A new report launched today by the World Economic Forum reveals that only 25 countries are in the best position to gain as production systems stand on the brink of exponential change. Recognizing the impact of the Fourth Industrial Revolution and emerging technologies on new production systems and business models, the Readiness for the Future of Production Report 2018, developed in collaboration with A.T. Kearney, provides a snapshot of today’s global production landscape along with potential responses.
The new framework is made up of two main components: Structure of Production, which measures a country’s scale and complexity of production; and Drivers of Production – the key enablers that position a country to capitalize on the Fourth Industrial Revolution to transform production systems. Recognizing that each country has its own unique goals and strategy for production and development, participants are assigned to one of four archetypes: Leading (strong current base, high level of readiness for the future); High Potential (limited current base, high level of readiness for the future); Legacy (strong current base, at risk for the future); or Nascent (limited current base, at risk for the future).
Helena Leurent, Head of the Future of Production System Initiative of the World Economic Forum, said: “Our work seeks to shape a future where new technologies in production systems help unlock human potential, tackle and solve challenges that have previously been insurmountable, and where all benefit. This report is intended to catalyse discussion between public and private sectors on the factors and conditions required, inform the development of modern industrial strategies, and define areas of collaborative action.”
Along with further qualitative analysis, the initial assessment reveals eight main findings:
Global transformation of production systems will be a challenge, and the future of production could become increasingly polarized in a two-speed world. The 25 countries in the Leading archetype account for over 75% of global manufacturing value added (MVA), while 90% of the countries from Latin America, Middle East, Africa and Eurasia included in the assessment have a low level of readiness.
Different pathways will emerge as countries navigate the transformation of production systems. Advanced manufacturing will not be the chosen path for all: some may seek to capture traditional manufacturing opportunities in the near term, while others will pursue a dual approach, or prioritize other sectors altogether.
All countries have room for improvement. No country has reached the frontier of readiness, let alone harnessed the full potential of the Fourth Industrial Revolution in production. While there are early leaders to learn from, these countries are also still navigating the early stages of transformation.
Common challenges within each archetype indicate potential future pathways for Leading, Legacy, High Potential and Nascent countries. Countries can learn from each other, while pursuing their own unique strategy.
Technological advancement brings the potential for leapfrogging, but only a handful of countries are positioned to capitalize. Lagging countries can potentially enter emerging industries at a later stage without the legacy costs of earlier investment, but only if they have the right set of capabilities and develop effective strategies for capturing leapfrogging opportunities most relevant to them.
The Fourth Industrial Revolution will trigger selective reshoring, nearshoring and other structural changes to global value chains. Emerging technologies will change the cost-benefit equation for shifting production activities and, ultimately, impact location attractiveness. All countries must develop unique capabilities to make them attractive production destinations and capitalize on these shifts.
Readiness for the future of production requires global, not just national, solutions. Globally connected production systems need not only sophisticated technology but also standards, norms and regulations that cross technical, geographical and political boundaries, to release efficiencies and make it easier to do business across global value chains.
New and innovative approaches to public-private collaboration are needed to accelerate transformation. Every country faces challenges that cannot be solved by the private sector or public sector alone. New approaches to public-private collaboration that complement traditional models are needed to help governments quickly and effectively form partnerships that unlock new value.
Johan Aurik, Managing Partner and Chairman of A.T. Kearney, said: “In a changing production landscape, each country will need to differentiate itself, capitalize on competitive advantages and make wise trade-offs in forming its own unique strategy for the future of production. Given the speed and scale of changes occurring in the environment, the new diagnostic and benchmarking tool can help raise awareness and sharpen a country’s response.”
Shaping the Future of Production System Initiative
This report is a key contribution to the World Economic Forum System Initiative on Shaping the Future of Production. The initiative brings together global leaders and decision-makers in seeking to address how the transformation of production systems, from R&D to the consumer, can drive innovation, sustainability and employment, to benefit all people.
Business disorder between Europe and U.S.
