There is no doubt that we are now living in a new era formed by the emergence of the Fourth Industrial Revolution (4IR), in which global decision-makers and investors face several challenges related to means of dealing with this revolution and its comprehensive change in various economic sectors.
This requires adaptation to achieve the objectives of enterprises, companies, and even individuals. The basis and the difference in the adaptation between companies and institutions involve having a vision and visionary plans for 4IR, which many feel will reshape most aspects of life, whether related to the life of an individual or his work environment, and of the mechanisms for developing general government policies related to education, healthcare, etc.
Thus, it may be useful to understand the impact of 4IR on society and individuals in terms of communication, work, and life, and how it restructures governance and regulations and the way and speed of decision-making in developed and developing countries.
4IR has the potential to have a positive global impact on the social, economic, political, and security levels, but this positive impact naturally faces many challenges in the foreseeable future, requiring governments in developing countries, which lack sufficient human and material resources, to have sufficient knowledge of the level of challenge. It is also important that governments balance the opportunities and challenges of 4IR, as delays in adapting to them will create a large gap in the economy and labor market.
One of the biggest challenges faced by governments will be keeping pace with emerging technologies. Many of these products, such as IoT, artificial intelligence, advanced sensors, massive data and biotechnology, quantitative computing, and digital transformation, have no clear mechanism that regulates their work. Meanwhile, the geographical aspects of these technologies are ambiguous and thus reduce governments’ role in drawing policies that establish appropriate governance for the use of these technologies.
It is therefore necessary to create new governance up to the level of the formation of 4IR to ensure optimal large-scale utilization of modern technologies based on cooperation between the public and private sectors so as to ensure that governments adapt to them without inhibiting creative and innovative thought in the private sector.
At the overall policy level, 4IR technologies may have a wide-ranging impact on the labor market. Many jobs are expected to shrink or disappear, but many jobs that require new skills compatible with the tsunami technology will be created. There will also be a significant impact on fiscal and monetary policies, as many jobs will be performed by robots or managed electronically. Such developments will make it difficult to calculate tax or control these works, which in turn will affect fiscal policy. Similarly, virtual currencies or Fintech, which pose a challenge to traditional payment service companies, may have a broad-ranging impact on monetary policy.
It is therefore very difficult to predict the impact of 4IR at the policy level if we recognize that this revolution will have an impact on raising productivity and revenue while reducing production costs.
The 4IR has recently entered the implementation phase in the region, and Saudi Arabia’s Vision 2030 illustrates a good opportunity to benefit from it. The Minister of Communications and Information Technology has pointed out that 4IR will be essential in achieving Vision 2030 objectives, given that the Kingdom is undergoing a process of comprehensive change and reform at all levels.
It may be useful for some of the Kingdom’s leading universities to establish specialized laboratories in all the tracks of the industrial revolution, with the active involvement of the private sector. Strategic partnership with universities that have a great sale in the tracks of 4IR, such as Massachusetts Institute of Technology (MIT), may be one of the best options for the adoption of this revolution, as what has already been done by some countries in the region.
Hussain Abusaaq is Chief Economist and Head of Research at KPMG Al Fozan & Partners in Saudi Arabia
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