Digital Industrial World: A $465B Boost to Regional Economy
By Marco Annunziata, Chief Economist and Executive Director of Global Market Insight at GE
In a fascinating report on the need for a new development model in the Arab world, the World Bank notes that Arab countries have one of the world’s lowest rates of new companies entering the marketplace and one of the highest median age for manufacturing companies. It also finds that very few small enterprises grow into medium or large firms. The region’s industry needs a boost of dynamism to fuel jobs and income growth.
It is fortuitous — as the region stands at this point of economic and development transition — that we are entering the era of the industrial app economy. Just as software apps have transformed the consumer world, industrial apps are coming to big machines and are linking them to big data and powerful analytics to enhance efficiency, productivity, and overall operational performance.
The industrial app economy can add nearly half a trillion dollars to the economies of the Middle East, North Africa, Turkey and Pakistan.
As I note in a recent paper, The Moment for Industry, industrial apps are set to accelerate the growth of the Industrial Internet. GE’s Industrial Internet applications have delivered on average performance gains of 20% across industries today. By 2025 Industrial Internet applications can be scaled to apply to economic activities worth about US$2.3 trillion across the region; these efficiency gains could then result in US$465 billion of additional value on an annual basis for the region.
Powered by the growth of industrial apps, the Industrial Internet, alongside advanced manufacturing, crowdsourcing and new collaboration tools—the pillars of the Future of Work—will transform the region’s economy. It will redefine economies of scale, enabling micro factories and the democratization of manufacturing, bringing substantial benefits to the region’s SMEs, local supply chains, manufacturing, and the broader labor market.
These benefits will materialize across vast areas of the economy, with these industrial apps having application in sectors including manufacturing, health care, infrastructure and transportation.
The industrial apps economy will therefore boost employment across industries. But it will also directly create tens of thousand of potential jobs in software development. By their very nature, these high-quality jobs will be an especially good fit for the region’s young and growing population. It is disproportionately young people involved in software development.
This new digital-industrial transformation has huge implications and opportunities for the Middle East, North Africa, Turkey and Pakistan region. The World Bank has identified a need for a new development model. The disruptive, productivity-boosting character of the Industrial Internet, the industrial app economy and advanced manufacturing present an exciting way forward, just as the region is looking for a model to drive economic growth and development.