The European Union remains cautious in the economic battle with the White House. U.S. President Donald Trump continues to pursue his protectionist policies in international trade system. This has led to raising concerns and serious discontent among the United States’ European partners.
Disputes between the United States and other countries around the world are continuing on trade and economic issues. The fact is that U.S. President Donald Trump intends to exacerbate tensions until the presidential elections of 2020. Many international experts and analysts believe that a major part of the economic approach to the world of Trump has an electoral and political goal.
Many international analysts now talk about the conflicts between the United States and Europe over imposing sweeping steel and aluminum tariffs as a transatlantic “trade war”.
Conflicts that may extend in the near future and affect the widespread relations between Washington and Europe.
On the other hand, the authorities of Germany, Britain and France have not taken a proper approach to the policies of the President of the United States.Though politicians such as Emmanuel Macron, Angela Merkel and Theresa May seek to manage the situation and prevent the exacerbation of tensions with Washington, but people, business owners and European opposition parties are so angry at Trump and the U.S. government that the European troika’s authorities aren’t capable to control or even hide it.
One of the most important reasons for the continuation of Trump’s economic policies in the world is the passivity of European leaders against the White House. Under such circumstances, Europe has threatened to retaliate against the U.S. if Trump imposes steel and aluminum tariffs on European exports.
After Trump made his first announcement on the tariffs, European Commission President Jean-Claude Juncker threatened to put tariffs on American goods in response to Trump’s decision. That could decrease demand for those products inside EU borders and consequently lead to U.S. workers losing their jobs. But practically, European countries did not do anything about this.
Although some European citizens thought that the Chancellor of Germany would have a more determined approach than other European politicians, this was also a mistake!The German Chancellor stated that European Union member states must give the EU trade commissioner a clear mandate for negotiations with the United States over a long-term exemption from U.S. metal tariffs. Markel added: “Of course, we think it’s important that there are exemptions not only for a limited period of time … So far, we have had a very united stance, namely that we view these tariff demands as unjustified and that we want a long-term exemption.”
The fact is that Merkel’s implicit threat, which she didn’t address directly and explicitly because of her conservative policy towards the United States, is the same as the “European countermeasures” against the United States.
For months now, there have been months of anti-European measures taken by the White House and customs duties on European aluminum and steel. However, European countries have preferred to keep Silent instead of confronting Washington!
Indeed, the prolonged U.S.-EU talks on steel and aluminum tariffs is going to increase the dissatisfaction and anger among the European public opinion. It will also affect the performance of American companies in Europe.
First published in our partner Tehran Times
Citizen Capitalism: How a Universal Fund can provide Influence and Income to all
In the face of growing wealth inequality worldwide, more and more people are discussing alternatives to the current laissez-faire capitalism status quo. Tamara Belinfanti, Sergio Gramitto and the late Lynn Stout offer up their own solution in Citizen Capitalism: How a universal fund can provide influence and income to all.
Our authors have devised up a concept they call the Universal Fund. It’s like a sovereign wealth fund, but is privately created and funded via private ordering. That means that the Universal Fund is to be created from donations of stocks by companies and philanthropists. The government would hence be uninvolved; the Universal Fund is not a socialist venture. Rather, it is in part modeled on the structure of NGOs like the Sierra Club and the Red Cross. The Fund would provide an annual dividend to every citizen, with no maximum income cap. Though it may seem absurd to send welfare payments to the wealthy, it’s politically savvy framing. A free public college bill was passed in ultraconservative Tennessee thanks to having no maximum income cap; conservative detractors weren’t able to use the “class warfare” and “welfare queen” arguments. It should be noted that charitable tax deductions, estate tax reductions and lowered tax brackets would act as a de facto government incentive for the wealthy to donate to the Universal Fund.
The goals of the Universal Fund would be to decrease wealth inequality, encourage long-term investment and increase civic engagement in corporate culture. On the last point, the authors remind us that, “The top 10% [of wealthiest Americans] hold more than 90% of all shares.” Even in regards to the other 10% of shares owned, most of them are passively owned. Most small-time investors don’t have time to vote in the annual general meetings of every company in which they are invested in. Thus, boardroom votes are dominated by two shareholder proxy advisory firms and individual investors who own a substantial percentage of shares, as well as fund portfolio & hedge fund managers.
