Digital and Technological Revolution

 

The Growth of Digital

Digital technologies will continue to disrupt and transform the global economy at an accelerating pace. In the mid-term, the impact of digitalization will cascade across every industry, redefining consumer expectations and business models, thus impacting the demand of connectivity in the future. This impact will affect countries of all income levels and cut through all aspects of life, including work, leisure, and communication.
 

Figure 1: Global Growth of Digital Devices and Connections

Source: Cisco VNI Global IP Traffic Forecast, 2016-2021. Published in “The Zettabyte Era: Trends and Analysis.” Cisco White Paper. Updated June 7, 2017. https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/vni-hyperconnectivity-wp.html

 

The Era of Hyper-connectivity

The global economy is increasingly reliant on digital technologies that require the continuously improving quality of digital connectivity. To stay competitive, countries will have to continuously invest in advanced digital infrastructures to meet existing and future demand, or risk falling behind.  By 2021, the world will have an estimated 26.3 billion digital devices and connections—which could be more than three times the number of the world’s people. By then, more than 60 percent of global mobile traffic will be in the Asia Pacific, the Middle East, and Africa.
 

Figure 2. Number of Connected Devices (including M2M)

Source: Graph created online using interactive data via GSMA Intelligence: https://www.gsma.com/mobileeconomy/

 

Next Generation Intelligent Transport

In the future, digital technology will form the backbone of mobility. As digital connectivity extends to transport systems, it can lead to more equitable, efficient, and safer mobility—and offer great opportunities for countries to reshape the way people, goods, and services travel (Sustainable Mobility for All 2017, 14-15). New technology, together with hyper-connectivity of devices, enables technology-led efficiency gains of transport systems and beyond. Yet, a recent global survey on digital readiness shows the transport sector is less prepared to embrace digitalization than other sectors. Positive global trends over the past decade include improvement in logistics performance (e.g., through big data analytics and cloud computing) and fuel economy, both of which contribute to reducing the aggregate cost of goods, as well as fossil fuel energy consumption. But institutional and regulatory barriers—especially in land-locked developing countries and their transit neighbors—continue to prevent reduction in transport costs (Sustainable Mobility for All 2017, 8).
 

Figure 3. Intelligent & Sensor-based Infrastructure

Source: United States Department of Transportation (US DOT) 2014. Published in: http://pubdocs.worldbank.org/en/147471501515848530/KOTI-WB-2017-MyJ-2-Moderator.pdf

 

Smart Manufacturing

The digital revolution is also likely to induce major changes in the manufacturing sector. For example, entirely new product lines are currently under development. Whereas with industry 3.0, the assembly of high-tech goods, such as laptops and mobile phones did move to low- and middle-income economies, the same is unlikely to happen with the advanced manufacturing product lines associated with Industry 4.0 because of the likely skill and infrastructure requirements throughout the product’s value chain. The production of new, advanced manufactured goods, such as wearable tech, autonomous vehicles, biochips and biosensors, and new materials, are most likely to collocate with R&D facilities in high-income economies as they are being developed (Hallward-Driemeier and Nayyar 2017, 93-94).
 

Figure 4. Industry 4.0 Conceptual Framework and Contributing Digital Technologies

Source: PWC 2016. 2016 Global Industry 4.0 Survey. Published in: https://www.pwc.com/gx/en/industries/industries-4.0/landing-page/industry-4.0-building-your-digital-enterprise-april-2016.pdf

The biggest impact on low- and middle-income countries, however, will likely be through new manufacturing process technologies that affect the production of traditional manufactured goods. Emerging technologies allow firms to “reshore” previously labor-intensive activities back to high-income economies, either in response to the reduced importance of wage costs or increased demand for quick-turnaround customized goods, or to maintain production in low- and middle-income countries with much lower levels of employment (Hallward-Driemeier and Nayyar 2017, 79). Countries that successfully transition to mainstream disruptive technologies, such as analytics and robotics—particularly artificial intelligence (AI)-enabled, including sensor-using “smart” factories and 3-D printing—will emerge as winners. Moreover, while not all of these technologies are new—robots and 3-D printing have been around for decades, and the Internet of Things, or IoT, builds on ICT legacy technologies—cost innovation, software advances, and evolving business formats and consumer preferences are fueling their adoption (Comin and Ferrer 2013).


REFERENCES

Comin, Diego. A. and Martí Mestieri Ferrer. 2013. “If Technology Has Arrived Everywhere, Why Has Income Diverged?” NBER Working Paper 19010, National Bureau of Economic Research, Cambridge, Massachusetts.

Hallward-Driemeier, Mary and Gaurav Nayyar. 2017. Trouble in the Making: The Future of Manufacturing. Washington, D.C.: World Bank.

Sustainable Mobility for All. 2017. Global Mobility Report 2017: Tracking Sector Performance. Washington, D.C.: Sustainable Mobility for All.

 

 

 

 

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