global Lighthouse Network

This focus is backed by growing research proving that workforce engagement is key. Over the last several years, research with the World Economic Forum, in collaboration with McKinsey, surveyed thousands of manufacturing sites on their way to digitizing operations and have identified about 90 leaders. These are the lighthouses—sites and supply chains chosen by an independent panel of experts for leadership in creating dramatic improvements with technology. Together they create the Global Lighthouse Network, committed to sharing what they’ve learned along the way. A common theme among these sites is their worker centricity—they are supporting the frontline workforce, upskilling, and making jobs easier and more interesting.

In this special edition of McKinsey Talks Operations , we’ll hear from the CEOs of a few of these leading companies about how they are engaging their people and putting technology in the hands of the workforce. The conversation originally took place during Lighthouses Live, a recent event of the Global Lighthouse Network. The discussion is led by Francisco Betti, at the World Economic Forum.

Let’s listen in.

Francisco Betti: I am delighted to be joined by an impressive group of leaders from our Global Lighthouse Network: Revathi Advaithi, chief executive officer of Flex; Robert Bodor, president and CEO of Protolabs; and David Goeckeler, chief executive officer of Western Digital.

Revathi, Robert, David—a very warm welcome, and thank you for joining us today. We have an exciting conversation ahead of us. We will discuss how you are shaping the future direction of your companies by leveraging Fourth Industrial Revolution technologies and empowering and engaging your people.

Revathi Advaithi: The most important thing is that we’re a company of people. We’re 165,000 people in 30 countries. And I’m a big believer that culture is at the forefront of everything we do. And great manufacturing comes because you have a great culture.

My belief is that the recognition of [the Flex factory in Althofen, Austria] as a lighthouse site is because they have a fantastic culture—a culture that’s focused on innovation, that is very ready to embrace change, is willing to learn from other companies across the world. So it’s such an amazing recognition for that particular site. And it really opens up the avenue for every Flex manufacturing site to really strive to be at the level that Althofen is and to be at the level of the other 90 manufacturing sites that are lighthouse-recognized.

So we are very, very excited about it. We think that this is the start of using the Fourth Industrial Revolution to really build on the capability of our sites, and just build a sustainable manufacturing legacy for Flex.

Francisco Betti: Western Digital has also joined the Global Lighthouse Network with two sites this year—one in Penang, Malaysia, and the other in Prachinburi, Thailand.

In your lighthouses, we have seen success driven by a combination of technology and people. Can you share how Western Digital has been keeping people at the center of its digital transformation journey to realize its full potential?

David Goeckeler: Keeping people at the center is actually pretty straightforward because people are the number-one priority in our operations. We work in a very dynamic market, and we know that our teams, and the skill of our teams, is really what’s going to define our success in the future. So keeping them at the center is critical. And it’s not just the operations team; it’s everybody in the company. We have over 60,000 employees—from the people in operations all the way to the executive team—and everybody is involved and behind this exciting effort. So keeping our people, reskilling our people, building that future-ready workforce, is what’s critical for us, but also for our employees.

Any time in life when you learn new skills, when you educate yourself, I think you have the opportunity to live a better life. It’s not just about our company being better and us being prepared for the future; it’s about all of our employees being ready for that future—keeping them at the center, having them highly engaged, all of the reskilling, getting them excited about what the future holds.

This isn’t some kind of executive mandate; it’s the employees leading it, pulling the company to it. Keeping them all deeply engaged keeps them directly at the center of what we’re doing. And, as I said, having our employees fully engaged, really building that future-ready workforce, is going to be what defines the success of Western Digital.

Francisco Betti: Thank you very much, David. It’s great to hear about the importance of culture and people from both you and Revathi.

Let me ask you a follow-up question. What advice you would give to those companies that are still stuck in pilot purgatory and are trying to scale digital transformations?

