Preparations for the Fourth Industrial Revolution and developing countries
Let’s go back to the civic life of the beginning of the new millennium in flashback. Need a taxi? Stop at a taxi stand nearby, wait, not sure how long it will take for the taxi to arrive; Once a taxi arrives, there is no guarantee that you will be able to get to the desired destination at a fair fare because the taxi will go to the route of its choice. Want to read a very favorite book? Want to buy a book? You have to go to a bookstore in New Market. There is no time to go due to work pressure, books are not being bought, favorite books are not being read. Want to see a movie? You have to stand in line for tickets at the cinema counter so you haven't seen your favorite movie.
The above examples are very inconsistent with today's reality. No need to wait at the stand for a taxi. If you call Uber, the taxi will come to you, take you to your desired destination without any bargain. If you want to read the book of your choice, order it on Rokmari.com and it will come on time, you don't have to go to the store to buy the book. If you want more easily, you can read online by downloading the app of your choice, such as Kindle. You can watch your favorite movie on Netflix or Amazon Prime at your convenience. Numerous more such examples can be given, where the activities of the economy are being performed on an on-demand basis.
The fundamental question of the economy on the basis of demand is whether the value of owning a service or product is higher or the value of the platform on which those services or products are traded? Amazon is not a publishing company and has no books of its own, yet the largest bookstore in the world. Amazon's current market value is trillions of dollars. Similarly, Uber does not have any cars of its own, although it is the largest car rental company in the world. Alibaba is the third-largest e-commerce company in the world. Alibaba has no stock of its own merchandise, although it is the largest retailer in the world.
Let's talk about Airbnb, the world's largest real estate provider, but no real estate owner at all. If you want to sell an old product, click on any one of the online platforms, such as OLX, you will get everything from mobile chargers to cars and even homes. The above examples are just some of the examples of the Fourth Industrial Revolution. The increasing digital transformation of the activities of the economy is the main foundation of the Fourth Industrial Revolution.
The Fourth Industrial Revolution is undoubtedly very different from the First and Second Industrial Revolutions, but there are many similarities with the Third Industrial Revolution. The first industrial revolution began in the mid-eighteenth century and lasted until the first quarter of the nineteenth century. The first industrial revolution began with the invention of the steam engine and the construction of the railway. The role of rail communication in the transportation of goods was immense. However, the use of coal and steel played an unprecedented role in industrial production.
Their path marked the beginning of the Second Industrial Revolution, which lasted from the last half of the nineteenth century to the first half of the twentieth century. The discovery and use of new basic materials such as light materials such as plastics, new mixtures, and the use of electrical energy make ‘mass production possible, which helps bring down production costs to unimaginable levels. On the other hand, the effects of the Third Industrial Revolution, which began in the mid-nineteenth century, lasted until the new millennium. The invention of the modern computer and the Internet was the mainstay of the Third Industrial Revolution.
The beginning of the fourth industrial revolution started with the hands of the third industrial revolution. This is why many call the Fourth Industrial Revolution the second stage (or digital revolution) of the Third Industrial Revolution. Because the basic elements of the Fourth Industrial Revolution are also the invention and spread of the computer and internet-enabled technology. However, the pace of innovation and expansion is so fast and variable that it is often regarded as a separate industrial revolution.
Renowned author Klaus Schwab in his book, The Fourth Industrial Revolution, divides the effects of the Fourth Industrial Revolution into three main categories. The first category is ‘physical’, such as the invention of automatic vehicles that are driven by sensors and artificial intelligence. This development of technology will soon have a huge impact on various sectors of the economy. With the help of such drones, many things will be possible without the direct participation of human beings. Again, 3D printing will have a great impact on medicine. Advanced cobots (collaborative robots), whose use so far has been limited to certain industries, including the manufacture of automobiles, will play a special role in everything from agriculture to medicine.
