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Everything You Need to Know About the Four Waves of Economic Development

Everything You Need to Know About the Four Waves of Economic Development

Industrial Revolution describes the process of change from a handicraft and agricultural economy to an industrial and machine manufacturing economy. The process first began in Great Britain in the early 18th century and soon spread to other parts of the world. To successfully design and launch an innovation, we first have to understand the era we are operating in.

We are in the midst of a paradigmatic transition—a fundamental change in the approach towards and underlying assumptions of how we do business—from Industry 3.0 to Industry 4.0. This latest industrial revolution may better be termed an “information revolution”: in the past ten years, the global economy has swapped oil for data. No matter what sector you operate in, you can’t afford to ignore the presence and power of information.

At the same time that the service and data sectors grow, the traditional industrial sector has eroded to less than a quarter of global GDP. This information revolution and its rapidly changing economic and cultural context, require us to adapt as organizations and individuals in significant ways. Indeed, the seeds of this information revolution are not new. As can be seen in the following visualization, they go back to the mid-20th century.

Characteristics of the Industrial Revolutions

The main characteristics of the industrial revolutions were cultural, socio-economical, and technological in nature. The technological changes included the following:

1. Use of basic materials like steel and iron.
2. Use of new energy sources, including motive power and fuels, such as internal combustion engine, petroleum, electricity and steam engine.
3. The invention of new machines.
4. Introduction of a new organization of work known as the factory system, which increased specialization of function and division of labor.
5. The radical transformation in the transport and communication sector.

In addition, there were other developments recorded in non-industrial spheres, including:

1. The agricultural transformation that made possible the provision of food for a larger non-agricultural population.
2. Economic transformation that resulted in a wider distribution of wealth.
3. The political transformation that resulted in a shift in economic power and new state policies, reflecting the needs of an industrialized society.

The First Industrial Revolution

Between 1760 to 1830, the industrial revolution was basically confined to Great Britain. Aware of this enviable height, the British government forbade the export of manufacturing techniques, skilled workers, and machinery. However, the British monopoly did not last long, especially as many British business leaders saw profitable industrial opportunities abroad. Moreover, many European business moguls sought to lure British top business CEOs to their countries.

Two English business leaders, William and John Cockerill, were the first to bring the industrial revolution to Belgium. Therefore, Belgium became the first country in continental Europe to experience economic transformation. The Belgian industrial revolution centered on textiles, coal, and iron. The economic and technological aspects of the industrial revolution brought about significant sociocultural changes.

 At first, it seemed to deepen workers’ misery and poverty. Their subsistence and employment became largely dependent on costly means of production that only the wealthy could afford. Job security was threatened: workers lost their jobs regularly and were replaced by technological improvements.

The Second Industrial Revolution

Electrification and mass production assembly lines characterized the second industrial revolution. Everything transformed as new technological advancements and the development of the combustion engine system initiated new sources of energy: oil and gas. This industrial revolution centered around an industrial and economic model based on new large factories. Industries were fueled by organizational models of production envisioned by business leaders such as Henry Ford and Frederick Winslow Taylor.

The steel industry experienced a radical transformation. Methods of communication were revolutionized with the invention of the telephone and the telegraph. In addition, transportation methods changed with the invention of automobiles in the late 1800s and the invention of the Aeroplane in the early 1900s. The major achievements within this era include the invention of the telephone, the discovery of electricity and oil, the expansion of cross-national railroads in the US, and mass production assembly lines.

The Third Industrial Revolution

The third industrial revolution, also known as the digital revolution, began in the late 1900s and is characterized by the discovery of nuclear energy and the invention of the internet. It also featured the spread of automation and digitization through the use of computers and electronics. This period witnessed the rise of computers and electronics, from computers to new technologies that enabled industrial and automation processes. Digital innovation in telecommunications facilitated widespread globalization, which in turn enabled industries to offshore production to non-industrialized nations and radicalize business models worldwide.

The Fourth Industrial Revolution

The current revolution is characterized by digital transformation, digitalization, industrial IoT, automation, AI technologies, data analytics, personal connected devices, and the digital economy. This is the era when lines between digital, physical, and biological spheres are challenged, and industries all across the world are uprooted.

Factories now use the gig economy and technologies such as Big Data Analytics, Cloud, and IoT to enable advanced and efficient communication between key players in the production line. In addition, the era facilitates the transition from non-renewable energy sources to solar, wind, and geothermal energy sources.

