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Industrial Development Report 2020 Report Development Industrial Industrializing in the digital age digital in the Industrializing Industrial Development Report 2020 Report Development Industrial Industrial Development Report 2020 Industrializing in the digital age Industrial Development Report 2020 Industrializing in the digital age Copyright © 2019 United Nations Industrial Development Organization The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Designations such as “developed,” “developing,” “industrialized,” “frontrunner,” “follower,” “latecomer” and “laggard” are intended for statistical convenience and do not necessarily express a judgment about the state reached by a particular country or area in the development process. The mention of firm names or commercial products does not imply endorsement by UNIDO. Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a copy of the publication containing the quotation or reprint. For reference and citation, please use: United Nations Industrial Development Organization, 2019. Industrial Development Report 2020. Industrializing in the digital age. Vienna. UNIDO ID/449 Sales Number: E.20.II.B.49 ISBN: 978-92-1-106456-8 eISBN: 978-92-1-004602-2 Contents Page xii Foreword xiii Acknowledgements xv Technical notes and abbreviations xvi Glossary 1 Overview Industrializing in the digital age 1 Why should we care about new technologies? 2 What are the new technologies shaping the industrial landscape? 4 Who is creating, and who is using ADP technologies? 10 What is needed to engage with ADP technologies? 15 What dividends can ADP technologies deliver? 22 What policy responses can make ADP technologies work for ISID? 27 Notes Part A Industrializing in the digital age 31 Chapter 1 Advanced digital production technologies and industrial development: A global perspective 31 Linking industrialization to new technologies: Basic concepts 37 The new technologies shaping the industrial landscape 47 Characterizing the global landscape of ADP technologies 55 New windows of opportunity? Catching up, stage-skipping and leapfrogging 60 Manufacturing is still important 62 Notes 65 Chapter 2 The evolving landscape of industrialization under advanced digital production technologies 65 ADP technologies and the structure of manufacturing 75 ADP technologies and the “skills of the future”: Risks of digitalization 82 ADP technologies and inclusive industrialization: Direct, indirect and net effects of the use of industrial robots 87 Notes iii Page 89 Chapter 3 How manufacturing firms can absorb and exploit advanced digital production technologies 90 ADP technologies: What’s in it for firms in developing countries? CONTENTS 94 Field case studies: A qualitative approach 99 A micro-level perspective based on surveys 110 Getting the most out of it: Capabilities for industrializing in the digital age 115 Notes 117 Chapter 4 Responding to advanced digital production technologies 118 Characterizing strategic responses to ADP technologies 121 Basic elements of strategy design and development 126 Fostering capabilities to adopt ADP technologies 136 In sum 139 Notes Part B Trends in industrial development indicators 143 Chapter 5 Industrial trends 143 Evolution of world manufacturing value added 145 Evolution of world manufacturing exports 148 Evolution of world manufacturing employment 149 Evolution of the world’s manufacturing labour productivity 152 Sectoral analysis of world manufacturing value added 155 Chapter 6 The Competitive Industrial Performance Index 155 The Competitive Industrial Performance Index 155 Main results 160 Results by geographical region and development stage 162 Sustainable Development Goal 9 165 Notes Annexes 169 A.1 Producing the landscape of production and use of ADP technologies (Chapter 1) 172 A.2 Knowledge-intensive business services and robots (Chapter 2) 174 A.3 Surveys of the adoption of digital production technologies by industrial firms (Chapter 3) 179 A.4 Summary of strategic responses to ADP technologies in 11 countries (Chapter 4) 185 B.1 Rankings on the three dimensions of the Competitive Industrial Performance Index, by geographical regions 190 B.2 Sustainable Development Goals and the Competitive Industrial Performance Index 194 C.1 Country and economy groups 196 C.2 Classification of manufacturing sectors by technology groups iv Page 197 References CONTENTS Boxes 40 1.1 Automation and digitalization: From the first to the fourth industrial revolution 42 1.2 Collaborating with the robots 42 1.3 Manufacturing complex metal parts through 3D printing 43 1.4 Using the Internet of Things for remote control of water treatment plants 43 