Business Reporter
World countries need to decide how best to respond to the emergence of the Fourth Industrials Revolution vis-à-vis their national strategies and their ambition to leverage production as a national capability.

This is according to a World Economic Forum Readiness for the Future of Production Report 2018 released ahead of the Davos meeting next week.

This comes as The Fourth Industrial Revolution and emerging technologies — such as the Internet of Things, artificial intelligence, robotics and additive manufacturing — are spurring the development of new production techniques and business models that will fundamentally transform production.

According to the report both the speed and the scope of technological change, combined with the emergence of other trends, add a layer of complexity to the already challenging task of developing and implementing industrial strategies that promote productivity and inclusive growth.

“Further, recent changes put the competitiveness paradigm of low-cost manufacturing exports as a means for growth and development at risk,” said the report.

The report said countries will have to understand the factors and conditions that have the greatest impact on the transformation of their production systems and then assess their readiness for the future.

“Subsequently, governments — together with industry, academia and civil society — can take suitable policy actions to close potential gaps related to their readiness for the future of production,” it said.

The report analyses how well positioned countries are today to shape and benefit from the changing nature of production in the future.

“Readiness is generally regarded as the ability to capitalise on future production opportunities, mitigate risks and challenges, and be resilient and agile in responding to unknown future shocks.”

According to the findings of the report global transformation of production systems will be a challenge, and the future of production could become increasingly polarised in a two-speed world.

Of the 100 countries and economies included in the assessment, only 25 countries from Europe, North America and East Asia are Leading countries, or in the best position to benefit from the changing nature of production.

“These 25 countries already account for over 75 percent of global Manufacturing Value Added (MVA) and are well positioned to increase their share in the future.”

Another key finding of the report is that different pathways will emerge as countries navigate the transformation of production systems.

However, not all countries may seek to pursue advanced manufacturing in the future.

“Some countries that are next in line as low-cost labour destinations may still seek to capture traditional manufacturing opportunities in the near term under the current paradigm.”

“Advanced countries may seek to focus primarily on advanced manufacturing. Some countries may prioritise other sectors in the national economy over production.”

The report noted that it will be important for each country to differentiate itself, capitalise on competitive advantages and make wise trade-offs in forming its own unique strategy for the future of production and its broader economy.

Countries seeking to compete in the future of production need to invest in enablers and develop a strategy to capitalise on future opportunities and build or transition their production base. However, there are some enablers that cannot be developed in isolation to unlock the full potential of the future of production.

Some of the African countries covered in the report include South Africa where manufacturing’s share of GDP has decreased since the early 1990s to approximately 12 percent as its services sector has expanded.

Nevertheless, the country is said to have the strongest Structure of Production within Africa.

According to the report the ability to innovate is one of South Africa’s greatest strengths, as the country has a strong innovation culture, and entrepreneurial activity is supported by a sophisticated financial sector.

“On the other hand, human capital remains the most pressing challenge in preparing for the future of production, as there is a shortage of engineers and scientists as well as digital skills.

“It will also be critical for South Africa to improve its Institutional Framework to effectively respond to change, offer a stable policy environment and direct innovation.

World economic powerhouse, China’s manufacturing sector is the largest in the world, with a total global MVA of nearly $3 trillion in 2016, representing approximately one-quarter of global Manufacturing Value Added.

“While China performs very well on the scale of its production base, it still can improve on the Complexity component, as it is the 26th most complex economy in the world.

“Over the last two decades China has evolved its capabilities from producing low-cost goods to more advanced products.”

The report also covers areas on how countries can prepare for the future of production and also areas on how they can measure their readiness for the future of production.

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey