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Russia 4.0: The Fourth Industrial Revolution as a Driver of Global Competitiveness

May 29, 18:33 UTC+3
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The world is on the threshold of another, fourth industrial revolution (“Industry 4.0”) which will lead to full automation of most production processes and, as a result, to higher labour efficiency, economic growth and competitiveness of its tigers. For Russia, “Industry 4.0” is a chance to change its role in the global economic environment, but the Russian economy is not fully utilising its potential.

The concept of “Industry 4.0” was presented in 2011 by Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum (WEF) in Davos.

  • The essence of “Industry 4.0” is in accelerated integration of cyber-physical systems into industrial processes, which results in a large portion of production taking place without human involvement.
  • “Industry 4.0” related terms include “Industrial Internet of Things” and “Digital Enterprise”.

The World Bank and General Electric Company estimate that “Industry 4.0” may bring up to USD 30 trillion into the global economy.

  • Analysts of the National Research University Higher School of Economics believe that transition to “Industry 4.0” will result in increasing energy efficiency and enhancing the competitive position of the economy, spanning boundaries between industries, and reducing the anthropogenic impact on the environment.
  • According to PwC, industrial manufacturers from around the world are planning to invest USD 907 billion a year in “Industry 4.0” until 2020.
  • The “Industry 4.0” bellwether is Germany, with its Intelligent Technical Systems OstWestfalenLippe as an equivalent of Silicon Valley. Similar projects have been launched in France, the UK, Italy, Belgium, the Netherlands, and other countries. The US has Smart Manufacturing Leadership Coalition, a non-profit organisation established in 2012, which brings together businesses, universities, and government entities.

The transition to “Industry 4.0” will result in fundamental changes in the employment structure – hundreds of thousands of workers may lose their jobs, and the countries undergoing the fourth industrial revolution will have to employ them elsewhere in order to avoid social upheavals.

  • According to a WEF report, 5 million people may become unemployed by 2020. The author of the “Industry 4.0” concept Professor Klaus Schwab predicts that development of smart industries will lead to increasing inequality both within national economies and on a global scale.
  • Boston Global Group (BGG) analysts envisage changes in the structure of industrial competencies and jobs, with a higher demand for employees with software development and IT skills.

The fourth industrial revolution will reshuffle the nations in the global competitive hierarchy. This is an opportunity for Russia.

  • In the Global Competitiveness Index 2017 by the WEF, Russia has risen to 43rd place due to high quality of education, and development of infrastructure and innovation potential, i.e. criteria directly linked with “Industry 4.0”.
  • The Association for Industrial Internet, a brainchild of Rostelecom and Roscosmos, can be considered Russia’s first step towards the transition to “Industry 4.0”.

The global market of “Industry 4.0” compliant services is currently estimated at ca. USD 773 billion, but the Russian share stands at a measly 0.28% so far.

  • Key barriers for Russia’s transition to “Industry 4.0” is inadequate digitisation and lack of business investment in innovation.
  • The share of R&D investment in the world’s auto industry leaders’ budgets is six times higher than that of the Russian manufacturers, while in the telecommunications industry there is a ten-fold gap.

In 2017, the Russian Government approved the first roadmap to develop the National Technology Initiative – Advanced Industrial Technologies (TechNet).

  • The goal of the roadmap is to bring Russia’s share of the global market of “Industry 4.0” compliant services to at least 1.5%.
  • The development must focus on digital design and simulation, new materials, additive technologies, industrial internet and robototronics.

At its early stages, the roadmap will cover at least eight industries. Some projects are already underway, e.g. Volgobus unmanned commercial vehicles in the auto industry or the Arctic Project 22220, world’s largest nuclear-powered icebreaker, in the shipbuilding industry. Financial support for high-potential projects will be extended by Vnesheconombank.

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