The Fourth Industrial Revolution A Davos Reader FOREIGNAFFAIRS.COM Portrait by renowned illustrator Joseph Adolphe. WILMINGTON TRUST RENOWNED INSIGHT “In a world where knowledge is power, investment intelligence is the most valuable currency.” In the spirit of bringing intellectual Aligned impressions. Much capital to our clients, we recently of this spirited talk reaffirmed hosted a captivating conversation Wilmington Trust’s core narrative, between Foreign Affairs editor favoring U.S. stocks and the country’s Gideon Rose and Fareed Zakaria, “THE MIDDLE EAST CNN host and Washington Post IS NOT THAT columnist. The U.S. economy was the IMPORTANT TO THE GLOBAL ECONOMY.” first topic, and Rose was cautiously – Fareed Zakaria, October 2015 hopeful, noting that pessimism can negatively impact portfolios. dominant economy. In a low-return Tony M. Roth On global growth. Focusing environment, we see the preeminence of M.A., J.D., LL.M. (Tax) internationally, the two agreed current income. For bonds in particular, Chief Investment Officer China’s economy is growing slowly. we expect challenges to persist, yet see Tony brings more than 20 years However, Zakaria stressed that opportunity for yield to be a durable of experience to bear on client portfolios each and every day. economic barometers such as GDP part of total return. We recommend He leads the team that executes don’t capture intangibles such as portfolios have an allocation for our six-stage investment process, quality of life or internet access, adding emerging markets, but expect short- which features an innovative U.S. that the “information economy” term struggles with growth, inflation, sector equity allocation approach will revolutionize industries such as and currency depreciation. and a platform of institutional- healthcare and education. Both felt For insight into the global economy quality solutions. 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Thanks to the work of all our hands. eni.com Q_2654_177e8x254_ForeignAff_2.indd 1 21/12/15 18:55 January 2016 Introduction Gideon Rose The Fourth Industrial Revolution Klaus Schwab THE DRIVERS November/December 2012 How to Make Almost Anything cover photo: courtesy reuters courtesy photo: cover The Digital Fabrication Revolution Neil Gershenfeld March/April 2014 As Objects Go Online The Promise (and Pitfalls) of the Internet of Things Neil Gershenfeld and JP Vasseur May/June 2013 The Rise of Big Data How It’s Changing the Way We Think About the World Kenneth Neil Cukier and Viktor Mayer-Schoenberger March/April 2014 The Mobile-Finance Revolution How Cell Phones Can Spur Development Jake Kendall and Rodger Voorhies November/December 2013 Biology’s Brave New World The Promise and Perils of the Synbio Revolution Laurie Garrett July/August 2015 The Robots Are Coming How Technological Breakthroughs Will Transform Everyday Life Daniela Rus THE IMPACT July/August 2014 New World Order Labor, Capital, and Ideas in the Power Law Economy Erik Brynjolfsson, Andrew McAfee, and Michael Spence July/August 2015 Will Humans Go the Way of Horses? Labor in the Second Machine Age Erik Brynjolfsson and Andrew McAfee July/August 2015 Same as It Ever Was Why the Techno-optimists Are Wrong Martin Wolf October 31, 2014 The Future of Cities The Internet of Everything Will Change How We Live John Chambers and Wim Elfrink July/August 2015 The Coming Robot Dystopia All Too Inhuman Illah Reza Nourbakhsh January/February 2011 The Political Power of Social Media Technology, the Public Sphere, and Political Change Clay Shirky March/April 2011 From Innovation to Revolution Do Social Media Make Protests Possible? Malcolm Gladwell and Clay Shirky THE POLICY CHANGES July/August 2015 The Next Safety Net Social Policy for a Digital Age Nicolas Colin and Bruno Palier August 12, 2015 The Moral Code How To Teach Robots Right and Wrong Nayef Al-Rodhan March/April 2014 Privacy Pragmatism Focus on Data Use, Not Data Collection Craig Mundie January/February 2015 The Power of Market Creation How Innovation Can Spur Development Bryan C. Mezue, Clayton M. Christensen, and Derek van Bever January/February 2015 The Innovative State Governments Should Make Markets, Not Just Fix Them Mariana Mazzucato November/December 2015 Food and the Transformation of Africa Getting Smallholders Connected Kofi Annan and Sam Dryden Introduction Gideon Rose January 20, 2016 From social media to the Internet of Things, digital fabrication to robotics, virtual reality to synthetic biology, new technologies are racing forward across the board. Together they are ripping up the rule book for people, firms, and governments alike. Mastering this so-called Fourth Industrial Revolution is the theme of the World Economic Forum’s 2016 Annual Meeting, for which this special collection serves as background reading. Klaus Schwab kicks things off with an overview of the topic, followed by sections on the technological trends driving the revolution; those trends’ economic, social, and political impacts; and the resulting challenges for policy. Drawn from the pages of Foreign Affairs and the pixels of ForeignAffairs.com, the articles feature world-class experts explaining crucial issues clearly, directly, and authoritatively. Read Neil Gershenfeld on 3-D printing, John Chambers on the Internet of Things, Daniela Rus and Illah Nourbakhsh on robotics, Laurie Garrett on synthetic biology, and Kenneth Cukier and Viktor Mayer-Schoenberger on big data. Follow debates between Martin Wolf and Erik Brynjolfsson, Andrew McAfee, and Michael Spence on how new the new economy really is, and between Clay Shirky and Malcolm Gladwell on the political power of social media. Learn what Clayton Christensen thinks about the prospects of entrepreneurial innovation in the developing world, how Craig Mundie sees the future of privacy protection, and why Kofi Annan and Sam Dryden believe IT is transforming African agriculture. We’re delighted to showcase all these and other highlights of our coverage of a rapidly changing world. They’ll bring you up-to-date on some of the most important developments going on around us. But at this rate, by the time we’ve truly gotten a handle on the Fourth Industrial Revolution, we’ll probably be well on the way to the Fifth. GIDEON ROSE is Editor of Foreign Affairs. January 20, 2016 The Fourth Industrial Revolution What It Means and How to Respond Klaus Schwab January 20, 2016 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, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society. The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.