Lessons Learned from the Fourth Industrial Revolution for the Global Economy

Abstract

The term Industry 4.0 has been used since 2011, but became known to the world public at the World Economic Forum in Davos in 2016. This industrial revolution represents a new phase in human development, as was the case in the previous three industrial revolutions, and in this case the power stems from the growing reach and interaction of a number of new technologies. The process of the Fourth Industrial Revolution is much more than focusing just on aspect of technology. Therefore, in the new era, we need to understand how new technologies are interconnected, how the level of interconnection affects our decisions concerning investment, design, innovation, and so on. In our everyday life, tools such as online systems, artificial intelligence, robotics, 5G technologies, big data and Industry 4.0 are already being permanently imported. If we fail to understand how people and technology communicate with each other, it will be very difficult to work together on investments, policies and joint activities that will have a positive effect on the creation of the future. In the new era in which we live, governments and institutions are reshaping education, health, transport and many other systems. There is a broad consensus among historians of economic thought that certain technologies are important enough to accelerate economic progress. Thus, we have set our research goal in the direction of determining the key lessons learned from the Fourth Industrial Revolution for the Global Economy. In achieving this goal, we first briefly focus on elaborating the concept of the Fourth Industrial Revolution in the context of the speed, breadth, and systemic effect by which it differs from the previous three industrial revolutions. Therefore, we will analyze in more details the expectations from the process of Industry 4.0 in terms of computerization of the processing industry and equipping the production with the highest technology. In the context of the previous one, the three new goals of the Fourth Industrial Revolution will be elaborated: (1) Minimization of the human factor of production and elimination of the omissions of production made by man; (2) Achieving a high level of flexibility in production and creating conditions for product design that will be fulfilled by the specific needs of the costumer, and (3) Intensification of the production process. In addition, lessons learned will be provided regarding the possibilities and threats posed by the Fourth Industrial Revolution, and especially on the problem of inequality as a systemic threat imposed by these processes of digitization and automation. A special part of the research will be focused on the key theories of economic growth that incorporate technology into their growth models: The differences between Harrod-Domar's growth model and Solow's neoclassical growth model and the new growth theories. Finally, in our analysis, we will make attempt to generally identify the key positive and negative effects that the Fourth Industrial Revolution has on the global economy, employment, and enterprise performance.