A new policy brief from the APEC Policy Support Unit calls for more aggressive development, adoption and investment in Fourth Industrial Revolution technologies in the APEC region to support member economies’ efforts to move up the value chain. Increase economic benefits.
The 4th Industrial Revolution refers to various fields of digital technology and information technology hardware and software, connectivity, data management, user interfaces, power, consumer goods, smart home, vehicle and healthcare applications.
“Participation in global value chains is a common way for economies to participate in global production and innovation ecosystems, but we also find that the revenue generated from each stage of the value chain is not evenly distributed. ‘, said Senior Dr. Akhmad Bayhaqi. Analyst in Policy Support Unit.
Dr. Bayhaqi explained the concept of “smile curve” in the value chain. In this curve, the two ends of the smile (one closer to the producer and the other closer to the consumer) yield higher returns in terms of added value than the middle. point. “This middle ground is a labor-intensive manufacturing stage that generally has a lower relative value,” he explained.
“Member countries can move upstream towards research and development activities or downstream towards branding and marketing activities to increase their income and profits from participating in global value chains,” said Dr. Bayhaqi. added.
The development and adoption of Fourth Industrial Revolution technologies will play a key role here, according to the policy brief. An economy’s level of technological progress can affect its position in global value chains.
For example, investments in research and development and workforce upgrades can help member economies leap to higher stages, while more traditional approaches such as specialization will continue to grow as member economies increase in value. It helps you build your technology and production capacity step by step. chain.
In 2019, the APEC region contributed approximately 80% of global exports (US$699 billion) and 63% of global imports (US$533 billion) of 4th Industrial Revolution products. China was the world’s largest exporter, followed by Chinese Taipei, Japan, South Korea and Mexico. On the import side, the US and China are her two main contributors, importing 24% and 21% respectively.
The Policy Brief also measures how innovative APEC economies are in the field of the Fourth Industrial Revolution by evaluating the number of patent application collections covering similar technical content. Over the past 20 years, the APEC region’s patent families have grown six-fold, from just over 9,000 in 2000 to nearly 57,000 in 2019. These are primarily connectivity, home, consumer goods, and information technology hardware and software. The most aggressive patenting economies, such as Canada. China; Japan; South Korea; Chinese Taipei; and the United States also show high patent content embedded in the value chain.
“Global value chains, as a form of trade network between multinational companies and their globally distributed suppliers, can be a conduit for knowledge, know-how and innovation,” explained Dr Bayhaqi.
“Advanced digital production techniques can bring integration and upgrade benefits as well as opportunities such as increased production efficiency using big data analytics,” he concluded.
The benefits of embracing and investing in 4th Industrial Revolution technology go beyond increased income and profits, says the policy brief. This is a forward-looking strategy that will allow member his economies to continue on their innovative growth path, as mandated by the APEC Putrajaya Vision. However, the successful adoption of these technologies depends on enabling factors such as: Closing the digital skills gap with digital literacy training. Upskilling of the local workforce. Knowledge transfer through foreign direct investment in priority sectors.
To read the full policy brief, Digital Technologies and Global Integration: Opportunities for Innovative Growth by the APEC Policy Support Unit, please visit this link.