The major achievements of the fourth industrial revolution include the emergence of machine learning, IoT networks, Artificial intelligence, advanced robotics, Cloud Computing Technologies, Big Data, and large-scale digitalization.

Pros and Cons of Industrial Revolution

Industrial Revolution played a major role in transforming our society into what it is today. With the technologies produced within this era, we have everything from automobiles to computers and skyscrapers. On the other hand, if the industrial revolution had not happened, we may not be facing the global warming crisis we are facing today.

What are the pros of the industrial revolution?

1. It increased job opportunities

The fact remains that the industrial revolution created more jobs for people across the globe. Before this era, jobs were mainly based on educational background, family connection, or a unique talent. However, when factories were built, it created more opportunities for all, regardless of educational background, family connection, or talents. It gave the average person an opportunity to earn a living legitimately. Numerous stories from Richard Arkwright to George Stephenson showed how one man could change the course of the world with technology.

2. It facilitated innovation

Within the Industrial Revolution, great wealth and resources were available. One notable example is the wealth created by Andrew Carnegie in the Steel industry, making him one of the richest business leaders in history. He was worth over $300 billion in today’s value.

3. It increased production levels

Before the industrial revolution, production was mainly man-made using traditional methods. This required more time and energy; therefore, mass production was virtually impossible. The industrial revolution changed this completely. The establishment of factories made room for mass production than the traditional method of production.

4. It reduced the influences of borders

Before the industrial revolution, trade and commerce were restricted to the national levels. International trade was the order of the day. However, it was difficult to trade because of the immense cost of transporting products. The industrial revolution made transportation easier and cheaper. This allowed businesses to create an international presence for their brands.

What are the cons of the industrial revolution?

1. Local jobs got poached

During the industrial revolution, profits were the primary concern; it created a race to the bottom in terms of worker wages. At that time, businesses could hire workers that could work for the lowest wages. This literally means that local jobs could get poached by foreign workers willing to work for much lower rates. In addition, this poaching process limited the need for individual skill and craftsmanship. Therefore, people began to conform to the needs of businesses rather than focusing on their individuality.

2. It wasn’t a global phenomenon

Not every nation experienced the industrial revolution at the same time. Most of the poorest nations in the world today rely on goods and services provided by industries outside their borders. This means that the few resources they have go to products they need instead of building their infrastructure. Moreover, it created a wealth gap between industrialized and non-industrialized nations.

3. It increased environmental pollution and global warming

According to NRDC, the industrial revolution is not only the source of global warming but is a major contributor. The coal industry generates 1.7 billion tons of carbon emissions every year.

How Businesses Can Thrive in the Fourth Industrial Revolution

The first industrial revolution pioneered production using steam, and the second saw the use of electricity for mass production. The third industrial revolution was based on bytes and bits that ushered us into the information technology era. Now, we are in the fourth industrial revolution.

The fourth industrial revolution is unique in terms of its scope, scale, and complexity. In addition, it is the convergence of emerging technologies such as quantum computing, autonomous vehicles (self-driving cars and drones), 3D printing, robotics, AI, machine learning, and many more. These converging technologies are the blurring lines between the physical and digital world.

It is practically affecting the way we live, think, work and interact with one another. Therefore, businesses must learn how to thrive in the fourth revolution.

More Opportunities for Businesses

More business opportunities characterize the fourth industrial revolution. It is also known as the gig economy because it raised our GDP per capita and income levels.

The automation of jobs improved productivity in all organizations and businesses. From sales to procurement, telecommunications to supply chain, the fourth industrial revolution helped to reduce cost.
Employees can unleash their creativity and innovation using new techniques and tools available online. This transformation has opened doors to new markets and business development and introduced the gig economy.

Social media platforms like LinkedIn, Facebook, Twitter, and Instagram have broken down traditional communication barriers across borders of countries and made instant connection possible. These platforms make business operations faster and easier. Therefore, if you want your business to thrive in this fourth revolution, you must leverage the use of these social media platforms.

Conclusion

The world experienced a radical wave of economic development from the first industrial revolution to the current fourth industrial revolution. The fourth industrial revolution is different from the previous waves in its scale of impact. Businesses have better opportunities in this gig economy. We hope the information we provided in this article will give you a clearer understanding of the four waves of economic development and how to position your business for maximum benefits.

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