# Changes Brought About by the 4th Industrial Revolution

In this chapter we will provide an overview of the potential, etc., of the changes brought about by the $ 4^{th} $ Industrial Revolution. Furthermore, based on the results of surveys and research carried out on domestic and international companies focusing on industry and human resources in relation to changes that are expected to result in the area of industrial structure and the roadmap required for Japan to realize its “4 $ ^{th} $ Industrial Revolution,” we suggest directions that should be taken and issues that need to be worked upon, while anticipating the arrival of the age of the 4th Industrial Revolution. Furthermore, in order to be able to accept the results of the reforms realized as a result of the 4th Industrial Revolution, we believe it will be advantageous to not only learn from previous industrial revolutions, but also for those involved to share their ideas and directions based on quantitative indices. From this perspective, and based on analysis of Input-Output Tables, etc., we consider issues such as the digitization of industry, as well as the economic impact of the reforms resulting from the 4th Industrial Revolution.

## Section 1 Global Trends Brought About by the 4th Industrial Revolution

This section looks at an understanding and definition of the $ 4^{th} $ Industrial Revolution based on global discussions and trends, and provides an overview of activities taking place both in Japan and overseas.

### 1. Global Activities Based on the 4th Industrial Revolution

In January 2016, the annual general meeting of the 46 $ ^{th} $ World Economic Forum (hereinafter WEF) was held in Davos, Spain. This meeting, generally known as the “Davos Conference,” took its main theme as “Mastering the Fourth Industrial Revolution,” and there were discussions for establishing a definition.

At the Davos Conference in January 2017, too, debate focused on the $ 4^{th} $ Industrial Revolution, and how this Revolution, which hinges on artificial intelligence (AI) and robotics, should progress. The $ 4^{th} $ Industrial Revolution is expected to bring about historical reforms in many areas, not only industry, but also labor and lifestyles, and various countries, including those in Europe and the US, are already pressing ahead with strategies to respond.

In Japan, too, plans including the Cabinet-decided “Japan Revitalization Strategy 2016,” the “Basic Policy on Economic and Fiscal Management and Reform 2016” and “Japan’s Plan for Dynamic Engagement of All Citizens”, all focused on the 4 $ ^{th} $ Industrial Revolution as policies for growth. The “Growth Strategy 2017,” adopted by the Cabinet in 2017, which provides a new strategy for growth, also includes the realization of Society5.0 as a key to Japan moving out of long-term stagnancy and into mid- to long-term growth, for which the innovations of the 4 $ ^{th} $ Industrial Revolution (IoT, big data, AI, robotics, the sharing economy etc.) need to be incorporated into various industries and activities within society.

The government understands the need to proactively press ahead with the realization of Society5.0 through partnerships between the public and private sectors.

## Figure 3-1-1-1 Characteristics of Industrial Revolutions

1st Industrial Revolution

18th century to early 19th century

Mechanization in light industry, such as steam engines and spinning machinery

2nd Industrial Revolution

Late 19th century Oil, electric power, and heavy chemical industries

3rd Industrial Revolution

Late 20th century

Emergence of the

Internet, rapid

dissemination of IC

4th Industrial Revolution

21st century

Industrial revolution

through extreme

automatization and

connectivity

$ ^{*} $ Davos Conference UBS White Paper (January 2016)