scientific work on the topic: “ensuring the country's...

Scientific work on the topic:

“Ensuring the country's competitiveness

in terms of Industry 4.0”

Authors: Kravchuk Y.H. and Shestopalova A.H.

Reasearch adviser: Skorobogatova N.Y.

Relevance of the topic. The world is facing the global transformations of the Fourth Industrial Revolution today. Artificial intelligence, automation, the Internet of Things, cloud environments and other innovations help countries to increase their competitiveness on the world stage. These technologies are the basis for improving production efficiency, environmental friendliness and convenience of public life. At the same time, they pose a huge challenge to national economies, as there is a need to radically change national strategies for building and ensuring competitiveness.

The purpose of the study is to improve the scientific and methodological foundations and development of practical recommendations to ensure the competitiveness of countries in terms of Industry 4.0.

The scientific novelty of the results lies in the deepening and development of theoretical and scientific-methodological approaches to ensuring the competitiveness of the country in the conditions of Industry 4.0 and in the development of practical recommendations for improving its level. The theoretical significance of the work is to improve scientific and methodological approaches to ensuring the competitiveness of the country. The practical value lies in the development of recommendations for the formation of competitive advantages of the national economy in the context of Industry 4.0.

The trends of new industrialization are becoming a priority for most countries today. It is the concept of Industry 4.0 that is considered a promising means of strengthening the level of international competitiveness. To research the impact of Industry 4.0 tools on the competitiveness of countries, four groups of countries were selected depending on their readiness for the Fourth Industrial Revolution:

• the first - the leading countries (China, USA, Germany, France, Japan and South Korea);

• second - countries that are ready to introduce new technologies (India and Russia);

• third - countries with high potential (Australia and Ukraine);

• fourth, countries where the transition is just beginning (Brazil, Saudi Arabia and South Africa).

As a rule, the countries of the first group are the leaders in the rating of international competitiveness, but there is no clear distinction between the groups.

№ Country

Global Competitiveness Index

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

І group

1 USA 2 4 5 7 5 3 3 1 1 2

2 Germany 7 5 6 6 4 4 5 3 3 7

3 Japan 8 6 9 10 9 6 7 8 5 6

4 United Kingdom 13 12 10 8 10 10 7 6 8 9

5 France 16 15 18 21 23 22 21 18 17 15

6 South Korea 19 22 24 19 25 26 26 17 15 13

7 China 29 27 26 29 29 28 28 28 28 28

ІІ group

8 India 51 56 59 60 71 55 39 40 58 68

9 Russia 63 63 66 67 64 45 43 45 43 43

ІІІ group

10 Australia 15 16 20 20 21 21 23 15 14 16

11 Ukraine 82 89 82 73 84 79 85 89 83 85

ІV group

12 Saudi Arabia 21 17 18 20 24 25 29 30 39 36

13 South Africa 54 50 52 53 56 49 47 61 67 60

14 Brazil 58 53 48 56 57 75 81 80 72 71

The impact of the institutional component can be clearly seen in the value of the Index of Economic Freedom by country. 5 countries have the highest level of economic freedom among the analysed sample: Great Britain (index value 79.3 in 2020), Germany (73.5), South Korea (74), USA (76.6) and Japan (73.3), moderate - France (66), Russia (61) and Saudi Arabia (62.4). China, Ukraine, India, Brazil and South Africa have significantly lower levels of economic freedom. Ukraine has the worst performance among the analysed countries, but its position has been slowly improving for 10 years, until 2018 it was in the group that is named "despotic".

The affordability of doing business in the country is determined by the relevant Ease of Doing Business Index. In this ranking, Ukraine is rapidly raising its position (for 10 years from 142 places to 71), which contributes to the active development of entrepreneurial activity in the country. Countries such as Saudi Arabia and South Africa have a negative trend - from 15th to 92nd place and from 34th to 82nd place respectively.

