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The Fourth Industrial Revolution: reshaping innovation policies for sustainable and inclusive growth

Whereas economic growth is recognized as the most important instrument for the decline in global poverty levels in the past 50 years, not all countries have been equally successful at reducing poverty, and income inequality has risen considerably within and among countries. Moreover, current production processes cannot be sustained within planetary boundaries: resource depletion, climate change, massive increases in waste production and pollution are challenges that have endured. The 2030 Agenda for Sustainable Development calls upon countries to pursue a different kind of growth, one that is socially inclusive and environmentally sustainable.

The driving force of the Fourth Industrial Revolution, or Industry 4.0, will be innovation – experimenting with different ways to make use of a range of emerging physical, digital and biological technologies that transform how we produce, consume, and interact and, ultimately, how we meet the Sustainable Development Goals. New technologies include remarkable advances in artificial intelligence, robotics, automation, the Internet of Things, 3D printing and additive manufacturing, nanotechnology, and biotechnology.

The opportunities and challenges of the Fourth Industrial Revolution and how effective innovation and industrial policies can steer it towards sustainable and inclusive growth were the focus as experts and members of the UNECE Team of Specialists on Innovation and Competitiveness Policies met in Geneva on 1–2 November 2018.

The benefits that the Fourth Industrial Revolution can bring to the world economy overall and to individual countries ready to harness its opportunities are large and, some speakers argued, unprecedented. New business ideas building on these technological advancements promise transformative gains in efficiency and productivity. A representative of the World Economic Forum highlighted that the global market for the Internet of Things would amount to an estimated US$14.4 trillion by 2022. 

Countries with economies in transition may be able to leapfrog to the latest technologies and standards, bypassing intermediate stages at a fraction of the cost. A considerable increase of Artificial Intelligence applications in business, the public sector and society has not only a potential to improve the quality and efficiency of various operations, but also to increase growth and improve and create new business opportunities and jobs. The McKinsey global Institute reports that one third of new jobs created in the United States in the past 25 years were types that did not exist, or barely existed, in areas including IT development, hardware manufacturing, applications creation, and IT systems management.

Yet countries in the UNECE region face many challenges to capture these benefits – depending on level of development, geography, governance, and skills. The level and quality of employment with the possible significant rise of unemployment and precarious employment contracts, the lack of the right skills and education, and the increasing income distribution disparities among regions and within countries are but a few of the challenges the Fourth Industrial Revolution could bring. To reduce the potential risks and leave no one behind requires concerted attention from policy makers. To be sustainable, the impacts of Industry 4.0 need to be managed through a broad range of policies – innovation and industrial policies, competition policy, education and fiscal policy.  

One of the outcomes of the Team of Specialists meeting is the establishment of a Task Force for the development of high level innovation policy principles. The Team also agreed to take part in the development of a sub-regional Innovation Policy Index, to assess the quality and scope of innovation policies and institutions across a group of countries. For the initial piloting of the index, Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine have expressed their wish to take part.

For more information, please visit: www.unece.org/ceci/ic.html