Market Outlook: The Fourth Industrial Revolution

The founder and executive chairman of the World Economic Forum (WEF), Klaus Schwab, first coined the term, Fourth Industrial Revolution (4IR) in 2016, when it was the theme of the WEF meeting in Davos. At the event, he argued that a technological revolution is underway “… blurring the lines between the physical, digital and biological spheres.”
 
Historically, the industrial revolution was a change which happened as society moved from an agricultural economy to a largely urban economy, dominated by industry and machine manufacturing. The term was first used to describe Britain’s economic development from 1760-1840 and then spread to other parts of the world. It was powered by the steam engine’s invention, which enabled new manufacturing processes and led to the creation of factories. Historians refer to this period as the First Industrial Revolution.
 
A century later, an age of science and mass production (the Second Industrial Revolution) followed, which saw rapid advances in the electricity, steel, oil and automobile industries. Goods that once had to be painstakingly handmade were now mass produced in huge factories by machines. The telephone, light bulb and internal combustion engine were some of the key inventions of this era.
 
The Third Industrial Revolution (or Digital Revolution) started in the 1960s, introducing mainframe and personal computing, the Internet and the invention of the semiconductor. Analogue moved to digital by dramatically disrupting industries, especially global communications and energy. Electronics and information technology started to automate production, taking supply chains global.
 
Currently, we are at the start of a new era of technological disruption and social change – the age of intelligence or 4IR. Technologies such as artificial intelligence, blockchain (a secure, decentralised way of sharing data, without needing to rely on third-party intermediaries), quantum computing, genome editing, energy capture, storage and transmission, the Internet of Things, 3-D printing etc. are rapidly changing the way we create and distribute value.
 
In general, we can think of it as the collective force behind many services we use daily - a GPS suggesting the fastest route, voice-activated virtual assistants (Apple’s Siri) or Facebook recognising and tagging your face in a friend’s photo. 4IR will be driven by a convergence of digital, biological, and physical innovations (e.g. facial ID recognition, digital healthcare sensors etc.) by building on the widespread availability of digital technologies. 4IR is different from the Third Industrial Revolution because the gap between the digital, physical and biological worlds is getting smaller and technology is changing at a much faster rate than ever before.

Written exclusively for Moore South Africa by Anchor Capital