The level of prosperity of countries is determined on the basis of The Legatum Prosperity Index, created by the British think tank The Legatum. In this ranking, Ukraine (54.5 in 2019) also lags behind the analysed countries, a similar position in South Africa (56.65). The greatest development of this indicator was achieved by Great Britain (80.7) and Germany (81.14).

Factor analysis results

The economic development of the country directly depends on its innovative activity, technological readiness for the introduction of new technologies. Today, countries that are actively implementing the latest technologies hold the lead in most global rankings. Ukraine is increasing its position in this ranking and for the last 3 years is in the TOP-50 most innovative countries. At the same time, Saudi Arabia is showing the opposite trend to Ukraine, and is constantly losing ground.

The basic element of Industry 4.0 is information technology. To assess the impact of this factor, the Index of Information and Communication Technologies Development and the Network Readiness Index were analysed. A maximum of 10 points can be obtained by countries on the ICT Development Index. Ukraine with 5.62 points in 2017 is ahead of such countries as South Africa (4.96), India (3.03) and China (5.60), but lags far behind the leading countries, namely: South Korea ( 8.85), Great Britain (8.65), Germany (8.39), Japan (8.43), Australia (8.24), USA (8.18) and France (8.24).

The main tool for monitoring the development of the network economy is the Network Readiness Index is a comprehensive indicator of the development of network technologies, which is calculated annually by the World Economic Forum and the International School of Business INSEAD. Analysing the value of the index for the studied countries, we can see that Ukraine does not occupy a leading position. However, it has the potential to develop network readiness due to the rapid development of the IT sector. The analysis of the features of the impact of innovative technologies of Industry 4.0 on the competitiveness of the studied groups of countries showed the following.

The analysis of statistical and analytical data proved the need for significant investment resources for the introduction of new technologies, which, in turn, will contribute to GDP growth (Fig. 1). In particular, the net inflow of foreign direct investment has a direct impact on the country's nominal GDP (correlation coefficient equal to 0.892), there is a parabolic relationship between these indicators (the second-degree log was constructed).

Among the countries selected for the analysis, the largest net inflow of FDI is in the United States ($ 35,648 million) and, accordingly, the largest amount of nominal GDP ($ 1,91919.4 billion). Saudi Arabia and Ukraine have the lowest net FDI inflows, which in turn affects GDP. The analysis of statistical data also shows a close relationship between GDP and R&D expenditures (Fig. 2). The identified dependencies prove the need for active R&D funding, which will affect the growth of the country's GDP and its level of competitiveness. At the same time, GDP growth allows to allocate a larger share of it to R&D financing to ensure the country's competitiveness. The study revealed the ambiguity of this dependence for certain countries. In particular, South Korea has the largest share of R&D in GDP, but nominal GDP among the analysed countries does not have a corresponding proportion among the analysed countries. Conversely, China and the United States have the highest nominal GDP among the countries represented, but the share of R&D in GDP is much smaller than in South Korea. This situation is explained by the scale of production and the structure of GDP.

Analysis of sources of financing R&D expenditures shows their diversity: business own funds, government support and attracting foreign investment (Fig. 3). At the same time, intellectual property, which is the result of R&D, directly affects the economic development of the country and its competitiveness.

This dependence is confirmed by the correlation analysis (Fig. 4), as well as the results of world ratings.

Fig. 1 Fig. 2

Fig. 3 Fig. 4

SWOT-analysis of the implementation of Industry 4.0 technologies for the countries of the first group is given on slide 9.

The next group of countries are countries that are ready to introduce new technologies - they have a strong base for the introduction of the latest technologies in Industry 4.0, but do not pursue an active policy to disseminate this concept. SWOT-analysis for this group of countries on the implementation of the latest technologies in Industry 4.0 is given on slide 9.

Particular attention should be paid to countries with high potential, Ukraine is classified in this category. SWOT-analysis for this group of countries is given on slide 9. Analysing the countries of this group as a whole, it should be noted significant problems in economic development, which can be overcome through the introduction of technologies in Industry 4.0.

