Global Challenges Require Global Responses with the Fourth Industrial Revolution

By Sharada Prahladrao

Category:
ARC Report Abstract

Overview

The 49th World Economic Forum Annual Meeting in Davos, Switzerland, January 22–25, 2019, drew more than 3,000 participants from 115 countries.  This year’s theme, "Globalization 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution,” delved deeper than ever into key issues, such as environmental degradation, cybersecurity, economic strains, and geopolitical tensions, as well as potential future shocks.

Across 350 sessions, this year’s meeting explored how we can harness the power of digitalization in areas such as health, infrastructure, and energy and how emerging technologies like artificial intelligence (AI) and blockchain will continue to disrupt and reshape the industrial landscape. 

The Fourth Industrial Revolution recognizes how new technologies are creating widespread changes across all industries at unprecedented speed and scale. The dialogs covered geopolitics in a multi-conceptual world, the future of the economy; new technologies and adherence to regulations; risk resilience to promote systems thinking, human capital and society; and global institutional reform. António Guterres, Secretary-General of the UN commented that global responses are the only way to deal with global challenges.

Major transformations are redefining globalization.  These include:

  • Global economic leadership is no longer dominated by multilateralism, but characterized by “plurilateralism”
  • The balance of global power has shifted from unipolar to multipolar
  • Ecological challenges, including but not limited to climate change, are threatening socio-economic development
  • The Fourth Industrial Revolution is introducing technologies at a rapid pace

Economic Outlook and Sustainability with the Fourth Industrial Revolution

Professor Klaus Schwab, Founder and Chief Executive of the World Economic Forum, explained: “This fourth wave of globalization needs to be human-centered, inclusive, and sustainable. We are entering a period of profound global instability brought on by the technological disruption of the Fourth Industrial Revolution and the realignment of geo-economics and geopolitical forces.” Against the backdrop of the Fourth Industrial Revolution the agenda highlighted:

  • Climate change
  • Global economic slowdown
  • International relations
  • Rise of populism/failure of globalization
  • Brexit

Fourth Industrial Revolution weos1.JPGThe focus of the economic outlook session was not on the mere statistics or the weakening global economy; but on the risks, opportunities, and factors like climate change, which impact global economic growth. For example, a temperature increase of 2.5 degrees Celsius shaves 15 percent of the global GDP; if it goes up to 3 degrees, we lose 25 percent of GDP.  However, in terms of human suffering, it’s impossible to measure the cost.

There must be a shift to a new climate economy that will create $26 billion in renewable energy, new mobility, low-carbon mobility, low-carbon buildings, and 65 million more jobs.

The Digital Journey and Dispelling Myths

As companies embark on the digitalization journey, it would be useful for them to identify the value that remains trapped in the form of under-used assets, the mismatch between supply and demand, and using innovation to unlock this potential. The sessions revealed that many myths exist about digitalization being implemented in the manufacturing sector:

Prohibitively expensive: Although digitalization does require a significant amount of upfront work to implement, it helps optimize processes, shorten cycle times, increase quality, reduce energy losses, shorten downtimes due to maintenance, and improve overall equipment effectiveness. Even for capital-intensive investments such as advanced robotics, the long-term benefits outweigh the initial implementation cost.

Widespread unemployment: Digitalization in manufacturing is often associated with robots and smart algorithms taking over tasks from humans; this creates fear of large-scale unemployment and social unrest. While there is no doubt that repetitive tasks will decline, recent reports provide a more positive outlook for the workforce. In manufacturing, while there is likely to be a decline of tasks for assembly and factory workers, material handlers, quality inspectors and maintenance technicians; this decline will be counterbalanced by an increase of roles in the fields of data analytics, artificial intelligence, software and application development and technologies. The challenge lies in training and re-skilling the existing workforce.

Profit vs. sustainability: There must be a shift in mindset - many business leaders think about sustainability either as a marketing strategy, or a signal that the company is going to forgo profits to become more “green.” To do this, companies need to think about sustainability in terms of sustained success, and in the larger context of contributing positively to the workforce, society, and the environment. Small changes can make a huge difference – for example, the installation of intelligent lighting controls can save over 40 percent of energy used in lighting; and a building energy management system to optimize a plant’s energy use can save up to 30 percent of energy consumption.

ARC Advisory Group clients can view the complete report at ARC Client Portal 

If you would like to buy this report or obtain information about how to become a client, please Contact Us    

Keywords: World Economic Forum (WEF), Fourth Industrial Revolution, Globalization, Digital Technologies, ARC Advisory Group.

Engage with ARC Advisory Group