David Goeckeler: First of all, what we just talked about is workforce engagement. It’s got to be a pull, the workforce has to be fully engaged, you have to take the time to train and explain all the things about what success is going to mean for everybody. And you have to get that alignment from the shop floor all the way to the executive team on what going to a new model is going to deliver. And, as I said, not just for the business, but for all the individuals.

This is a new world. In manufacturing, there’s going to be a lot of fast and big data. Make sure you have a scalable industrial IoT stack that’s going to be able to handle that and be ready. David Goeckeler

Then I would point people to infrastructure readiness. This is a new world. In manufacturing, there’s going to be a lot of fast and big data. Make sure you have a scalable industrial IoT [Internet of Things] stack that’s going to be able to handle that and be ready.

So first make sure the workforce is engaged. Make sure the infrastructure is ready so that you don’t run into roadblocks. And then really prioritize. Pick use cases that are going to have a big impact. As the team says, “Think big, start small, and then scale fast.”

We’ve had a lot of success doing that—picking use cases that are going to have big business impacts. People see the value. You start to build momentum. And once you get some momentum going, it’s easier to keep it going and build faster and more of it. So, again, workforce engagement, infrastructure readiness, and then start with some prioritized use cases. Start small but think big. And then scale as fast as you can.

Francisco Betti: That is great advice, David. Thank you.

Revathi, let me come back to you now. Flex’s lighthouse in Austria was facing tough competition from lower-cost regions. However, your teams were able to leverage technology to build a more attractive product lineup. What are the key lessons your company learned from this? How does it inform your future strategy?

Revathi Advaithi: When you walk into our Althofen site, the first thing you notice is the “can do” culture. As the world went through labor arbitrage and manufacturing moving to more competitive regions of the world, Althofen has been a thriving site that has focused on using technology as a competitive advantage.

We have a site that is very well trained in terms of skilling. They’re able to skill and reskill, like David talked about, at an amazing pace with really good change. And the second is, tremendous resiliency. They’re able to bring up new products at a fast pace versus any other site that I’m aware of just because they have that spirit of innovation and the focus on technology.

Pretty much any complexity of product, they’re able to bring into their facility and scale up for a customer, and really respond to any of the market dynamics present. All of this has resulted in a site that’s having tremendous rigor—operational rigor—lots of agility, in terms of how they operate.

The results have been incredible for that site. They’ve had tremendous revenue growth while improving margins. But most importantly, they’ve made some sustainable change, which I really love. CO 2 emissions have improved significantly for that site. And we have driven reductions, in terms of our travel costs and those things in that site, just by use of technology—whether you’re thinking about simulation or any of those other technologies that have been used.

Francisco Betti: Thank you, Revathi. Amazing achievements.

Robert, this seems like the perfect opportunity to bring you in. Firstly, many congratulations for the recognition of your Plymouth site as a lighthouse—Protolabs’ first lighthouse in our global network.

As a medium-size enterprise, you embarked on an amazing journey to transition from providing prototypes to becoming an at-scale production supplier—and you did that by incrementally developing new digital capabilities.

What did you do to further accelerate your 4IR journey, considering your company was already a digital native?

Robert Bodor: As you alluded to, Protolabs was founded over two decades ago with a digital mindset from the start. We began as an injection-molding company looking to transform the traditional manufacturing process. Our mission was to automate traditional manufacturing in order to provide molded parts in days at a fraction of the price of traditional molders.

Over time, we extended this digitalization approach to other services, including CNC [computerized numerical control] machining, sheet metal fabrication, and 3-D printing. So, Revathi, you’re right, we love additive manufacturing at Protolabs.

As our name implies, we targeted engineers, who had needs for prototypes to begin with. But over time, we found that our customers were using us for production-part needs and that they valued us for our quality, our reliability, and our willingness to make parts on demand with no minimum-order quantities, so that they could virtualize their inventory and reduce their supply-chain risks, especially in times when demand was volatile.