These Wall Street elites naturally tend to vote based upon their elitist interests. Thus, they usually make decisions that are insane in terms of employee welfare, long-term corporate growth, executive pay and the environment. For example, `the authors remind us of the recent case of Martin Shkreli, the hedge fund manager who acquired Turing Pharmaceuticals and then raised AIDS medication prices from $13.50 to $750. This is the embodiment of the Reagan-era Golden Rule of maximizing shareholder value. Not only is this Gordon Gekko truism objectively crazy, it’s actually legally unfounded. Contrary to what you hear on CNBC or Fox Business, there’s no legal requirement that companies only focus on maximizing shareholder value. The book relates the following quote from Supreme Court Justice Samuel Alito comments in the recent case Burwell v. Hobby Lobby:“Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so.”
CITIZEN CAPITALISM points to the ongoing successes of the sovereign wealth funds of Norway and Alaska, an ultraliberal and an ultraconservative society, respectively. The Alaskan fund generally provides each citizen with a dividend payment of a few thousand dollars each year, via the state’s oil revenues. The Government Pension Fund Norway is a more pertinent example, since it’s funded through a $1T stock portfolio. Norway is not only able to fund its citizens’ pensions through the Fund, but also exert a moral influence on the market. The Fund boycotts various egregious companies, like cigarette manufacturers, and will sell its shares in a company that gets exposed for abusive practices, like say employing child labor. Our authors likewise want the Universal Fund to use a carrot-and-stick approach in regards to corporate ethics.
The thesis of CITIZEN CAPITALISM is, as the title suggests, rooted in optimism for capitalism. Though they write about the success of socialist program in Alaska specifically, a conservative state in the US, the authors are convinced that a sovereign wealth fund bill could never be passed in Congress. Recent polls and election results, however, show that Americans are starting to overwhelmingly favor ambitious government-program proposals like Medicare for All and a Green New Deal. As I wrote before, the Universal Fund would mostly be feasible due to tax incentives; these government incentives would likely need to be greatly expanded in order to encourage enough stock donations to build the Fund to a substantial size. Even America’s greatest philanthropists still stockpile billions of dollars in their offshore bank accounts. Thus, one shouldn’t expect the Universal Fund or other private UBI schemes to become a replacement for state management of wealth inequality through programs like public school funding and marginal taxation. Nonetheless, CITIZEN CAPITALISM is a stimulating little primer for rethinking the relationship between Wall St and Main St, managing the looming crises of a rapidly aging workforce and automation, plus the balancing of private and public sectors in regards to solving societal problems.
Working for a brighter future
Authors: Cyril Ramaphosa and Stefan Löfven*
We stand at a crossroads as seismic shifts take place in the world of work.
Technological advances are changing the nature of many jobs, and leading to the need for new skills. The urgently required greening of economies to meet the challenge of climate change should bring further employment possibilities. Expanding youth populations in some parts of the world, ageing populations in others, may affect labour markets and social security systems.
On one path, countless opportunities lie ahead, not only to create jobs but also to improve the quality of our working lives. This requires that we reinvigorate the social contract that gives all partners a fair stake in the global economy.
On the other path, if we fail to prepare adequately for the coming challenges, we could be heading into a world that widens inequalities and leads to greater uncertainty.
The issues are complex. As co-chairs of the Global Commission on the Future of Work we, and our fellow members of the Commission – leading figures from business and labour, think tanks, government and non-governmental organizations – have been examining the choices we need to make if we are to meet the challenges resulting from these transformations in the world of work and achieve social justice.
We call for a new, human-centred approach that allows everyone to thrive in a carbon neutral, digital age and affords them dignity, security, and equal opportunity. It must also meet the changing needs and challenges facing businesses and secure sustainable economic growth.
The opportunities are there to improve working lives, expand choice, close the gender gap and reverse the damage that has been wreaked by global inequality.
