Strategic priorities of social production digitalization: world experience

  • Svitlana Bila National Aviation University (NAU)
Keywords: digital technologies, innovations, digital economy, social production, industry and service work, «Industry 4.0», circular economy, NBIC-technologies, structural reformation, competitive advantages, business processes, management, socio-economic consequences, world economy

Abstract

Actual importance of study. At the beginning of the 2020s developed world countries and countries which are the leaders of world economic development faced up the challenges of radical structural reformation of social production (from industry to service system) which is based on digitalization. Digital technologies in world science and business practice are considered essential part of a complex technological phenomenon like ‘Industry 4.0’. Digitalization should cover development of all business processes and management processes at micro-, meso- and microlevels, processes of social production management at national and world economy levels.  In general, in the 21st century world is shifting rapidly to the strategies of digital technologies application. The countries which introduce these strategies will gain guaranteed competitive advantages: from reducing production costs and improved quality of goods and services to developing new sales market and making guaranteed super-profits. The countries which stand aside from digitalization processes are at risk of being among the outsiders of socio-economic development. Such problem statement highlights the actual importance of determining the directions, trends and strategic priorities of social production digitalization. This issue is really crucial for all world countries, including Ukraine which is in midst of profound structural reformation of all national production system. Problem statement. Digital economy shapes the ground for ‘Industry 4.0’, information, It technologies and large databases become the key technologies. The main asset of ‘Industry 4.0’ is information, the major tool of production is cyberphysical systems that lead to formation the single unified highly productive environmental system of collecting, analyzing and applying data to production and other processes. Cyberphysical systems provides ‘smart machines’ (productive machines, tools and equipment which are programmed) integration via their connection to the Internet, or creation special network, ‘Industrial Internet’ (IIoT) which is regarded as a productive analogue of ‘Internet of Things’ (IoT) that is focused on the consumers. ‘Internet of Things’ can be connected with ‘smart factories’ which use ‘Industrial Internet’  to adjust production processes quickly turning into account the changes in costs and availability of resources as well as demand for production made. One of the most essential tasks for current economics and researchers of systems and processes of organization future maintenance of world production is to determine the main strategic priorities of social production digitalization. Analysis of latest studies and publications. Valuable contribution to the study of the core and directions of strategic priorities concerning social production digitalization was made by such foreign scientists as the Canadian researcher Tapscott D [1], foreigners Sun, L., Zhao, L [2], Mcdowell, M. [3] and others. Yet, the study of issues concerning social production digitalization are mainly done by the team of authors as such issues are complicated and multihierarchical. Furthermore, the problem of social production digitalization is closely linked to the transition to sustainable development, which is reflected in the works by Ukrainian scholars like Khrapkin V., Ustimenko V., Kudrin O., Sagirov A. and others in the monograph “Determinants of sustainable economy development”  [4]. The edition of the first in Ukraine inter-disciplinary textbook on Internet economy by a group of scientists like Tatomyr I., Kvasniy L., Poyda S. and others [5] should also be mentioned. But the challenges of social production digitalization are constantly focused on by theoretical scientists, analytics and practitioners of these processes. Determining unexplored parts of general problem. Defining strategic priorities of social production digitalization requires clear understanding of prospective spheres of their application, economic advantages and risks which mass transition of social production from traditional (industrial and post-industrial)to digital technologies bear. A new system of technological equipment (production digitalization, Internet-economy, technology ‘Industry 4.0’, NBIC- technologies and circular economy) has a number of economic advantages for commodity producers and countries, as well as leads to dramatical changes in the whole social security system, changes at labour market and reformation the integral system of social relations in the society. Tasks and objectives of the study. The objective of the study is to highlight the core and define the main strategic priorities of social production digitalization, as they cause the process of radical structural reformation of industrial production, services and social spheres of national economy of world countries and world economy in general. To achieve the objective set in the article the following tasks are determined and solved: - to define the main priorities of digital technologies development, which is radically modify all social production business processes; - to study the essence and the role of circular economy for transition to sustainable development taken EU countries as an example; - to identify the strategic priorities of robotization of production processes and priority spheres of industrial and service robots application; - to define the role of NBIC-technologies in the process of social production structural reformation and its transition to new digital technologies in the 21st century. Method and methodology of the study. While studying strategic priorities of social production digitalization theoretical and empirical methods of study are used, such as historical and logical, analysis and synthesis, abstract and specific, casual (cause-and-effect) ones. All of them helped to keep the track of digital technologies evolution and its impact on structural reformation of social production. Synergetic approach, method of expert estimates and casual methods are applied to ground system influence of digital technologies, ‘Industry 4.0’ and their materialization  as ‘circular economy’ on the whole complicated and multihierarchical system of social production in general. Basic material (the results of the study). Digital economy, i.e. economy where it is virtual but not material or physical assets and transactions are of the greatest value, institutional environment in which business processes as well as all managerial processes are developed on the basis of digital computer technologies and information and communication technologies (ICT), lies as the ground for social production digitalization. ICT sphere involves production of electronic equipment, computing, hardware,.software and services. It also provides various information services. Information Technology serves as a material basis for digital economy and digital technologies development. Among the basic digital technologies the following