So that realization was really key for us. And that launched the 4IR journey that you mentioned, Francisco, from being a prototype provider to, now, also a production provider. To do that, we had to extend our digital thread, which connects our online quoting platform to the shop floor and to the customer.

We already had end-to-end automation in place that allowed us to make a mold from scratch and shoot molded parts in one to 15 days. But now, we needed to extend that for these production applications. So we adopted 4IR technologies to expand that system. And it included things like processed automation, digital-part inspection and validation, and process control, which included implementing an industrial IoT stack that allows us to conduct real-time monitoring of our mold presses and associated equipment. And then close the loop in all of that.

All of this expanded the digital thread and the digital twin of key elements of our production processes so that we truly had this end-to-end connection from the online quote all the way through the production process and, ultimately, to the customer.

Lastly, we also implemented a scaled agile development framework, because software is at the core of our business and what we do. And this framework allowed several hundred software developers who are serving our injection-molding business to be able to be agile and coordinated at that scale and to respond to the needs of the plant and to the customers as they evolved.

Francisco Betti: Excellent. Thank you for sharing that, Robert. It sounds like an amazing journey. David, coming back to you now, and I’d like to focus once again on the importance of people.

Your lighthouses in Thailand and Malaysia have several thousand workers, and you’ve focused heavily on upskilling and reskilling. In fact, in Thailand, 60 percent of your workforce was reskilled to support and accelerate technology adoption. And that resulted in zero job losses, which is just fantastic.

How are you turning this approach of reskilling at scale into a competitive advantage for your company?

David Goeckeler: Our successes depended on our people. And let me give a little bit of background on what these people are building. Western Digital is a diversified storage company. An easy way to think about us is, 40 percent of the data that’s stored in the world is stored on a device that our team built.

That’s kind of an amazing stat: 40 percent of the data in the world that’s stored is stored on a device that these teams built. And the demand for that storage is increasing at a 35 percent yearly compounded annual growth rate. So there are plenty of things to do, and the technology allows us to build that.

And it’s our responsibility to equip and empower that team for our short-term and our long-term success. This is a very large imperative that we have a workforce that’s ready for the future that we’re building. We have thousands of engineers who are designing the products of the future that are going to enable the digital economy we all live in. Making sure we have a workforce that’s ready to build that technology is critically important to us.

So it’s really about making Western Digital the employer of choice in the regions that you saw. And that’s about that stronger workforce engagement—training them, letting people know that when you come to Western Digital, you’re not just going to do the job you have today, but you’re going to learn new skills.

We’re able to take our very experienced employees and our workforce that really knows how our business works and bring them into the future, and at the same time attract new people into the business. So I think it’s a win for everybody, and it’s been a great journey and a tremendous success.

Francisco Betti: Thank you, David. Robert, can I ask you what your thoughts are here?

Robert Bodor: I would agree with David’s comments. And furthermore, I would add that the manufacturing industry today, particularly the American manufacturing industry, is experiencing a severe labor shortage. And this has potential long-term implications.

A National Association of Manufacturers study indicated that over two million manufacturing jobs could go unfilled by 2030. As a digital manufacturer, we’ve worked to automate a great deal of our manufacturing process, which allows us to be more efficient with our workforce. And that’s one of the competitive advantages that’s coming to us from our 4IR initiatives.

However, our employees are absolutely critical to our success. So the challenge is real. And at Protolabs, we’re dedicated to creating what we hope are long-term career opportunities for our employees on the shop floor. And that requires considerable investment in creating learning opportunities that will help them grow.

We’ve put a really concerted focus on upskilling our employees to ensure that they’re able to grow in their careers and develop the skills that are vital in this Fourth Industrial Revolution. But for us, that includes things like in-house training and certification programs for key roles, like our mold technicians, for example.