But it will need committed action on the part of governments and social partners to turn those opportunities into reality.
So how do we achieve this? Three areas of increased investment are needed:
First, we have to invest more in people’s capabilities: This means establishing an effective lifelong learning system that enables people to skill, reskill and upskill – a system that spans early childhood and basic education through to adult learning. It also means investing in the institutions that will support people as they go through transitions in their working lives – from school leavers to older workers. Making gender equality a reality and providing social protection from birth to old age are also critical. These social investments will not only increase productivity. They will also allow for a more inclusive growth, where informal workers and business can both benefit from and contribute to a sound formal economy.
Second, we must invest more in the institutions of work – including the establishment and implementation of a Universal Labour Guarantee. This will ensure that all workers enjoy fundamental rights, an “adequate living wage”, limits on their hours of work and safe and healthy workplaces. Linked to this, people need to have more control over their working time – while meeting the needs of enterprises – so that they can fulfill the full range of their responsibilities and develop their capabilities.
Collective representation through social dialogue between workers and employers needs to be actively promoted. Workers in the informal economy have often improved their working conditions by organizing. Unions need to expand membership to informal workers, whether they work in the rural economy, on the city streets of an emerging economy or on a digital platform. This is a critical step towards formalization and a tool for inclusion.
We’re also calling for governance systems for digital labour platforms that will require these platforms and their clients to respect certain minimum standards.
Finally, we need to invest more in decent and sustainable work. This includes incentives to promote investments in key areas, such as the care economy, the green economy, and the rural economy, as well as high-quality physical and digital infrastructure. We must also reshape private sector incentive structures to encourage a long-term, human-centred approach to business. That includes fair tax policies and improved corporate accounting standards. We need to explore new measures of country progress to track important aspects of economic and social advancement.
Beyond these critical investments, there is a further opportunity: to place discussions about the future of work at the heart of the economic and social debates taking place at the high table of international policy-making. This could revitalize the multilateral system at a time when many are questioning its legitimacy and effectiveness.
Yet none of this will happen by itself. If change is the opportunity, we must seize the moment to renew the social contract and create a brighter future by delivering economic security, equal opportunity and social justice – and ultimately reinforce the fabric of our societies.
Stefan Löfven, Prime Minister of Sweden, co-chairs of the ILO Global Commission on the Future of Work
ICTP to Inaugurate New Quantum Technologies Institute
On 25 March, UNESCO’s Abdus Salam International Centre for Theoretical Physics (ICTP) will launch a new institute dedicated to the...
The Future of Mountain Tourism
“The Future of Mountain Tourism” is the theme of the 4th edition of the UNWTO Euro-Asian Mountain Tourism Conference (2-5...
A new approach to information management
The American people, both directly and through their representatives, are more focused on organizing and conducting the work of intelligence...
Trade agreements: What the EU is working on
The EU negotiates various trade deals all over the world, but they depend on approval by the European Parliament. Read...
Suicide attack in Iran frames visit to Pakistan by Saudi crown prince
This week’s suicide attack on Revolutionary Guards in Iran’s south-eastern province of Sistan and Baluchistan, the second in two months,...
Defense: European Commission paves the way for first joint industrial projects under EU budget
The European Commission formally initiated work with Member States to finance joint industrial projects in the field of defence. Once...
Raffles Hotels & Resorts launches luxury sleep rituals
Raffles Hotels & Resorts is raising the bar when it comes to rest with the launch of an intuitive and...
Americas3 days ago
Why Venezuela’s People Are Suffering
Tech News2 days ago
How can artificial intelligence enhance education?
Energy2 days ago
The Lebanon, natural gas and local political equilibria
Reports3 days ago
Colombia’s development agenda needs to prioritize productive transformation
South Asia2 days ago
Kashmir: From legal rigmarole to a solution
Defense1 day ago
Nasr Missile and Deterrence Stability of South Asia
Terrorism3 days ago
Despite falling attacks, ISIL terrorists remain ‘global threat’
Reports2 days ago
Boosting adult learning essential to help people adapt to future of work