ones play the profound role: technology ‘Blockchain’, 3D printing, unmanned aerial vehicles and flying drones, virtual reality (VR). Augmented reality (AR), Internet of Things (IoT), Industrial Internet of Things (IIoT), Internet of Value (IoV) which is founded on IT and blockchain technology, Internet of Everything (IoE), Artificial Intelligence (AI), neuron networks and robots. These basic digital technologies in business processes and management practices are applied in synergy, complexity and system but not in a single way. System combination of digital technologies gives maximal economic effect from their practical application in all spheres of social production-from industry to all kinds of services. For instance, in education digital technologies promote illustrating and virtual supplement of study materials; in tourism trade they promote engagement of virtual guides, transport and logistics security of tourist routes, virtual adverts and trips arrangements, virtual guidebooks, virtual demonstration of services and IT brochures and leaflets. Digital technologies radically change gambling and show businesses, in particular, they provide virtual games with ‘being there’ effect. Digital technologies drastically modify the retail trade sphere, advertisement and publishing, management and marketing, as well as provide a lot of opportunities for collecting unbiased data concerning changes in market conditions in real time. Digital technologies lie as the basis for ‘circular economy’, whose essence rests with non-linear, secondary, circular use of all existing natural and material resources to provide the production and consumption without loss of quality and availability of goods and services developed on the grounds of innovations, IT-technology application and ‘Industry 4.0’. Among priorities of circular economy potential applications the following ones should be mentioned: municipal services, solid household wastes management and their recycling, mass transition to smart houses and smart towns, circular agriculture development, circular and renewable energy, The potential of circular economy fully and equally corresponds to the demands for energy efficiency and rational consumption of limited natural resources, so it is widely applied in EU countries while transiting to sustainable development. In the 21st century processes of social production robotization draw the maximal attention of the society. There is a division between industrial and service robots which combine artificial intelligence and other various digital technologies in synergy. Industrial robots are widely used in production, including automotive industry, processing industry, energetic, construction sectors and agriculture Services are applied in all other spheres and sectors of national and world economies –from military-industrial complex (for instance, for mining and demining the areas, military drones) to robots-cleaners (robots-vacuum cleaners), robots-taxis, robots engaged in health care service and served as nurses (provide the ill person with water, tidy up, bring meals). Social production robotization is proceeding apace. According to “World Robotic Report 2020”, within 2014 – 2019 the total quantity of industrial robots increased by 85 %. By 2020 in the world the share of robots in the sphere of automated industrial production had comprised 34 %, in electronics – 25%, in metallurgy – 10 %. These indicators are constantly growing which results in structural reformation of the whole system of economic and industrial processes, radical changes in world labour market and the social sphere of world economy in general. Alongside with generally recognized types of digital technologies and robotization processes, an innovation segment of digital economy – NBIC – technologies (Nanotechnology, Biotechnology, Information technology, Cognitive Science) are rapidly spread. Among the priorities of NBIC-technologies development the special place belongs to interaction between information and cognitive technologies. As a material basis for its synergy in NBIC-technologies creation of neuron networks, artificial intelligence, artificial cyber brain for robots are applied. It is estimated as one of the most prospective and important achievements of digital economy which determines basic, innovational vector of social production structural reformations in the 21st century. The sphere of results application. International economic relations and world economy, development of competitive strategies of national and social production digitalization of world economy in general. Conclusions. Digital technologies radically change all spheres of social production and social life, including business and managerial processes at all levels. Digital technologies are constantly developing and modifying, that promotes emergence of new spheres and new business activities and management. 21st century witnessed establishing digital economy, smart economy, circular economy, green economy and other various arrangements of social production which are based on digital technologies. Social production digitalization and innovative digital technologies promotes business with flexible systems of arrangement and management, production and sales grounded on processing large Big Data permanently, on the basis of online monitoring in real time. Grounded on digital technologies business in real time mode processes a massive Big Data and on their results makes smart decisions in all business spheres and business processes management. Radical shifts in social production digitalization provides businesses of the states which in practice introduce digital technologies with significant competitive advantages  - from decrease in goods and services production cost to targeted meeting of specific needs of consumers. Whereas, rapid introduction of digital technologies in the countries-leaders of world economic development results in a set of system socio-economic and socio-political challenges, including the following: crucial reformatting the world labour market and rise in mass unemployment, shift from traditional export developing countries’ specialization, breakups of traditional production networks being in force since the end of the 20th century, so called ‘chains of additional value shaping’, breakups of traditional cooperation links among world countries and shaping the new ones based on ‘Industry 4.0’ and ‘Industrial Internet’. Socio-economic and political consequences of radical structural reformation of all spheres in national and world economy in the 21st century, undoubtedly, will be stipulated with the processes of social production digitalization. It will require further systemic and fundamental scientific studies on this complicated and multi hierarchical process.

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References

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Author Biography

Svitlana Bila, National Aviation University (NAU)

Professor of International Economic Relations and Business Department, Professor, Doctor of Public Administration, Honored economist of Ukraine

Published
2021-03-30
How to Cite
Bila, S. (2021). Strategic priorities of social production digitalization: world experience. University Economic Bulletin, (48), 40-55. https://doi.org/10.31470/2306-546X-2021-48-40-55
Section
Knowledge Economy, Innovative Economy