Our online learning portal offers hundreds of courses that can help our employees to grow. [We provide] tuition reimbursement for continued learning opportunities at universities and trade schools. Further, we really work to incorporate technology on the job so that we can improve the employee experience on the manufacturing floor and support their on-the-job training through technology.

Ultimately, our goal is to ensure that our employees have the path to become experts in the modern best-practice methods that we’re using, such as scientific molding in the case of Plymouth, and also to grow other skills, like A3 problem solving, change management, leadership development.

Francisco Betti: Excellent, Robert. Thank you. Revathi, one final question to you. At Flex, we have seen your incredible efforts to reskill almost the entire IT team and your shop floor operators. They are all smart manufacturing experts by now.

It’s core for the survival of companies, and, more importantly, its core for our people strategy, because the best way to keep our employees, our colleagues, excited about what they do is to make sure that they are at the forefront of every technology they use. Revathi Advaithi

Revathi Advaithi: Francisco, just like Robert and David talked about this, I think it’s core for the survival of companies, and, more importantly, its core for our people strategy, because the best way to keep our employees, our colleagues, excited about what they do is to make sure that they are at the forefront of every technology they use.

I’ll give you an example. The facility here in Austin typically makes a lot of technology products, whether it is storing security products, things like that. But recently, we had to start moving a lot of medical products into Austin.

One reason for this is because it’s a fantastic location to have. But two is because we also have a great team there. But the team had to really change their entire mindset. They had to learn a fully automated, wholly sophisticated set of equipment and how to run it, and really pick up new skills that they didn’t have before, including FDA [US Food and Drug Administration] compliance for a lot of regulatory issues.

But we were able to train the team based on other sites, learn from them, and really change the competency of this site in the last couple of years. Althofen, the site that is recognized as a lighthouse today, has done that time and time again, many times over.

We have a system called Pulse that we deploy across the organization. Pulse, truly, is the heartbeat of the organization. Althofen was one of the first sites that deployed Pulse. They know in real time exactly where all the product is—what is coming in, what is leaving, how much inventory is in the system—so they can give real-time updates to the customer to provide them a seamless transition.

The idea of all those sites was “unless we learn first and we get to the table first, it is survival of the fittest and the best team wins,” right? So we are able to have sites that have the culture of “we want to be the best.” And what has been amazing about [the Global Lighthouse Network] is we get the ability to benchmark and learn from other sites, then bring it in, and then really reskill our workforce.

Francisco Betti: There are millions of facilities and companies around the world that we want to reach and engage in the unique learning opportunity the Global Lighthouse Network provides. Our network will continue to grow, and we invite you all to reach out to us to be able to experience the journey toward becoming a lighthouse.

Daphne Luchtenberg: That was a great discussion, and thank you again to our panelists and our colleagues at the World Economic Forum for an insightful event. Once again, organizations are selected to be part of the Global Lighthouse Network based on their leadership and willingness to share their insights. If you are inspired to begin your own Lighthouse Learning Journey, we invite you to learn more on McKinsey.com/GLN , or on the World Economic Forum website .

This program is just one in a series that considers the challenges that companies and economies are facing, as well as the opportunities that leaders can seize for competitive advantage. We will explore other important topics, such as how to connect boardroom strategy to the front lines, where and when to infuse operations with technology, and why empowering the workforce with skills and capabilities is key to success.

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Keeping calm and carrying on in the fourth industrial revolution.

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Claire Rutkowski is Chief Information Officer at POWER Engineers.

It’s hard to pinpoint a period when technology has changed how we work and live as profoundly as AI, automation and IoT did in 2023, with even more changes we cannot predict coming in the next few years as these technologies converge. Experts refer to this period as the fourth industrial revolution , and not hyperbolically: Every enterprise is changing the way it delivers goods and services based on technological advancement. Simultaneously, the roles of employees within these enterprises are evolving at an unprecedented pace.

Some of these changes are positive, to be sure. For instance, much has been made of generative AI’s capacity for improving employee efficiency by automating mundane “busy work,” even boosting productivity among highly skilled workers.

