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Industry 4.0: which countries will thrive?

3.3 minutes | 24 Sep 2018

Global network connections in industry 4.0

Manufacturing and production systems are changing at un unprecedented rate, but not all countries are up to speed. A new report from The World Economic Forum (WEF) and A.T. Kearney reveals that only 25 countries are poised to take advantage of Industry 4.0, or as the report calls it, 4IR.

A closer look

The research assessed 100 countries and economies across all regions and stages of development, and how well positioned they are to gain from emerging technologies, such as linked sensors – also known as the Internet of Things – artificial intelligence, robotics, blockchain, wearables and 3D printing, or as it’s also called, additive manufacturing.

These technologies are pushing new production techniques, business models and value chains that will completely take global production to a new level. The speed and breadth at which this is happening brings a layer of complexity to an already ambitious goal of developing and implementing industrial strategies that enhance productivity.

Each country has its own goals and strategy, so a like-for-like comparison is not appropriate. With this in mind, participants have been assigned to one of four categories:

  • Leading: strong current base, high level of readiness for the future
  • High Potential: limited current base, high potential for the future
  • Legacy: strong current base, at risk for the future
  • Nascent: limited current base, low level of readiness for the future

Leading countries: top 10 performers

Looking at the leading archetype, the study considers the current baseline of production. These countries, while the leaders, must continue to push current boundaries in technology.

Structure of Production

  1. Japan
  1. Korea Republic
  1. Germany
  1. Switzerland
  1. China
  1. Czech Republic
  1. United States
  1. Sweden
  1. Austria
  1. Ireland


Next, the study considers the key enablers that position a country to take advantage of Industry 4.0:

Drivers of Production

  1. United States
  1. Singapore
  1. Switzerland
  1. United Kingdom
  1. Netherlands
  1. Germany
  1. Canada
  1. Sweden
  1. Denmark
  1. Finland


High-potential countries ranked

Countries in the high potential archetype have capabilities that can be adapted to strengthen their structure of production and diversify their economy.

Structure of Production

  1. Norway
  1. Portugal
  1. New Zealand
  1. United Arab Emirates
  1. Hong Kong SAR
  1. Australia
  1. Qatar


High-potential countries pursuing smart manufacturing:

Drivers of Production

  1. Hong Kong SAR
  1. Australia
  1. Norway
  1. United Arab Emirates
  1. New Zealand
  1. Portugal
  1. Qatar


Legacy countries ranked

Legacy countries need to invest in technology platforms and innovation capacity. While they currently have a relatively strong base, they risk losing out in the future.

Structure of Production

  1. Thailand
  1. Slovak Republic
  1. Hungary
  1. Mexico
  1. Romania
  1. Philippines
  1. India


Legacy countries are in danger of being squeezed by more advanced leading countries, but also need to avoid losing out to nascent countries on lower labour costs.

Nascent countries ranked

Nascent countries vary in their levels of industrial development. Their crucial challenge to their economic strategy is to decide whether to pursue advanced manufacturing or traditional manufacturing.

Structure of Production

  1. Croatia
  1. Indonesia
  1. Bulgaria
  1. Brazil
  1. Serbia
  1. Ukraine
  1. Saudi Arabia


Nascent countries also need to improve their institutional framework. They also need to attract global investment while acquiring technology and knowledge.

Drivers of Production

  1. Cyprus
  1. Chile
  1. Saudi Arabia
  1. Latvia
  1. Mauritius
  1. Bahrain
  1. Oman


Further study assessments

Key findings also included:

Global transformation of production systems will be a challenge, and the future of production could become increasingly polarised in a two-speed world. The 25 countries in the Leading archetype make up more than 75% of global manufacturing value added (MVA). Of concern, 90% of the countries from Latin America, Middle East, Africa and Eurasia suffer a low level of readiness for Industry 4.0.

Different pathways will emerge as countries navigate the transformation of production systems. Not every country will pursue advanced manufacturing. Some will continue to follow traditional manufacturing opportunities, while other countries will aim for a dual approach.

All countries have room for improvement. No country has reached what the study calls ‘the frontier of readiness’. Nor has anyone truly harnessed the full potential of Industry 4.0 in production. The non-Leaders can learn from the advanced countries, even though they they’re 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 also have their own unique challenges, which they must address to pursue their own strategy.

Technological advancement brings the potential for leapfrogging, but only a handful of countries are positioned to capitalise. Countries lagging behind now can enter emerging industries at a later stage without the legacy costs of earlier investment. To do that, they must have the right set of capabilities and develop effective strategies for taking advantage of the opportunities most relevant to them.

Industry 4.0 will trigger selective reshoring, nearshoring and other structural changes to global value chains. Emerging technologies will change the cost-benefit equation of production across borders. When a value chain is identified, counties will have the opportunity to gain position or lose share.

Readiness for the future of production requires global, not just national, solutions. Globally connected production systems require sophisticated technology, but also standards, norms and interoperability across a diverse set of systems. Standards, norms and regulations that cross technical, geographical and political boundaries offer efficiencies and make it easier for global value chains to do business.

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 can help governments effectively partner with industry, academia and society to find new value.