Trends and Issues in

Economics
Macario B. Masagca, Jr.
Objective
Micro and macro economic trends and issues in the country which
will guide students on how to:
 make a living;
 use money wisely;
 run a business;
 distribute properly available scarce resources;
 maximize profits and consumer satisfaction;
 help in making appropriate economic decision and
implementation
Matrix of Industrial Revolution
Industrial Evolution

4. Industrial
revolution
Based on cyber-physical-
systems

3. Industrial revolution
Through the use of electronics
and IT further progression in
autonomous production

2. Industrial revolution
Introducing mass production

Level of complexity
lines powered by electric
energy

1. Industrial revolution
Introducing mechanical
production machines powered
by water and steam
Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0
End of the Beginning of the Beginning of the Today
18th century. 20th century 70th
Source: DFKI/Bauer IAO

Page 7
The Labor
Market: An
Illustration
Today’s Factory

Page 13
Tomorrow’s Factory

Page 14
Industry 4.0
 6 Design Principles of Industry 4.0

 Interoperability
 Virtualization
 Cyber-physical
 Decentralization
systems
 Real-Time Capability  Internet of things
 Service Orientation  Internet of services
 Modularity
Building blocks of Industry 4.0
Autonomous
Robots

Big data
Simulation
analytics

Horizontal
Augmented and vertical
reality Industry 4.0 system
integration

Industrial
Additive Mfg Internet of
Things
Cyber
Security
Impacting value chain
Digital Enterprise
Entire value chain is digitized and integrated
Robots working in Amazon WH

45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2013 2014 2015 2016
Examples of Product evolution: Connected
and smart products

Harvard Business Review

Page 24
Impact

Economy

Individual
Business
Impact

Society National
& Global

Page 25
Impact
Economy
 Growth
 Ageing
 Productivity
 Employment
 Labor substitution
 The nature of Work
Impact
Business
 Customer expectations
 Data enhanced products
 Collaborative innovation
 New operating models

Combining digital, physical and biological worlds

 TheFirst (Industrial Revolution) used water and steam power
to mechanize production;
 The Second used electric power to create mass production;
 TheThird used electronics and information technology to
automate production;
 The Fourth is building on the digital revolution that has been
occurring since the middle of the last century. It is said to be
characterized by a fusion of technologies that is obscuring the
barriers between the physical, digital, and biological spheres.
German Chancellor Angela Merkel in 2015 during the World
Economic Forum, discussed Industry 4.0 to describe the
computerization of manufacturing regarded as the fourth
industrial revolution. She claims that the phenomenon will change
the way we deal with the fusion of the online world and the
world of industrial production where smart technology and real-
time data will be used to increase productivity and reduce costs.
The Fourth Industrial Revolution is not merely a
continuation of the Third. Moreover, what sets it apart is,
when placed vis-à-vis the earlier industrial revolutions, the
Fourth is evolving at an exponential rather than a linear
pace. It also projected to obstruct every industry in every
country.
These critical changes, according to Schwab (2016),
will be amplified by emerging technology
breakthroughs in fields such as artificial intelligence,
robotics, the Internet of Things, autonomous vehicles,
3-D printing, nanotechnology, biotechnology, materials
science, energy storage, and quantum computing.
Timeframe to impact industries, business models
Employment effect of drivers of change by job family
(Compound growth rate, 2015-2020, %)

Strong growth

Flat outlook

Flat outlook

Moderate decline
Significant decline
Employment effect of drivers of change by job family
(Compound growth rate, 2015-2020, %)
Installation and
Maintenance jobs will
experience growth in green
jobs such as the installation,
retrofitting, repair and
maintenance of smart
meters and renewable
energy technologies in
residential and office
buildings.
With all these projections- both job creation and
destruction- the usual alarm that as automation permeates
the global economy, the displacement of workers will
increase, still holds true today- even after all the past
Revolutions. For Schwab (2016), at this point, determining
which of these two scenarios will overpower the other is
still unpredictable but history suggests that it is likely to be
a combination of the two.
The Philippines is rich in medium-skilled
workers (43%); followed by low-skilled
workers (33%), and then high-skilled workers
(24%).
Opportunities of Industry 4.0
United Nations Industrial Development Organization

 Economic gains, such as increased revenues

because of lower transaction and transportation
costs
 More reliable and consistent productivity and
output and better quality products
 Shiftto mass customization with an increased role
for SMEs
Opportunities of Industry 4.0 (cont)
United Nations Industrial Development Organization

 Enablinginnovation across many applications,

with much larger economic impact on growth
 Energy-efficientand environmentally sustainable
production and systems
 Effective use of human and material resources
Opportunities of Industry 4.0 (cont)
United Nations Industrial Development Organization

 Increased food security and safety

 Improvements in the health and safety of workers
 Changes in education and training systems
 More open innovation systems 
Opportunities of Industry 4.0 (cont)
United Nations Industrial Development Organization

 Changes in the organization of work, with more

remote, flexible and on-demand work becoming a
standard (telework or telecommuting)
Where do we go from here?
(Maresova, et. al., 2018)

The current phenomenon of Industry 4.0 with respect

to research studies focusing on business and
economy culminated around the year 2015. The
studies described the impacts of Industry 4.0 on the
labor market, education, changes in operational
processes, or economic growth.
Where do we go from here?
(Maresova, et. al., 2018)

However, many studies lack a coherent view of the

topic in question. The authors typically focus on one
aspect of business and economy implications and
continue to examine it in depth. The papers are
usually based on the Industry 4.0 initiative but omit
related initiatives, such as Work 4.0, Management
4.0, Marketing 4.0, and others.
Where do we go from here?
(Maresova, et. al., 2018)

The interconnections and relationships of all relevant

stakeholders, that is, private and state companies, the
state, trade unions and employer unions, are often
ignored. However, it is only by taking into account
these very interconnections that individual countries
can prepare for the social and economic impacts
involved in the current trend of digitization and
automation.
Where do we go from here?
(Maresova, et. al., 2018)

In the future, an increasing interconnection of

industry, science, research, and innovative new
technologies can be expected, which needs to be
approached in a complex way if the transition to
Industry 4.0 is to succeed.
 Enhanced Model

Industry 4.0 Management 4.0 Marketing 4.0 Services 4.0

Agriculture Industry
Gross
= Domestic
Product
Services
Industry 4.0 Policies
Therefore,
 Service sector (including tourism and hospitality
management services) must take advantage of the benefits
arising from the fusion of online world to maximize profit
and provide customers higher level of satisfaction;
 Inthe phase of Industry 4.0, Investments is still
equivalent to Savings (I=S);
 Investuntil your MR = MC. If your MR > MC, increase
your production. If your MR < MC, then reduce
production to avoid additional cost;
Thank you