Singapore is among the 25 Leading countries. It ranked 11th
for the Structure of Production, and 2nd for Drivers of Production.
The World Economic Forum (WEF) released
its first ‘Readiness for
the Future of Production Report’, (“the Report”) assessing how well-positioned global economies
are to shape and benefit from changes in production being driven by the Fourth
Industrial Revolution. The report was developed in collaboration with A.T.
Singapore is among the 25 countries assessed to be in the
best position to benefit from the changing nature of production.
The Report uses a new benchmarking framework, diagnostic
tool and data set to help countries understand their current level of readiness
for the future of production, as well as corresponding opportunities and
The assessment framework is made up of two main components: Structure of Production, or a country’s
current baseline of production, and Drivers
of Production, or the key enablers that position a country to capitalize on
the Fourth Industrial Revolution to transform production systems. There are 59
indicators across these two components.
The 100 countries and economies included in the assessment
are assigned to one of four archetypes based on their performance in the
Drivers of Production (vertical axis) and Structure of Production (horizontal
The assessment measures readiness for the future, rather
than performance today. It assesses the entire country on average, not just the
highest-performing areas within a country. It does not look at sub-regional
differentiation within a country.
The report finds that global transformation of production
systems will be a challenge, and the future of production could become
increasingly polarised in a two-speed world. Of the 100 countries and economies
included in the assessment, only 25 countries from Europe, North America and
East Asia are Leading countries, or in the best position to benefit from the
changing nature of production. These 25 countries already account for over 75% of
global Manufacturing Value Added (MVA) and are well positioned to increase
their share in the future.
The 25 Leading countries in alphabetical order are: Austria, Belgium, Canada, China, Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Israel, Italy, Japan, Republic of Korea, Malaysia, Netherlands, Poland, Singapore, Slovenia, Spain, Sweden, Switzerland, United Kingdom and United States.
The rest of the 100 includes 10 Legacy countries, 7 High-Potential countries/economies and 58 Nascent countries.(Complete rankings can be found in Table3.1 on page 12 of the Report.
Singapore is among the above mentioned 25 Leading countries.
It ranked 11th for the Structure of Production, and 2nd for Drivers
of Production. It ranks in the top 20 for economic complexity and performs well
across all Drivers of Production, except Sustainable Resources. Within the
Sustainable Resources driver, Singapore contributes less emissions than other
Leading countries, but has challenges related to baseline water stress and
alternative energy sources.
The assessment finds Singapore to be a leader on the Global
Trade & Investment driver as one of the most open and trade-friendly
countries in the world. The Report highlights Singapore’s strong Institutional
Framework and future-oriented approach (the recent
launch of the Singapore Smart Industry Readiness Index is mentioned as an
example) of the Government as key strengths.
Mr. Lim Kok Kiang, Assistant Managing Director, EDB , commented on the report, "Singapore’s strong performance in the Drivers of Production reflects
our commitment and early efforts in building an ecosystem to drive the adoption
of advanced manufacturing amongst our MNCs and SMEs. The launch of the Singapore
Smart Industry Readiness Index, a world-first tool to help industrial companies
harness the potential of Industry 4.0, and Hannover Messe staging its first
Asia edition in Singapore later this year, will reinforce our efforts.
Transformation is a multi-year journey, and more needs to be done. It is
important that we continue working closely with companies, trade associations
and unions to improve our competitiveness and ensure our workforce is well
equipped to support and enable the future of production."
Key general findings
The findings are intended to catalyse multi-stakeholder
dialogue to inform the development of modern industrial strategies. The report
recommends leaders from both the public and private sectors to work together to
address key challenges, build on opportunities and define joint actions at the
national, regional and global level.
The Report finds that the Fourth Industrial Revolution will
trigger selective reshoring, nearshoring and other structural changes to global
value chains. Emerging technologies will change the cost-benefit equation for
shifting production activities and, ultimately, impact location attractiveness.
All countries must develop unique capabilities to make them attractive
production destinations and capitalise on these shifts.
Another key finding of the report is that different pathways
will emerge as countries navigate the transformation of production systems. Not
all countries may seek to pursue advanced manufacturing in the future.
countries that are next in line as the low-cost labour destinations may still
seek to capture traditional manufacturing opportunities in the near term (the
benefits of low-cost labour will be altered by the emerging technologies, as
was also highlighted in a recent
World Bank report). Others will pursue a dual approach, or prioritise other
The report also says that all countries have room for
improvement. Though there are early leaders, no country has achieved full
readiness, let alone harnessed the full potential of the Fourth Industrial
Revolution in production.
The assessment also finds common challenges within each
archetype (as seen in chart above: Leading, Legacy, High Potential and Nascent)
and countries can learn from each other, while pursuing their own unique
Leading countries need to convert readiness into actual
transformation and push the frontier by designing, testing and pioneering
emerging technologies. Legacy countries need to avoid getting squeezed between
more advanced Leading countries, which can offer more advanced manufacturing,
and Nascent countries that can offer lower cost labour. High-Potential
countries and economies have capabilities that can potentially be converted to
strengthen their Structure of Production and further diversify their economy. Their
key challenge is expected to be to find the right balance across sectors when
determining economic priorities. For nascent countries, the challenge will be
to determine whether to pursue advanced manufacturing or traditional
manufacturing, and to what extent.
The report also notes that though technological advancement
brings the potential for leapfrogging, but only a handful of countries are
positioned to capitalise. Lagging countries could enter emerging industries at
a later stage without the legacy costs of earlier investment, but only if they
have the right set of capabilities and develop effective strategies.
However, readiness for the future of production requires
global, not just national, solutions. Globally connected production systems
need not only sophisticated technology but also standards, norms and
regulations that cross technical, geographical and political boundaries. This
would be necessary to release efficiencies and make it easier to do business
across global value chains.
Moreover, the report recommends that new and innovative
approaches be explored for public-private collaboration to accelerate
transformation. Every country faces challenges that cannot be solved by the
private sector or public sector alone.
New approaches to public-private collaboration that
complement traditional models can help governments quickly and effectively form
partnerships that unlock new value.
It is also important to note that the assessment framework
is based on two key hypotheses and working assumptions that will be tested and
researched over time.
The first is that the most important drivers of future
readiness are Technology & Innovation, Human Capital, Institutional
Framework and Global Trade & Investment. These drivers have the strongest
correlation with economic complexity. The needs within each driver are expected
to evolve, but the overall drivers will remain significant.
The second is that scale is not a prerequisite for future
Economic complexity is more important than scale for readiness for
the future of production. The ability to gather, combine and use knowledge
embedded in people and technology to create a range of unique products will
become an increasingly important competitive advantage. Thus, small countries
such as Switzerland or Singapore are not necessarily at a disadvantage against
global giants with larger scale.
Read the complete report here.
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