A new industrial revolution led by the adoption of digital technologies is set to transform international production and global value chains, according to Unctad’s World Investment Report 2020.
“Key technology trends will shape international production going forward: robotics and automation enabled by artificial intelligence (AI), digitisation of supply chains and additive manufacturing (3D printing),” Unctad’s report said.
Manufacturers around the world in sectors such as automotives and electronics have implemented robotics and automation technology at a steady pace over the past decade.
The operational stock of industrial robots grew to 2.44 million at the end of 2018, from 1.3 million five years earlier, according to figures from the International Federation of Robotics, which expects this figure to reach 3.97 million by the end of 2022.
“The increasing availability of industrial robots will potentially increase reshoring in manufacturing industries as AI-enabled production reduces the competitive advantage of low-cost manufacturing hubs in developing countries,” Unctad’s report said.
In the services sector, the replacement of human labour with intelligent robots remains at an early stage, but the trend is growing.
The stock of professional services robots – mainly logistical and medical robots – is expected to grow from 270,000 units in 2018 to 1 million units in 2022, the International Federation of Robotics said.
“Over the next 10 years, there will be further progress towards ‘white-collar robots’ but, overall, services will be less exposed to automation than manufacturing will,” the report said.
Digitisation embraces technologies such as Internet of Things (IoT), cloud technologies, blockchain and data analytics that are already widely used across the industries, although the level of development of single technologies varies greatly.
The market of IoT technologies is expected to increase to $520bn from $240bn by 2021, according to figures from consultancy Bain & Company.
Spending on blockchain applications, meanwhile, is forecast to hit $3.5bn in 2022.
Digitisation technologies are intrinsically linked with services. When employed in manufacturing, they boost the service component of manufacturing, a process known as ‘servicification’ of manufacturing, the Unctad report states.
“The application of digital technologies results in more integrated production processes, a reduction in governance and transaction costs, more effective coordination of complex value chains and improved bottom-up access to global value chains for small and medium enterprise (SME) suppliers.”
3D printing boom
Additive manufacturing – or 3D printing – mainly applies to niche manufacturing products and specific components, but adoption in mainstream industries such as foods, pharmaceuticals, electronics and textiles is expected to grow. Its market size is projected to grow from $5bn in 2015 to $50bn by 2025, according to estimates by the Boston Consulting Group.
According to Unctad, 3D printing can affect international production configurations by re-bundling and offshoring, as the focus of manufacturing distribution shifts to market proximity instead of labour cost considerations.
“The Covid-19 pandemic is expected to increase attention to 3D printing as a means to secure decentralised, reliable and flexible supplies of critical goods,” the World Investment Report 2020 report added.