1.5 Improving the accuracy of rubber production through cloud computing and big data analytics 47 1.6 Improving inclusiveness with new affordable solutions for marginalized groups 59 1.7 Leapfrogging and leadership changes: Examples from the steel industry 61 1.8 Leapfrogging to ADP technologies in steel production 69 2.1 Fostering competitiveness through ADP technologies in South African machinery, equipment and electronics industry 73 2.2 Entering global manufacturing through the provision of knowledge-intensive services 76 2.3 Skills of the future for manufacturing 119 4.1 Highly industrialized economies differ in their strategic stances for smart manufacturing 124 4.2 Cooperation for a new digitalization strategy for Kazakhstan 125 4.3 Sino-German cooperation for smart manufacturing 128 4.4 Priorities for digitalization in Africa 129 4.5 Digitalization as a prerequisite for smart manufacturing 130 4.6 Nuevo León 4.0: A regional initiative around smart manufacturing in Mexico 131 4.7 Fostering the development and adoption of cloud computing in Zhejiang province 132 4.8 Fostering SME participation in smart manufacturing: The C4i4 Lab in Pune, India 133 4.9 Malaysia’s Industry4WRD Readiness Assessments 135 4.10 Creative spaces can advance and democratize manufacturing development Figures 2 1 New technologies and inclusive and sustainable industrial development 3 2 Broad technological domains of the fourth industrial revolution 4 3 Production technologies: From the first industrial revolution to the fourth 5 4 Building blocks of ADP technologies 7 5 Four generations of digital production technologies applied to manufacturing 8 6 Adoption of ADP technologies is still limited among developing countries 9 7 Rates of adoption of key ADP technologies differ across industries in Europe 11 8 Engaging with ADP technologies requires increasing industrial capabilities 14 9 Production capabilities are key for the adoption of technological process innovation 15 10 Expected dividends from ADP technologies 16 11 The adoption of ADP technologies is positively associated with productivity 17 12 Economies active in ADP technologies grow faster than the rest, across all income groups v Page 18 13 Manufacturing industries in economies actively engaging with ADP technologies are more integrated with KIBS, at all incomes 18 14 Aggregate impact of the increase in industrial robot use in individual industries on world CONTENTS employment 20 15 ADP technologies have above-average green content 20 16 The majority of firms engaging or ready to engage with ADP technologies agree that these will lead to environmental improvements 22 17 Female workers are more likely to face a higher computerization risk than men if they are employed in food, textiles and chemicals 32 1.1 New technologies and ISID: A conceptual framework 34 1.2 The rise of automobiles and personal computers in the United States: Consumption and production 35 1.3 Economy-wide income creation by new industries: Automobiles and personal computers in the United States 35 1.4 The global rise of electric vehicles: Projected sales to 2040 36 1.5 Larger investments in manufacturing research and development are associated with higher production efficiency 36 1.6 From production efficiency to ISID 38 1.7 Broad technological domains of the fourth industrial revolution 39 1.8 Production technologies: From the first industrial revolution to the fourth 41 1.9 Building blocks of ADP technologies 44 1.10 Expected dividends from ADP technologies 45 1.11 Main circular economy processes 48 1.12 Patenting, exporting and importing of ADP technologies: Different roles but similar concentration of the top 50 economies 49 1.13 Changes at the top with different indicators of patent, export and import activity in ADP technologies 51 1.14 The production and use of ADP technologies are concentrated in a few frontrunners 52 1.15 Engaging with ADP technologies requires increasing industrial capabilities 53 1.16 Within income groups, economies actively engaging with ADP technologies show much greater industrial capabilities than the rest 53 1.17 The production of ADP technologies takes off after 2005 54 1.18 Economies active in ADP technologies grow faster than the rest, across all income groups 55 1.19 ADP technologies have above-average green content 56 1.20 Four generations of digital production technologies applied to manufacturing production 57 1.21 Leapfrogging in digital technologies for manufacturing production 66 2.1 Rates of adoption of key ADP technologies differ across industries in Europe 67 2.2 The adoption of key ADP technologies in manufacturing is positively
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