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How Can Governments Leverage the Fourth Industrial Revolution for Growth?

 

February 24, 2016

It can be chilling to consider the implications of the “Fourth Industrial Revolution” or “Industry 4.0” to government. According to Dr. Klaus Schwab, of the World Economic Forum, “we stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold…”

It’s no wonder the implication of Industry 4.0 to public policy and public financial management is the underlying theme for the upcoming FreeBalance Ministers’ Roundtable on March 7-9.

“Cyber-physical” systems like artificial intelligence, robotics, machine-learning, big data, 3D printing and the Internet of Things could disrupt the nature of work, employment and government revenue. Countries may no longer be able to rely on labour cost gaps to drive employment when machines can do it cheaper.  And, this could have devastating consequences in developing countries: Reduced revenue and increased burden on social protection services. In addition, increased fragility and income inequality.

Even more chilling are predictions this will create more unemployment. Others see “AI”  (artificial intelligence) as a threat to humanness.

Public Policy Response to the Fourth Industrial Revolution

It’s not possible to slow technology innovation, as the Luddites found out in the 19th century. Technological change has developing countries and emerging economies an opportunity to use technology to leapfrog peer countries to drive growth and stabilize public finances:

  • Leapfrog of intermediate technologies through government adoption of digital technologies and changes in government regulation to promote these technologies
  • Adopt strategic Public-Private Partnerships
  • Fund country innovation and entrepreneurship in new technologies to create “developed in your country your context” digital solutions and business models
  • Invest in mobile and Internet of Things (IoT) technology to enable smart transportation, manufacturing and agriculture to optimize production
  • Focus on public investments to diversify some markets to adapt to global economic changes
  • Increase fiscal transparency to encourage investment and stability
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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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