Opinion

Industry 4.0 can make ‘the world more sustainable’

N Madhavan | Updated on August 23, 2019 Published on August 23, 2019

LI YONG, Director-General, UNIDO

Though a lot of jobs will be lost, new opportunities will emerge in skilled and knowledge-based sectors, says UNIDO chief

The Fourth Industrial Revolution or Industry 4.0, as it is also called, is both an opportunity and a challenge. It has the potential to enhance global manufacturing output to meet the rising human needs without hurting the environment. In other words, it can make the world more sustainable. At the same time, fear of significant job losses it will lead to is real. It risks widening the inequality between developed countries and other nations.

United Nations Industrial Development Organisation (UNIDO) has been at the forefront of ensuring that the world gets the best from this transition. In an e-mail interview, its Director-General Li Yong tells BusinessLine how this can be achieved and what India should do to benefit from Industry 4.0. Excerpts:

Do you expect the Fourth Industrial Revolution to impact the world positively?

The Fourth Industrial Revolution offers huge potential to advance economic growth and human well-being, to safeguard the environment and to achieve the 2030 Agenda for Sustainable Development.

In 2016, we had already noted that radical innovations such as the mobile internet, the Internet of Things and cloud computing would revolutionise production processes and enhance living standards, particularly in developing countries.

New technologies can increase the level of efficiency and productivity of industrial production processes. It can also help create smart cities.

Experts have warned that the Fourth Industrial Revolution will cause significant job losses..

Undoubtedly, significant numbers of jobs and job sectors will be vulnerable to automation, with some estimates suggesting that up to half of all jobs may be endangered. However, technology development is also likely to create some new industrial sectors and new job opportunities, though these are likely to predominate in more skilled and knowledge-based sectors.

I believe that this transition is more of an evolution than revolution. This is precisely the reason why industrial development is ever more relevant in the era of new technologies, and it is the most effective way to prepare countries for sustained growth.

Less developed nations with a large proportion of labour-intensive sectors will be impacted the most. How can they overcome this challenge?

There is no “one-size-fits-all” strategy for technology development in developing countries and re-shoring of labour-intensive sectors is a potential risk for them. However, from observing the successful cases of technology transition, which have typically focussed on building domestic capabilities, we can draw some conclusions on successful mitigation strategies.

Firstly, the implementation of the Fourth Industrial Revolution will require the promotion of investments in digital infrastructure and data, as well as an organisational change at firm level.

Secondly, as the required skill sets are changing, national education systems must support the development of competencies in ICT and STEM, but also in terms of “soft skills” and practical knowledge regarding production processes

Thirdly, it may be useful to allow for the provision of (competitive) grants to public and private R&D, also in combination, for example, between universities and companies. The degree of competition should depend on the status of development of the sector and the country.

Fourthly, regulatory frameworks need to encourage innovation, digitalisation and the adoption of new technologies, for example by removing barriers, while at the same time maintaining data protection.

Finally, new skills and well-educated workers are essential for optimal implementation and operation of new technologies. Thus, policymakers should prioritise and increase public investment in education infrastructure to effectively deal with the challenges of new technology implementation

In an era where protectionism has replaced globalisation, can countries work together on this?

At this stage, I believe it is premature to say that protectionism has replaced globalisation; rather one can say that the pace of globalisation has slowed following several decades of rapid growth. UNIDO’s mission of promoting inclusive and sustainable industrial development favours globalisation and multilateral decision-making.

The positive spillovers of Industry 4.0 will potentially permeate across the globe. For that reason, it makes sense that these issues should be raised in the global fora. The United Nations system has been responsive, establishing several mechanisms, including the Technology Facilitation Mechanism in support of the Sustainable Development Goals.

UNIDO has a special role to play in this regard and considers itself a suitable platform for convening dialogue, promoting thought leadership and establishing multi-sector partnerships for 4IR initiatives.

How has India responded to this situation?

We are witnessing a diverse picture in India. Several leading industries in the automotive and traditional engineering sectors are already benefiting from the application of advanced technology methods and techniques.

The MSME sector (it contributes to 29 per cent of India’s GDP; 50 per cent to exports and provides the largest share of employment after agriculture) is a highly vibrant and dynamic sector in the Indian economy. It would be important for this sector to benefit from operational and productivity improvements to prepare for the Fourth Industrial Revolution.

In order to do this, MSMEs in India will need to adopt lean production and management practices, avoiding ad-hoc manufacturing which will form barriers to digitalisation. In addition to this, for India’s MSME sector to be at the forefront of Industry 4.0, we would encourage government intervention in funding, infrastructure and human capital development.

As Director-General of UNIDO do you fear that the Fourth Industrial Revolution could widen the inequality between nations?

In a report released in July this year by the United Nations Secretary-General on “Progress towards the Sustainable Development Goals”, rising income and wealth inequality risk undermining the efforts that the international community is making to achieve the SDGs. The SDG and the 2030 Agenda for Sustainable Development promulgates that no one should be left behind, to which our (UNIDO) mandate to promote inclusive and sustainable industrial development will become ever more important, particularly for Least Developed Countries.

In this regard, we need countries to be ready, and to be able to identify and determine their strengths and weaknesses as industrial policies are developed — governments will need to manage trade-offs and seek complementarities between sustained growth and inclusive development. With appropriate policies, the Fourth Industrial Revolution can be a lever to promote inclusive and sustainable industrial development.

Published on August 23, 2019
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