Industrial Revolution 4.0 in the BRICS countries: What are the challenges for industrial policy?

Abstract

Long-term scenarios predict that the BRICS countries can overtake the G7 countries in their contribution to the world economy, but, as follows from the analysis of multicomponent international indices, the same countries lag significantly behind the G7 countries in terms of preparedness for a technological future. In this regard, the growth prospects of the BRICS economies are largely determined by possible strategies of the countries to disseminate and use the Fourth Industrial Revolution (Industry 4.0) technologies. Analysis of TiVA OECD data revealed that BRICS was not very profitably integrated into global value chains — far from the final consumer abroad and relatively close to suppliers of raw materials and semi-finished products — which in the long term determines the limitations on increasing economic complexity. Analysis of the WITS World Bank data revealed that BRICS was relatively poorly involved in the processes of international exchange of products related to the technologies of Industry 4.0 — industrial robots, additive technologies, computer-aided-design and computer-aided-manufacturing technologies, and biotechnologies — and retained the position of net importers, with China making the greatest contribution to the dynamics of trade. Taking into account the general growth of global competition for technologies associated with Industry 4.0 and the continuing lag of BRICS in creating and using such technologies, the authors highlight the challenges for the industrial policy of the BRICS countries and discuss possible answers within the framework of industrial and trade policies. Challenges for BRICS include continued participation in global networks as countries serving the production and trade of new technologies; lagging behind in the level of development of the institutional environment and infrastructure for development of technologies; formation of limited “hotbeds” intensively using the Industry 4.0 technologies; and, thus, growth of spatial, inter- and intra-sectoral inequality.