With many now embracing the fourth industrial revolution (4IR), some are still left to wonder if this digital revolution is a digital dividend or a digital divide. Prof Wong Poh Kam from the National University of Singapore (NUS) Business School, answers these questions at the “IR4.0 and the Developing World - Digital Dividend or Digital Divide?” webinar, organised by UTAR Institute of Management and Leadership Development (IMLD), on 12 July 2021 via Zoom.

The webinar, which attracted almost 300 participants from 12 economies, aimed to educate participants on 4IR and its impact on the developing world. Present to introduce Prof Wong was IMLD Director Prof Dr Cheng Ming Yu.

Prof Wong started by listing the types of industrial revolutions that have occurred, with the first focusing on mechanisation, water power and steam power; the second focusing on mass production, assembly line and electricity; the third focusing on computer and automation; and finally the current fourth, which focuses on cyber-physical systems. He also listed a number of industries that are facing shifts, as a result of pervasive integration of digital technology or networks and physical systems.

“We wonder if the third industrial revolution to 4IR will transition the same. We see two-phased revolutions; technological changes combined with financial capital create new ‘techno-economic paradigms’. It is the cluster of technologies, products, industries, infrastructure and institutions that characterise a technological revolution. First, it is the installation phase as technology is introduced into core industries; widening gaps between workers in these industries. The second is the deployment phase, which also tends to be uneven. Meaning not everyone gets immediate access to the benefits of this progress. The result is widening divisions, which can lead to public discontent. At present, the world is reaching the end of the deployment phase of the “Age of ICT”, and starting the installation phase of a new paradigm, involving frontier technologies sometimes called Industry 4.0. In IR 4.0, we also see some of the major concerns, which include automation eliminating jobs for humans, job polarisation, the Gig Economy and labour rights reduction, and finally, an increase in inequalities and marker power concentration,” explained Prof Wong.

He continued, “More so than previous generations of technological change, 4IR creates great potential for Digital Dividend for the developing world by drastically lowering the cost and technological barriers to bring innovative solutions to lower-income population and emerging markets. We consider modularisation that simplifies digital-physical system integration. For instance, in the case of the Internet of Things (IoT), we see more physical and virtual things having sensors and actuators, improvement of internet connectivity, application of cloud data storage and computing, and human user interface with smart device or software apps.”

Some examples of the use of IoT that have benefited various communities and industries include the application of IoT to innovate small aquaculture farms in Indonesia, and the building of micro smart grid that provides electricity in rural areas, thus offering a more efficient and distributed renewable energy systems for large cities and rural areas.

Blockchain technology is also on the rise, with promises, as listed by Prof Wong, including decentralisation, transparency, and immutability. He also explained that blockchain technology enables authentication without intermediaries, builds trust between transacting parties, offer faster transaction and lower transaction cost, and enhances security and true traceability. Participants learnt that blockchain technology is currently used for refugee camps and to authenticate credentials.

Another benefit of this digital revolution includes the use of CRISPR technology as a gene-editing tool. Prof Wong elucidated that this technology works like a biological version of a word-processing programme’s “find and replace” function. The advantages of using the CRISPR technology are programming simplicity, higher precision, and the ability to target multiple genes simultaneously. In Singapore, the CRISPR technology was also used to produce rapid tests for Covid-19 infection. He also mentioned that the CRISPR technology was used to eradicate malaria through mosquito gene editing. Using this technology, a mosquito population that can transmit pathogens is replaced by one that is unable to do so.

However, Prof Wong noted that despite the hype of 4IR, it is found that many firms are actually somewhat slow in adopting 4IR technologies. “There is a disruptive innovation potential of the 4IR. The innovation research literature informs us that incumbent firms tend to invest in sustaining innovation, but not disruptive innovation until quite late due to hubris, organisational resistance to change from legacy technology, and management’s unwillingness to cannibalise own businesses,” explained Prof Wong.

He added, “Disruptive innovation thus tends to be introduced by firms from outside of the industry, or by new start-ups, including latecomer firms from the developing world. 4IR technologies that are disruptive to existing industries and businesses, thus provide opportunities for firms from the developing world to leapfrog incumbent 3IR leaders in advanced countries. 4IR technologies are thus increasingly being commercialised by new tech start-ups. Added with the private venture capital investment in 4IR start-ups, it becomes a key driver for 4IR innovation.”

“We also learnt that 4IR opens up opportunities for latecomer economies to catch up and even leapfrog over advanced economies by reducing the cost and technical barriers to innovate, enabling new disruptive business models to be introduced,” said Prof Wong.

“China, for instance, is a great case study of a latecomer economy catching up with and leapfrogging over advanced economies in key 4IR applications. The country has high adoption readiness among its people and small business. It was recorded that China has the largest base for mobile/internet end-consumers in the world, where 95% of them are on mobile platforms. Twenty-six per cent of their retail sales are via e-commerce and 82% of e-commerce is via mobile. They also have higher user trust in their government. China’s rapid deployment of 4IR technologies also strengthens public policy and investment,” explained Prof Wong.

In this current pandemic, participants also learnt that many 4IR applications are accelerated, such as remote education, remote work, medical delivery to remote areas, robotics cleaning and telemedicine.

He concluded, “4IR creates great potential for digital dividend for the developing world by drastically lowering the cost and technological barriers to bring innovative solutions to lower-income population and emerging markets. However, an entrepreneurial mindset with a strong desire to understand and serve such needs, and an environment that fosters new, often disruptive innovations are needed to accelerate the deployment of 4IR technologies for the digital dividend. The government has a role to play in supporting 4IR innovation and deployment as well. If we steer 4IR to do good, then from a social entrepreneurship perspective, 4IR technologies can be used to do good and do well with the right entrepreneurial purpose and business model. To really scale the positive impact of 4IR, we need a major shift from the shareholder capitalism system to a stakeholder capitalism system, where businesses are incentivised by the environment, social and governance (ESG); investors; socially conscious consumers and employees including the development of public policies to make commitments to ESG goals, as well as shareholder returns.”