Economic ramifications of Industry 4.0


13 February 2017

A Circular Economy where there is no wastage, which arises through the conscious reuse of resources to ensure long-term sustainability for the environment – this is one of four dramatically different dimensions that the next industrial revolution could lead us to, said Dr Renato De Castro, Advisor of Leading Cities, World e-Governments Organisation of Cities & Local Governments. “This is in stark contrasts to our current linear production models, which transforms raw materials into use, and eventually waste.”

Offering up the first of three predictions surrounding smart cities, De Castro said 40 years from now, the quest towards smarter cities will lead to the fourth industrial revolution, which could be the most disruptive yet.  Besides the Circular Economy, other models which will emerge from this revolution – if they have not already done so – are:

  • The Creative Economy, where creativity is used to value-add to the local economy.
  • The Sharing Economy, exemplified by the rise of services such Airbnb and Uber, which will affect the global production and distribution chain and promote the rise of new business and innovation models, specifically one that caters to the idea of “access over ownership”
  • Co-Creation, where startups collaborate with all stakeholders - employees, suppliers, customers and even competitors and citizens co-create with public management to raise the quality of life.

Another area which De Castro highlighted in his predictions was the rise of artificial intelligence (AI) to combat security risks.

“Deep understanding and analysis of data becomes an increasingly powerful tool for governments and businesses to leverage – and this is particularly so in ensuring data protection and security,” he said.

He pointed out that the marriage of technology to security can potentially alleviate and help manage issues such as high crime rates and terrorism. Cities can consider adopting state-of-the-art high-definition surveillance systems that reach across information networks like social media, where AI is able to process the large amount of data. This not only shortens the required response time in threatening situations, but can also predict crimes. “Controversies of monitoring and privacy aside, AI has the potential to improve the safety and security of smart cities for the betterment of its citizens,” he said.

De Castro also trained his crystal ball on hypercities and their consequences. According to the United Nations, a hypercity refers to “massive sprawling conurbations of more than 20 million people”. Tokyo became the first hypercity in the mid-1960s when it crossed the threshold. By 2020, it is expected that Mumbai, Delhi, Mexico City, Sao Paulo, New York, Dhaka, Jakarta and Lagos will join the ranks, leading to a rise in inter-city competition. “Even as of today, large cities are already fighting for investments and talent to increase competitiveness,” noted De Castro.

As they make a push to become more attractive to investors, De Castro sees cities playing a more significant role in their own governance, and district confederations emerging with their own rules, regulations, and pilot projects.

  • Dr Renato De Castro will be speaking on the topic “City SMARTup: New Tools to Build Wiser and More Competitive Cities” at the CommunicAsia2017 Summit on Conference Day 2, 24 May 2017.