However, there’s a definite flipside: Anxiety over technological change is prevalent due to material differences in individuals’ roles, fears about redundancy or job security as a whole and compounded neurological impacts of constant engagement with digital and multimedia technologies. And while many of us are familiar with burnout as it occurs in fields such as healthcare, there’s less awareness of burnout in the tech space —though the epidemic is severe there, too.

As a result, digital leaders and employees are faced with a double-edged sword: How can we leverage the benefits of new technologies, while at the same time, mitigating the high levels of stress and anxiety that accompany technological change, both for our teams and ourselves? Perhaps not surprisingly, some of the best strategies for dealing with technology-related upheaval come not from the tech industry, but from the “soft sciences,” particularly the practices of mindfulness and self-care:

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1. Acknowledge it. Know that everything is going to change, whether it’s in the technology you use at home, the digital tools you use to do your work or society writ large. Recognize that change can be worrisome, confusing and challenging—and that it’s legitimate to feel that way.

2. Reframe your thinking. Whenever possible, be positive. Your attitude truly does impact how good or bad a day you’re going to have. Try to keep in mind the aspects of your job that you enjoy and the enhanced capabilities technology affords. Remember that change is a constant. You have gone through plenty of other periods of upheaval and come out the other side. You will this time, too.

3. Prepare for change. Do your research. Know what’s coming. If you are worried about GenAI and how it may impact your career, take some prompt training and learn how to get technology to work for you. Take opportunities for upskilling and reskilling. If they aren’t offered by managers or supervisors, ask for them. Learn everything you can about using these new tools.

4. Stay here. Be present. Constantly worrying about what might happen to your job, or whether your industry will survive, or how AI might impact humanity can all feel very overwhelming. When you find yourself starting to worry about eventualities that may never happen, try to take a deep breath and refocus on the here and now.

5. Focus on your work-life balance. Whether it’s taking more frequent breaks throughout the day, working a longer day so you can incorporate an afternoon nap or exploring alternate work schedules such as a 4-day week, figure out what you need to do to have balance in your life to avoid burnout and fatigue.

6. Be productive. The goal should be to aim not for toxic productivity (where we neglect other important aspects of our lives in favor of work, directly contributing to burnout ), but for real, manageable, sustainable productivity. Be organized and keep a task list. Know what you need to do…and what you don’t. Set aside time for those tasks so you can focus and perform well.

7. Use your support network. Sometimes all we really need to alter our frame of mind is to call a friend—to share a laugh, ask for help or just commiserate. Having a workplace friend can be truly beneficial. Seek professional help (such as therapy or coaching) when you need it.

8. Practice a little stoicism. Remember that some things are within the spectrum of your control, while others aren’t. Try to separate the two and not worry about the latter.

9. Learn to say no. Someone recently told me that “saying yes to someone else inherently means saying no to yourself.” While that doesn’t necessitate saying no to everything or never helping anyone else out, it does mean recognizing that there is an opportunity cost to doing things outside of your purview, particularly when you are already stretched thin. Guard your time for what’s important to you.

10. Take care of the basics. Sleep, exercise, eat, hydrate. Repeat. Make time for the things and people that you love. None of this is revolutionary guidance…but it sure is important.

We can’t control change; we can only control our reactions and responses to it. It’s crucial to acknowledge how stressful and anxiety-producing technological change (and really, all big periods of transition) can be, even when we are excited about promising new capabilities and opportunities. But by taking steps to mitigate that stress and fortify ourselves professionally, physically and emotionally, we can emerge all the better for it—not just as employees, but as humans.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?

Claire Rutkowski

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essay on 4th industrial revolution

Nvidia CEO Declares the Dawn of the Fourth Industrial Revolution

T he head of Nvidia, Jensen Huang, is fully convinced that the next industrial revolution has begun with the introduction of artificial intelligence (AI), which is driving growth in almost every industry sector. Two days ago, NVIDIA released its first quarterly financial report for the fiscal year 2025, which ends on April 28, and all data indicate that they have exceeded even the boldest expectations.

