Revolution 4.0: What to Expect for the Ukrainian Economy


Over six months after the economic forum in Davos the Ukrainian government has not yet drawn out any lessons. Instead of fighting for a place in the sun in the Fourth Industrial Revolution we continue with the monkey business around metal scrap exports and wood shipments. But the future will arrive much quicker than we expect, and the industries we became accustomed to call the country’s breadwinners will not save us.

The words “Industry 4.0” evoke strong associations with the prophecies of science fiction writers of the past century: from the robot war (R.U.R. by Karel Čapek) to the merger of online and offline lives (e.g. in William Gibson’s Cyber Space trilogy). Ukrainians who pride themselves on their grain-growing potential perceive that kind of thing as a day-after-tomorrow fairytale. And this is the first reason why we will find ourselves uninvited to the future feast of life.

In this context I would like to look back on the discussions held at the last pre-2008 crisis forum in Davos. The world was stricken with the fear of insufficient energy resources and high oil prices (USD 200 per barrel by 2030). Back then not much confidence was placed in the appeals for replacement of non-recoverable resources, and that is why the main issues were thought to be related to the deficit thereof. By 2016 the mineral reserves have not grown, the planet’s temperature is increasing, and carbon emissions still need to be fought like they did 10 years ago. But it seems the world has stopped being afraid that something would be in short supply for someone. Today’s global visionaries are investigating problems which might be caused by the development of artificial intelligence and robot technologies for the physical human civilization.

Continuing with the development of the Ukrainian economy with the same structure, we are expanding the gap between ourselves and the advanced world. I am no longer interested in saying that we need to grow the agrarian or industrial sector. This is an archaic discussion between outsiders. Apple’s proceeds from sale of iPhones in a single quarter are twice as big as Ukraine’s proceeds from all of its crops.

In fact a person’s physical location is not important from the viewpoint of the Fourth Industrial Revolution. All-round robotization replaces human labor, but not only that: people can do all the work for their companies without moving to the city where its production facilities are situated. At the last Davos forum Anand Mahindra, CEO at Mahindra & Mahindra (Indian automobile corporation), noted that as Industry 4.0 rolls out, an increasing number of workforce will be engaged in “urban” activities. As of now 65% of India’s village dwellers need not be dragged to the city but can be included in the global economy remotely. The expert stressed: “If we make our villages “smart”, a production outburst will occur.”

In this respect Ukraine also has huge capacities, with a considerable segment of citizens not living in large cities. Where do they try to find themselves? In Poland, Slovakia and other countries which exhibit activity against the background of the “retarded” Third Industrial Revolution. While our ultraliberals are flinging mud at me for insisting on the impossibility of an “independent” “self-developing” recovery of the industrial potential 3.0, a staff of 2000 employees at a railway car building works in the Polish city of Bydgoszcz includes 500 specialists from Ukraine. They were previously employed at a similar plant in Kremenchug where the production volumes are diminishing each year because we do not need the industry. “Just do not interfere”, the ultraliberals are saying. And we don’t.

On the other hand, the “Internet economy” offers incredible opportunities for technological growth in agriculture. For instance, programming plants with preset properties is the theme of latest scientific works. We are only approaching precision farming – a thing of the past for American farmers. Neanderthal production flourishes on the world’s best black soils, although many have already understood that something should put in the land to gain anything.

But the new industrial revolution will also provoke a social revolution which will trigger innovations. Agricultural holdings will disintegrate willingly or forcedly – under the conditions of revolutionary explosion. They justified their existence worldwide as an intermediary stage of development. The future belongs to clustering, mini-factories and medium-sized advanced farmers who will push the innovative process.

A smart factory is the milestone of the Fourth Industrial Revolution. Within it all production facilities will become self-organized and capable of receiving feedback from finished products, units, machines, devices. Vertically integrated companies are history even for metal-makers. The Germans, ideologists of the new industrial revolution, are in full swing with computerization and automation of the steelmaking process, implementation of digital technologies in metallurgy. Here cooperation with IT specialists in a search for these solutions appears natural. In this situation orders for new domestic IT products become a reality. As it is, our IT sector is largely represented by the outsourced development industry.

The state must act as the ideologist and inspirer, coordinator and implementer in this process. A high-ranking official from Estonia has recently explained the reverse marketing side of Skype to me. He has told me that each Estonian graduate dreams to take his or her startup to a billion level. And it does not matter that Skype is a myth and legend as the contribution of developers from this country to the design of the globally known product was not decisive. But the state sent a strong innovative and patriotic message. To implement the same ideology in Ukraine we need to conceive “our skype” but with the simultaneous provision of material support – a new banking system, a development bank, a stock market, tools to support SMB and export.

The world will not change on its own. For a Mariupol student to dream of automating the local metallurgical works, or for a Cherkassy student to program GPS monitoring of wheat crops, one should understand which way we are actually going. And that acting single-handedly people can only make decide to exit the system but not to improve it.


Volodymyr Panchenko


Novoye Vremya


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