The rapid advancement of robots will soon create a new reality between humans and machines, while humans will take the help of robots in their daily work. In addition, new materials will be discovered, the main features of which will be that they are much lighter, stronger, reusable, and automatically repairable.
The second category is ‘digital’ — such as creating human relationships with products, services, space, etc. through new applications. The examples given at the beginning of this article are all digital forms of the Fourth Industrial Revolution. For example, RFID technology has been used in many countries to ensure quarantine. Again, financial activities were largely technology-dependent. The use of technology in the financial sector (fintech) will greatly reduce traditional banking services in the future. Because small-sized fintech companies will be able to provide financial services more efficiently at a much lower cost.
In the digital age, it will be possible to make subtle adjustments between the demand and supply of these small but effective technology products and services. When central banks begin to rely on digital currency, monetary policy will be more effective.
The third class is biological. Scientists in our country have already discovered the genetic sequence of rice and jute. Discover many more plant genes needed in the future. Through the discovery of these genes, it will be possible to increase their disease resistance and increase their production many times over. Powerful computers and software will help understand the human genome. Biotechnology has now reached a stage where cell use can be influenced by altering cell DNA. Undoubtedly, it has many positive effects in medicine.
It is undeniable that the Fourth Industrial Revolution will bring about a drastic change in economic activity. The world is now at a crossroads in technology and innovation, the next step being to accelerate economic growth through greater production. With the advent of technology, the cost of production and distribution of goods and services will be reduced at an unimaginable rate, because machines will help people. In developed countries, where there is a shortage of working population, the advent of technology will be able to increase productivity.
So many people think that the fourth industrial revolution will have a positive impact on people's lives. However, in countries with high populations, which are largely underdeveloped and developing, the problem of unemployment may be evident. The scope of traditional economic activity, where there is the direct involvement of human resources, will be greatly reduced. In particular, the demand for accountants, financial analysts, tax advisers, librarians, telephone operators, security guards, treasurers, showroom salesmen, filling station workers will come down to the bottom in the next decade.
A long-term plan is needed to address this problem by using technology to increase human performance. People need to be empowered to adopt and use technology. Remember, technology is the creation of human beings only to accelerate the pace of human work. We need to invest in all the sectors that enhance the technical infrastructure and data analysis capabilities. Training may be profitable in the short term, but for long-term success, education needs to change. Mainstream education needs to be structured in such a way that it enables human resources to have the flexibility, thinking ability, and data analysis necessary for the future workplace. In addition to mainstream education, vocational and technical education needs to be strengthened.
The Fourth Industrial Revolution can create inequality in society. Such ‘low-skilled low-pay versus ‘high-skilled advanced pay structures will create economic divisions. The financial capacity will determine who will be able to adopt the technology immediately and use it effectively. Needless to say, their continued economic success will increase inequality between rich and poor, which will be an obstacle to sustainable economic development. To overcome this situation, developing countries need to look at wealth creation as well as equitable distribution of resources.
The Fourth Industrial Revolution is not just about giving human work to machines. It's not really a question of 'man vs. machine'. Rather many new workplaces based on the technology will be created for people. That is why developing countries will have long-term plans on how to increase the productivity of human resources through the addition of technology. At the same time, with the touch of technology, how to speed up the distribution as well as provide quality products and services as per the needs of the consumers. It is true, however, that the rate at which the first and second industrial revolutions created new jobs for people cannot be expected from the fourth industrial revolution. Because technology, not humans, will be the main driving force of the digital age.
Moreover, as a result of globalization, the path to competition is now much more open. In order to survive in a competitive market, there must be an emphasis on increasing innovation, which means further modernizing production and distribution strategies, focusing on reducing costs. Many new jobs will be created if we can move out of the demand-driven economy (where the focus of economic activity is on meeting consumer needs) and create new demand by providing new products and services. Those who are ahead in this race will enjoy the benefits of the Fourth Industrial Revolution.
Dr. Mohammad Dulal Mia: Associate Professor, Head of the Department, Department of Finance and Economics
Nijwa University, Oman