According to the financial report, Nvidia achieved a revenue of $26 billion in the first fiscal quarter, a significant increase of 262% compared to $7.192 billion in the same period last year and an 18% increase compared to $22.103 billion in the previous fiscal quarter.

Among these, revenue in the large data center infrastructure sector was $22.6 billion, a 427% increase over the previous year. In a conference call, Nvidia's CEO Jensen Huang stated that the next industrial revolution has begun and that artificial intelligence (AI) will bring an obvious increase in productivity in almost every industry sector.

The Fourth Industrial Revolution powered by Nvidia AI technology

He mentioned that the volume of work is growing significantly. Blackwell chips cannot be delivered in sufficient quantities to meet market demand, and their production is operating at full capacity.

It is expected that even greater revenue will be achieved by the end of the year. Currently, there are about 15,000 to 20,000 registered generative AI startup companies on the waiting list for the delivery of NVIDIA technology to train their AI models using powerful NVIDIA AI accelerator chips.

In his opinion, Nvidia has become a system supplier, not just a seller of advanced GPU solutions. Reflecting on history, from 1760 to the mid-19th century, humanity entered the age of steam engines and began the first industrial revolution.

From the second half of the 19th century to the beginning of the 20th century, humanity started entering the electrical age, peaked during the information revolution, and entered the second industrial revolution. In the second half of the 20th century, roughly after World War II, humanity entered the technological age.

A series of technological discoveries in atomic energy, electronic computers, space technology, and bioengineering initiated the third industrial revolution. After that, he categorically states that we are currently in the period of the fourth industrial revolution, a technological revolution focused on artificial intelligence, clean energy, robotics, quantum information technologies, controlled nuclear fusion, virtual reality, and biotechnology, reports Chinese Fast Technologies .

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Nvidia CEO Declares the Dawn of the Fourth Industrial Revolution

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  1. The Fourth Industrial Revolution

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  2. The Fourth Industrial Revolution: what it means, how to respond

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    The Fourth Industrial Revolution (4IR), also known as Industry 4.0, is a new era of development in which digital, physical and biological systems converge, fundamentally transforming industries, economies and societies. The term Fourth Industrial Revolution was coined by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum ...

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    The agrarian revolution was followed by a series of industrial revolutions that began in the second half of the 18th century. These marked the transition from muscle power to mechanical power, evolving to where today, with the fourth industrial revolution, enhanced cognitive power is augmenting human production.

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    "Fourth Industrial Revolution", "4IR", or "Industry 4.0" is a buzzword and neologism describing rapid technological advancement in the 21st century. The term was popularised in 2016 by Klaus Schwab, the World Economic Forum founder and executive chairman, who says that the changes show a significant shift in industrial capitalism.. A part of this phase of industrial change is the joining of ...

  8. What is industry 4.0 and the Fourth Industrial Revolution?

    Industry 4.0, the Fourth Industrial Revolution, and 4IR all refer to the current era of connectivity, advanced analytics, automation, and advanced-manufacturing technology that has been transforming global business for years. This wave of change in the manufacturing sector began in the mid-2010s and holds significant potential for operations ...

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  17. The Fourth Industrial Revolution: Economic Impact and Possible

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  26. Keeping Calm And Carrying On In The Fourth Industrial Revolution

    8. Practice a little stoicism. Remember that some things are within the spectrum of your control, while others aren't. Try to separate the two and not worry about the latter. 9. Learn to say no ...

  27. Nvidia CEO Declares the Dawn of the Fourth Industrial Revolution

    The Fourth Industrial Revolution powered by Nvidia AI technology. He mentioned that the volume of work is growing significantly. Blackwell chips cannot be delivered in sufficient quantities to ...