Letter IEDI n. 823–Industry 4.0: National policies and strategies under the new productive revolution
A new productive revolution is already underway in the world, combining technological transformations in a wide range of areas, materialized in three great dimensions: digitalization, new materials and new processes. Unlike many imagine, the effects of this revolution will not be felt in the distant future, but in a much shorter horizon. The OECD estimates that most impacts will occur in 10 to 15 years. That is, a new world knocks at our door.
This Letter IEDI thus returns to the topic of Industry 4.0, analyzing two OECD papers. The first one, "The Next Productive Revolution: Key Issues and Policy Proposals," by Alistair Nolan, OECD Director for Science, Innovation and Technology, presents the concepts and technologies that are driving the industry of the future. It emphasizes the public policy effort that developed countries, but also some emerging ones, are making to encourage this process, aiming to create or renew their competitive advantages.
The second paper, "An International Review of Emerging Manufacturing R&D Priorities and Policies for the Next Production Revolution," was prepared by Eoin O'Sullivan and Carlos López-Gómez, both from the Institute for Manufacturing at the University of Cambridge. They perform a detailed analysis of governmental policies related to research, development and manufacturing innovation in countries such as the United States, Japan, Germany, China and the United Kingdom.
The concepts of Industry 4.0 or Advanced Manufacturing derive from an acute process of digitalization of production, based on technologies such as 3D printing (whose market is projected to grow at 20% p.a. by 2020), advanced robotics and the internet of things (IoT). Also noteworthy is the incorporation of new materials, mainly from advances in biotechnology and nanotechnology, and new processes built from the use of Artificial Intelligence and from Big-Data-based management, i.e., administration strategies based on the critical analysis of huge amounts of data.
An important point highlighted by the OECD is that its members, which are among the most developed and industrialized countries in the world, are not watching idly the emergence of this new productive revolution. On the contrary, they have directed efforts to foster the development of the technologies at the center of the revolution, aiming to increase productivity and the international competitiveness of their productive structures and thereby enable their long-term economic growth.
According to Eoin O'Sullivan and Carlos López-Gómez, three major themes have received increasing attention in the strategies of governments and governmental agencies:
- Convergence, broadly understood as the integration of research disciplines, technologies and systems, given that the innovations of the forthcoming productive revolution are marked by high complexity and by a set of multidisciplinary knowledge and capabilities;
- Maturing and scale-up of new technologies, ranging from the emergence of an innovation, to prototyping, to pilot tests and studies of economic feasibility that extend from its introduction to the market all the way to its diffusion, to mass production and the consolidation of a value chain;
- Capturing value in the national economy (from manufacturing innovation), particularly in high-wage economies —which makes this issue a clear concern of OECD countries.
While these themes appear in a variety of forms and approaches in the policy responses of different countries, the OECD study identifies the following main trends in current policies to support research & development and innovation:
- Increased innovation mission scope of manufacturing R&D institutes to include innovation activities beyond basic technological research;
- Greater emphasis on new research partnerships and linkages to pursue synergies between the various actors of the innovation and production system;
- Increasing attention to the new industrial innovation infrastructures that combine the right tools, equipment and technologies to bring manufacturing R&D to the scale and complexity levels required by the new production model.
In this sense, policymakers in major world economies, when adopting manufacturing R&D strategies in the context of the production revolution, are not prioritizing only specific technological sectors, but are also seeking to implement programs and institutions that guarantee the development and application of technology research results to increasingly complex industrial systems.
For this reason, countries like Brazil must take an active stance so as not to be left behind in the transformations that are already in process. In order to remain competitive, the OECD suggests that public policies in emerging economies should also encourage the absorption of new technologies in their productive parks as a way of complementing other local cost differentials such as low wages.
It is worth remembering, however, that the more complex the technologies, the more the capacity to absorb them fundamentally depends on the development of previous capacities — within firms and in the available human capital structure— and on the continuous effort in R&D activities. It is in this sense that there is no time to be lost, especially for those countries that, like Brazil, have distanced themselves from most technological frontiers in recent decades.