There is no uncertainty that the world these days has reached the technological revolution, changing everything, from the way people live, work and communicate. The revolution is not only transforming today’s way of living, but also making a great impact on industries and the world economy. Now we have entered the fourth industrial revolution (Industry 4.0) that upends current economic frameworks.
Industry 4.0 primarily focuses on the large-scale machine to machine use and Internet of Things deployments to provide enhanced automation, advanced communication and monitoring. It also paves ways to leverage smart machines that can assess and diagnose issues without any human intervention. The fourth industrial revolution has already made its entrance in factories providing increasingly automated and self-monitoring capabilities.
Considering the report, the three major economic frameworks in most urgent need of a fourth industrial revolution are income generation, labour force participation and gross domestic product (GDP) measures. The global middle class can play a vital role in how people make money in the future, according to the World Economic Forum report. Currently, over 50 percent of the world’s population lives in middle-class households. However, wealth divisions and rates of middle-class growth vary from region to region.
Industry 4.0 in the Global Gig Economy
The first industrial revolution utilized water and steam power to mechanize production whereas the second revolution leveraged electric power to create mass production. And the third industrial revolution used electronics and information technology to automate production. Now the fourth industrial revolution brought more digitalization that will transform the global economy and its measurement.
Presently, the world relies on GDP as an indicator of economic growth and GDP relies as a performance indicator on the manufacturing society. However, the latest revolution in technology has shifted this reliance on services and technologies, where GDP fails to appropriately seize the intricacy of the economy.
In a WEF report, US$1 put towards digital technology investment increased GDP by US$20, in the past 30 years, whereas the same amount put towards non-digital investment increased GDP by just US$3. However, it is expected that nearly a quarter, 24.3 percent, of global GDP will come from digital technologies like artificial intelligence and cloud computing by 2025.
Despite this, Industry 4.0 has the capability to upsurge the global income levels and improve the living standards of the world’s populations. Right now, people are able to afford and access the digital world and cutting-edge technologies like IoT, AI, cloud computing, big data and more have made it possible to augment the efficiency of people’s daily lives. This technological innovation in years to come will bring more access to the digital environment, with long-term gains in efficiency and productivity.
It is projected that costs of transportation and communication will reduce, logistics and global supply chains will become more effective and trade will witness a drop in costs, opening new markets opportunities and expedite economic growth.