Industry 4.0 Technologies and Value-Added Services: Opportunities and challenges for LDCs

This session explored the challenges and opportunities of integrating industry 4.0 technologies in LDCs’ value-added services, and discussed ways to help them reap the fruits of the digital age for increased integration in global value chains. Services inputs play an increasingly important role in global manufacturing by contributing to the value -added of all sectors. The COVID-19 pandemic showed the critical role that ICT and computer services play in facilitating global trade, and revealed that the integration of technologies and innovation in financial, transport and logistical services will be key to economic recovery and enhanced production capacity.

The session started by highlighting the importance of the services sector and value-added services for LDC economies. For Cambodia, Services may be considered the “next step in structural transformation” as they represented 36% of Cambodia’s GDP and employed 37% of the country’s total workforce before COVID-19. Hence, services are at the core of Cambodia’s various development strategies, including supporting digital services with high export potential, especially IT-enabled, fintech and animation services, but also enhancing input services’ readiness for technological advancements and Industry 4.0. One of the critical challenges affecting service providers’ ability to adopt new technologies, such as Artificial Intelligence, Robotics and Automation, the Internet of Things and others, is the need for workforce skills development. This is confirmed by the “Frontiers Technologies Readiness Index” prepared by UNCTAD and also other studies.

The discussions also reflected that while studies are showing that critical sectors in LDCs, such as agriculture and tourism, are using Industry 4.0 technologies, it is often on an experimental or pilot basis, using non-sustainable donor funds. Panellists agreed that developed countries and the donor community can play a broader and more profound role in supporting LDC integration in Industry 4.0 and its Global Value Chains, by supporting in-depth national studies to bridge the data gap, integrating industry 4.0 in regional trade agreements (RTAs) to promote LDC integration in value chains and responding to LDC demands for support and providing the necessary aid to promote the technological ramp-up of services in sectors of interest.

At the end, panellists shared a common view that adopting Industry 4.0 technologies in LDCs has to be gradual. They emphasised the importance that LDCs develop national strategies for Industry 4.0 integration and technological ramp-up. This was supported by a presentation by CUTS International on the driving considerations for adopting emerging technologies for firms and businesses. The presentation showed the results of recent studies by international organisations and academia on how Industry 4.0 technologies have different maturity time and diffusion speed which affects businesses’ decision and ability to adopt them. Finally the session concluded with a road map towards LDCs integration into Industry 4.0. Key elements of the road map included: i) conduct Industry 4.0 readiness assessments at macro and micro levels, ii) identify sectors of interest for technological ramp-up, iii) make Industry 4.0 accessible to SMEs through Public Private Partnerships (PPP), Investments, negotiated RTAs and facilitating access to finance, iv) digital upskilling programmes for youth and workforce, v) the development of national strategies for Industry 4.0 integration per sector and support it with the required regulatory reform and development and vi) consider education reform to support innovation.

On the panel were Rashid S. Kaukab, Executive Director, CUTS International, Geneva; Long Kemvichet, Ambassador and Permanent Representative to the WTO, Permanent Mission of the Kingdom of Cambodia to the World Trade Organization (WTO) and other International Organizations; Shamika N. Sirimanne, Director of the Division on Technology and Logistics, United Nations Conference on Trade and Development (UNCTAD); Jeremy Green, Deputy Permanent Representative, Permanent Mission of Australia to the World Trade Organization (WTO); Yasmin Ismail, Programme Officer, CUTS International Geneva.

Leave a Reply

Your email address will not be published. Required fields are marked *