The Fourth Industrial Revolution and Its Impacts On the Economy and the Global Economic Landscape
Introduction
Over the years, the world has experienced several technological revolutions. Up until now, we have already experienced three industrial revolutions. For some of us, we were not even borne when some of these revolutions took place. However, in some way they have managed to influence our way of life. While it may seem like it is far away before the world experiences a fourth industrial revolution, the reality is that the fourth industrial revolution may occur soon if not tomorrow. However, while the exact period in which the fourth revolution will occur it is not anticipated, what the people know is that it will be based on the third industrial revolution. It will be an improvement in the changes that the third revolution made in terms of digitization. The fact of the matter is that the fourth industrial revolution is inexorable and while there is no clarity on the exact impact, there is a high likelihood that it will promote the world economy and change the world economic pattern with new technology groups together with Artificial Intelligence(AI) being its central focus.
Review of The Past Three Industrial Revolution
As mentioned above, the world has managed to experience three industrial revolutions so far. The first industrial revolution is estimated to have begun during the late 18th century (Xu, Jeanne & Hi Kim, 2018). At the time, most European countries had explored other territories. However, some countries happen to have more resources than others. A country like England had more resources such as steel among others. It was for this reason that such countries thought of ways to improve the production of their goods. Besides, at the time, most countries were still in the period of showing might in comparison to their fellow countries. As a result, the period experienced the invention of the power loom and the advent of steam power. Also, this revolution witnessed the use of coal as the main source of energy while steam trains were used as the main type of transportation. The invention of the train revolutionized other aspects of the industry such as trade and the manufacturing sector (Xu et al., 2018). With the easy movement of goods and individuals from one region to the other, it was easier for farmers to produce and transport their products, while the traders were able to collect goods from one region to another. With the new way of transportation, most manufacturing sectors were able to receive raw materials on time as well as transport their finished products. As a result, the world economy was boosted in some way. With an increase in manufacture a trade, there was anew and progressive amount of income that was accrued at the time. On the other hand, these improvements and changes led to the creation of new opportunities, as well as the development of new towns. The new opportunities were majorly employment and it was hugely influenced by the establishment of many textile and steel industries, across the European region, most especially England (Osborne, 2013). Currently, some of the major hubs of international trade such as London, Shanghai, Berlin, and New York managed to achieve their current status due to the foundations that the transport network in the first industrial revolution managed to set.
On the other hand, the second industrial revolution is thought to have started during the late 19th century (Osborne, 2013). The first industrial revolution managed to create a foundation that resulted in the occurrence of the second revolution, which also managed to have a tremendous impact on the world economy as well as influencing various challenges in the global economic pattern. The second industrial revolution started with the invention of the combustion engine and during this period, the usage of electricity led to the massive production of goods and services (Xu et al., 2018). There were massive food production and the production of other commodities such as steel roads and railway materials. Due to this the direct impact was the creation of employment (Osborne, 2013). This enabled the richest countries in terms of resources to experiences a massive boost in their economies. Countries such as England were among the main beneficiaries. On the other hand, the third industrial revolution is thought to have started at the beginning of the 1970s. Just like in the second revolution, the third revolution was majorly influenced by the changes of the second revolution. While the second revolution resulted in massive production of produce, their revolution focused on how this production could further be improved to another level. As a result, this led to the automation of most machines (Osborne, 2013). As a result, the manufacturing sector was heavily revolutionized. While at the time, this revolution seems to be interesting and creating a whirlwind of impacts to traders and the manufacturing sector, in some way it had a huge impact on the labor sector. Due to automation, various job responsibilities were replaced and many employees were laid off (Xu et al., 2018). This created backlash by various leading individuals. However, while several jobs were lost, it led to improved and creation of opportunities in other sectors. A group of technologies that led to digitization has made it easier for businesses to trade and just like the impact of the transport system in the first industrial revolution, the transport system was also boosted in their industrial revolution. The internet has made the world a global village. Currently, many companies have managed to transverse new territories as well as products. Several countries have managed to connect with other nations and with the foundation of world free trade. Currently, established economies such as the new states and china, have massively benefitted from the third industrial revolution.
The Fourth Industrial Revolution
Currently the fourth industrial revolution is building on the third. The idea of the fourth industrial revolution was developed by Schwab and the World Economic Forum and ever since many conversations have been revolving around this issue. Various technologies such as AI and 3D printing are currently being used as well as evolving (Schwab, 2017). 3D printing has had a huge impact on businesses that rely on crafting while on the other hand, artificial intelligence has managed to be part of our daily lives. Artificial intelligence is a form of technology in which devices are improved by being incorporated by human ability (Holler et al. 2017). In a way the fourth industrial revolution will incorporate the fusion of various technologies that will touch on the digital, physical, and biological fields.
