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At the IDB, we believe that together we can go farther. Our partnership network is making positive differences in Latin America and the Caribbean every day, and this blog is our channel for telling that story. Stay tuned for literature on partnership perspectives, stories from the field, changing trends, outlooks for development and the region, information on ways and opportunities to partner, and more. Thanks for stopping by.

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We Answer Davos’ Questions on the Fourth ‘Industrial’ Revolution in One Word

By - Jan 21 2016


We find ourselves, they say, at the dawn of the Fourth Industrial Revolution. Riding the tide of the third edition and the groundswell of automated production and technology that came with it, this fourth chapter is transforming our world, introducing technologies that morph how we operate as consumers and producers, regulators and citizens. Yet while the digitalism that defines this revolution is the product of its predecessor, this fourth phase stands apart for its scale, scope, complexity, and velocity, and for its tangible penetration of all industries, economies, and facets of life as we know it.  “This fourth revolution comes on us like a tsunami,” remarked Klaus Schwab, founder of the World Economic Forum. “New technologies and approaches are merging the physical, digital, and biological worlds in ways that will fundamentally transform humankind. The extent to which that transformation is positive will depend on how we navigate the risks and opportunities that arise along the way.” So how, in Mr. Schwab’s words, can we make this transformation positive, equitable, and sustainable? The answer is undoubtedly a complex one, but we believe partnership is an essential ingredient, uniting companies, governments, and people in a joint effort to not simply adapt to this revolution, but to appropriate it and thrive in it as well.

By now I’m sure you’ve read about the empowered consumer, she who is a mobile, informed, and engaged shopper and global citizen. Fueled by a digitalism and connectivity that affords her an unprecedented degree of options and product information, she holds companies to higher standards than ever before, reporting back on her consumer experience through numerous online platforms.  Leaving detailed company reviews and perusing grocery store aisles with an iPad in hand, this consumer is sparking a shift on the demand side, creating a new corporate context in which companies must operate sustainably to truly succeed. So wherein lays the challenge? That generating value for shareholders is the bread and butter of companies, while generating social and environmental returns is not (though this is a changing paradigm). To meet this new demand, companies need a partner that can help them embed a triple bottom line approach into their corporate DNA, and help measure the impact of these efforts once they’re off the ground. We at the Inter-American Development Bank (IDB) are already doing this, working with partners such as Citi, Coca-Cola, MetLife, PepsiCo, Nestlé, Visa, MasterCard, Unilever, CGEP, Maersk Sealand, Google, Microsoft, and many others to make a positive impact on communities while advancing core business objectives as well. In one example, we’ve teamed up with SABMiller, helping them to invest in their value chain and empower the mom-and-pop shops that sell their products as business owners and agents of change at the community level. This effort continues to generate shared value, improving the livelihoods of these shopkeepers and their families while better equipping them to sell SABMiller products. And while this business model is currently regarded as novel or innovative, very soon it will be expected by consumers who look beyond the bargain to the sustainable activities of the companies they support. We can help companies get there, collaborating with them to identify development gaps in the communities in which they operate, and building solutions that impact the bottom line as well.

Looking to the public sector, it’s no secret that governments everywhere struggle with innovation. That’s why in the Fourth Industrial Revolution, governments will need added support to acclimate. In the words of Mr. Schwab, governments “must continuously adapt to truly understand what it is they are regulating…and will need to collaborate closely with business and civil society.” As in the business sphere, increased connectivity will hold government more accountable, with citizens demanding more communication, innovation, and transparency than in years past. The IDB is already helping governments meet such demands through platforms like MapaRegalias, which tracks royalties and shows citizens how their dollars are spent. But we must do more.  We must encourage governments to update policies and procedures that foster this revolution and the equitable distribution of its benefits. We must encourage them to expand access to digitalism among their constituents, investing in broadband, research and development, and STEM to ensure their countries ride the wave of this revolution, instead of being knocked down by it and left behind. We must prove that technology and connectivity are no longer just luxuries, but rather requisite for development. For this to happen, governments must learn to quantify the importance of technology, looking beyond traditional growth indicators such as GDP and income per capita to measure its true value. For instance, while we once paid for such resources as encyclopedias and newspapers, technology has given us free access to online banks of information that grow daily. While we once invested ample time in such activities as shopping, banking, and more, technology has afforded us time-savings by making these tasks more efficient than ever. In accounting for this added value—the knowledge, cost savings, and efficiency provided by technology—governments will have tangible evidence that investing in innovation is critical to keeping societies equitable and economies competitive in our rapidly changing world.

Yet in these efforts to support companies and governments, it’s essential that we not forget people. Even those who recognize the revolution’s countless opportunities fear that it will generate further inequality, entrenching “low-skill/low-pay” and “high-skill/high-pay” segments into economies everywhere that will fuel social tensions and endanger social mobility. Through partnerships focused on human capital development, we can get ahead of this trend, better preparing individuals at all income levels to thrive in the new context. We are doing this in many ways. Alongside the Government of Korea, we are training government officials on the use and importance of broadband through our regional, Nicaragua-based broadband training facility. In partnership with Google, Alibaba.com, VISA, and DHL, we are bringing key information to budding entrepreneurs through our ConnectAmericas platform. And by teaming up with such companies as Telefonica, Intel, SK Telecom, and Microsoft we are helping our region build up the capacity needed to generate innovation. Yet there is always more we can do, tapping into the strengths of private sector, university, and government partners to ensure we are empowering our people and providing them the skills they need to succeed in this new era. Victor Hugo wrote that “the brutalities of progress are called revolutions, but when they are over we realize this: that the human race has been roughly handled, but that it has advanced.” The Fourth Revolution will bring with it many challenges. It threatens to render many jobs obsolete, exacerbate inequality, and undermine the way society operates at many levels. Yet if we equip humankind with the tools needed to flourish in this new landscape, we stand to emerge from this revolution more knowledgeable, empowered, creative, and successful than we can possibly imagine today.

At the IDB, we often reflect upon Latin America and the Caribbean’s late arrival to the industrial revolution. Today we have a chance to capitalize on the revolution to come, preparing to harness the technology and innovation it brings to grow our economies, educate our people, and improve quality of life for individuals everywhere. Though this will require hard work and ample investment, we know that partnerships give us a strong foundation upon which to build. We will engage the topic of this revolution, its challenges, and its opportunities, in the next few days at Davos, and will keep the conversation going in the months to come. At our 2016 Annual Meeting and beyond, we will explore how to capitalize on changing trends so that Latin America and the Caribbean may emerge triumphant from this revolution. Join us.

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