The last group is the countries where the transition to the implementation of the concept of Industry 4.0 is just beginning. This group includes countries such as Brazil, Saudi Arabia and South Africa. The SWOT-analysis for this group of countries on the introduction of the latest technologies of Industry 4.0 is given on slide 9. This is the largest group of countries and all of them show a low level of readiness for production using the latest technologies, as evidenced by weak performance among drivers of production, as well as have a limited structure of production.

SWOT-analysis of the implementation of Industry

4.0 technologies in countries with high potential

SWOT-analysis of the implementation of Industry

4.0 technologies in leading countries

Strengths Weaknesses

1. Powerful production

base

1. Lack of proper legislation

to regulate Industry 4.0

2. Strong economy

2. Weak influence on the

activities of TNCs, inability to

understand

3. Active development

and support of

innovations

3. Imbalance of levels of

development of regions

4. Highly skilled

workforce

4. Insufficient level of

information protection

5. Quick response to

changes and challenges

5. Weakening of the economy,

the impossibility of

introducing new standards in

all countries

Opportunities Threats

1. Improving the

efficiency of the

country's production

sector

1. Implementation of

inappropriate strategies for the

development of Industry 4.0

2. Increasing the level of

competitiveness

2. The emergence of

imbalances in the economy

3. Strengthening its

leading positions in

international rankings

3. Increasing unemployment

4.Improving the level of

environmental

friendliness of production

4. Risks of political and social

instability

5. Production cooperation

with world leaders

5. Violation of users' rights,

theft of digital information

due to an increase in the

number of cyberattacks


1. High potential for

implementation

1. Lack of initiatives to

develop Industry 4.0, which

could lead to backwardness

and loss of positions in the

future

2. Readiness of the

economy to implement

technologies Industry 4.0

2. Limited production base

3. Availability of highly

qualified employees

3. Insufficient security of

existing information

4. Active business

development

4. Weak development of

production drivers

5. Appropriate legal

environment

5. Problems with financing

and protection of intellectual

property rights


1. Maintaining or even

improving existing positions

in the international arena

1. Misunderstanding the

concept of Industry 4.0 to

the end

2. Environmental

friendliness of production

2. Adoption of inappropriate

strategies for the

development of new

technologies


with leading countries

3. Non-acceptance of new

technologies by the

population

4. Improving

macroeconomic indicators 4. Rising unemployment

5. Improving the state of

production drivers

5. Increasing the number of

political and social speeches


1. High level of income of

the country

1. Imperfect regulatory

not only in matters of

Industry 4.0, but in

general

2. Has a clear advantage

(rich in resources, service

orientation)

2. Significant problems

among production drivers

3. Highly skilled

workforce

3. Insufficient level of

network readiness

4. High level of

innovation

4. Lack of expanded

funding for science and

innovation

5. High development of

the IT sphere

5. Lack of adequate

intellectual property

protection


1. Transformation of

existing facilities into an

advanced production base

1.The population is not

ready for the latest

technologies


with the leading countries

of the world

2. Increasing

unemployment


with the leading countries

of the world

3. Increasing the level of

instability of political and

economic situations

4. Creating a positive

image of the country

4. Dependence on leading

countries

5. Inflow of foreign direct

investment

5. Lack of clear

understanding of the

concept of Industry 4.0


1. The current level of

industry

1. Limited production

structure

2. Low rates of

development of

production drivers

3.The tendency to

reduce the production

base

2. Ambitions of the

state

4. Limited resources

5. Lack of highly

skilled labor


1. Increasing the level

of industrialization

1. Deepening

dependence on leading

countries

2. Stimulating the

development of

production

2. Disconnect between

the population and the

latest technologies

3. Financial assistance

and support from the

world's leading

countries

3. Increasing the level

of political and

economic instability

4. Improving the level

of education,

development of new

professions

4. Lack of

understanding of the

concept of Industry 4.0

5. Improving the

country's position in

international rankings

5. Significant state

budget expenditures

and the threat of

default

SWOT-analysis of the implementation of

Industry 4.0 technologies in the countries of

origin

SWOT-analysis of the introduction of Industry 4.0

technologies in countries that are ready to introduce

new technologies

As the country belongs to the group of countries with high potential, it has a number of advantages, but many more factors that hinder development in this direction. The main reasons are problems with production drivers, outdated production base, etc. Subject to their solution, effective implementation of Industry 4.0 technologies is possible.