When taking a closer look at the fourth industrial revolution with the previous industrial revolutions it is massively different. For example, currently there are several technological breakthroughs such as AI and 3D printing that have been mentioned above which have no historical background (Park, 2016). These technologies are being developed exponentially in comparison to the previous ones, which were more linear. Besides, it will also affect almost all industries in every country. Besides, these changes will transverse a variety of systems form production to governance. Imagine a world where billions of people will be connected by mobile devices, with unprecedented access to knowledge from various fields such as education, massive power storages, automated vehicles, and robotics, among other things (Ballantyne, Wong & Morgan, 2017). Its impact on these fields and systems would be robust given that all these expectations would be multiplied by the emerging technologies such as 3D printing and AI (Park, 2016).In addition, the fourth industrial revolution will also have a great impact on globalization. Just like the previous industrial revolutions, the fourth industrial revolution is expected to boost the global income levels of individuals as well as businesses, and as a result this would positively affect the world economy. Most researchers believe that the fourth industrial revolution would heavily have an impact on the business and the government.
Business-wise, the fourth industrial revolution would present a variety of opportunities that the business world ought to take advantage of. Over the years, consumer behavior has been greatly influenced by advancement in technology (World Economic Forum, 2016). For example, technology has enabled consumers to order products from across the world irrespective of their location. Currently, most businesses have managed to exploit this opportunity and in some ways they have managed to triple their production. In the business world, the demand is always there, the problem is always how this demand can be availed to the supplier or the manufacturer. In a certain way, the internet managed to tweak this challenge and as a result it created an opportunity. Nowadays, consumers can order a cab, book flights, and travel to the destinations of their choice (World Economic Forum, 2016). Based on this, the internet did create a demand-side miracle on the side of the business. As a result, with the emergence of the new technologies and techniques, in the future there is a high likelihood that there would be a miracle on the supply side. This would result in a long-term gain in efficiency and production (World Economic Forum, 2016). As of now, emerging technologies have managed to open up existing markets due to the high demand for various products. It is known that human beings are not efficient. However, in the case of machines, efficiency is improved since robots are efficient provided they are created and tested in the right way. In the future, pieces of machinery and robotics would cover more than 80% of the production and manufacturing world and this would result in improved efficiency (Schwab, 2017). Just to mention with the improvement in customer’s transparency and increase in competition many companies have started to assess and change their approaches design and quality of their products. In the future, these changes would prove to be vital for most companies as this would enable them to be successful and as a result boost the world economy. For example, the tourism sector would have to remodel their field. While most individuals would have smartphones, many tourists would not be focused on their trip but rather the services that the tour travel operators offer (Loureiro, 2018). As a result, if such a business would start to incorporate these ideas their businesses would improve drastically given that demand for such services will continue to increase.
Apart from the improvement in efficiency, the future also promises the enhancement of products (Schwab, 2017). Currently, there is high inequality in the productions of goods from various parts of the world. The developed nations such as the U.S and China are highly advanced in terms of their production and this explains why their products are currently found in almost every part of the world. In countries such as those found in the African continent are far behind and are dependent on the western world for value addition in most of their products such as coffee. However, with the fourth industrialization, these countries are likely to enhance their products and as a result they would be able to avail their products to territories that are currently difficult to do so.
On the other hand, just to mention, the fourth industrial revolution would enable the citizens to voice their opinions (World Economic Forum, 2016). With the future of the world expected to be linked with mobile phones, citizens would be able to rally behind each other and put their government into check. In return, governments would have to readjust themselves by coordinating their efforts as well as adapting to the disruptive challenges that are expected ahead of them (Jules, 2017). On the other hand, the negative impacts of the fourth industrial revolution cannot be under looked. Just like the third industrial revolution, the fourth revolution is expected to have a huge impact on the labor market. This impact might lead to inequality in income as more highly skilled individuals would be on high demand compared to those who are low skilled (World Economic Forum, 2016). However, based on research done by McKinsey & Company while emerging technologies such as AI are a threat to job opportunities, the automation of various job responsibilities would save various companies billions of dollars (Peters, 2017). As a result, this money could be invested in various sections of the industry and this would boost the world economy.
In conclusion, while there is much conversation on the effect of the fourth industrial revolution on the labor market, the question should be, what are the governments and businesses doing to ensure that they are prepared for this revolution since its occurrence is inevitable. The impact of the fourth industrial revolution cannot be under looked at, given the increase in the demand and existing market in the business world as well leading to the enhancement of products (World Economic Forum, 2016). While it may look that the emergence of new technologies has been exponential, as a world we have undergone three industrial revolutions and it is no different o the fourth one, everyone should be prepared. Currently, AI is part of our life, from automated cars, nanotechnology, 3D printing, nanotechnology, and robotics among others. These technologies are a reason enough for everyone to believe that this is a force to reckon and at no point, this could be stopped. The fourth industrial revolution will not only affect the world economy but also the world economic pattern.
References
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