Industrial transformation poses a threat to traditional economy sectors

3 september 2019

How is the 4th industrial revolution changing the BRICS economy? What opportunities are opening up for the countries, and how to avoid the negative consequences of the transformation? These topics were discussed by the participants of the round table Development of a Joint Development Strategy for the BRICS countries during the 4th Industrial Revolution, held in the Analytical Center.

The experts noted that the industrial revolution involves the whole global economy and brings along opportunities and challenges. In particular, new business models are emerging in the markets, companies are modifying the innovation implementation process, and intangible assets become more important for the business than tangible assets.

However, according to the participants in the discussion, the 4th industrial transformation process is accompanied by general uncertainty and increasing inequality between countries and within them. Moreover, the mass introduction of digital technologies is becoming a threat for the traditional economic sectors, leading to changes in the labor market. As experts clarified, this is an area of risk for the BRICS countries. The countries of the group currently lack the developed human capital of Western countries, and the workforce does not have the necessary qualifications required by the fast-changing reality. 

The experts fear that the 4th industrial revolution will hinder the BRICS countries' involvement in the global economy, since, for example, digitalization reduces the demand for cheap workforce, which is prevalent in China and India.

The round table participants also noted that in BRICS countries infrastructure is not sufficiently developed, especially in the context of digital technologies, which poses a threat to full transition to the new development model.