As a result of the study, the following measures were developed to form Ukraine's competitive advantages in terms of Industry 4.0:

• Increasing the level of interaction between existing stakeholders and the state, creating the latest programs, initiatives, development strategies, which will facilitate the work of stakeholders on the implementation of the latest technologies in Industry 4.0.

• Expanding funding for the IT sector and motivating labor resources to work in Ukraine. The main problems with the outflow of personnel abroad are the impossibility of continuous professional development and low wages compared to foreign countries.

• Deepening integration into existing EU programs, as EU countries are active implementers of Industry 4.0 concepts in industry, EU programs for the development of Industry 4.0 with funded funding have been established.

• Reforming the protection of intellectual property rights, as the inability to protect their developments is an additional reason for the departure of professionals.

• Digitalization of the main sectors of industry and infrastructure, which will encourage the rapid development of key sectors of the economy and related industries.

SWOT- analysis of the introduction of the latest

technologies of Industry 4.0

in Ukraine Strengths Weak sides

1. Intensive development of the IT sphere 1. Lack of support for organizations

implementing Industry 4.0 technologies

2. Highly skilled workforce 2. Imperfection of the regulatory framework

3. Willingness to produce innovative technologies 3. Weak link between the state and

stakeholders

4Positive image of Ukrainian employees working

on the terms of outsourcing

4. Significant backwardness of the production

sphere

5. Cooperation with foreign companies and desire

to develop

5. Lack of proper protection of intellectual

property


1. Production cooperation with the world's leading

countries in the field of IT and innovative

developments

1. As a result of cooperation, Ukraine is

transformed into a source of labor

2. Penetration and development of the latest

technologies in all spheres of industry

2. Increasing distrust in the state of existing

enterprises

3. Improving the image of national producers in

the eyes of Ukrainians

3. Increasing the likelihood of unstable

political and economic situations

4. Obtaining expanded funding for scientific and

innovative developments under existing programs

4. Significant expenditures from the state

budget, deepening Ukraine's debt dependence

5. Improving positions in international rankings 5. Rising unemployment

List of publications

The practical significance of the obtained results is confirmed by the certificate of implementation (№ 50520-1 dated 05.05.2020 issued by the Centre for Resource Efficient Production).

The main provisions of the scientific work were published in the professional publication of Ukraine ("Entrepreneurship and Innovation", 2019, №7), collections of scientific papers on the results of international conferences "Problems and prospects of development of economy and management", Prague, 2019. , "Globalization of directions of industrial potential formation in the conditions of post-industrial transformations", Kyiv, 2019, "International scientific and technical cooperation: mechanisms, principles, efficiency", Kyiv, 2020, "Inclusive economic development in the context of today's global challenges », Kharkiv, 2020) .

Conclusions Therefore, as a result of the study, we can draw the following conclusions:

1. As a result of systematization of approaches to the interpretation of the essence of the concept of "competitiveness" it was found that the main feature of a country's competitiveness is the ability to achieve sustainable economic growth through the use of available and potential resources, technologies and more. Innovative technologies of Industry 4.0 can significantly increase the level of competitiveness of the country, even with limited material, natural, labor and other resources.

2. According to the results of the analysis of the competitiveness of four groups of countries, depending on the level of their readiness to implement the technologies of Industry 4.0, it was found that one of the determining factors in ensuring all groups of countries is the innovation component. Correlation analysis revealed the degree of influence of different factors in each of the analyzed countries. Each country, depending on the specifics of the national economy, uses other levers of influence and achieves different results. In particular, it was established that Ukraine has significant problems in ensuring competitive advantages, lagging behind comparable countries in such components as economic freedom, development of information and communication technologies, etc. However, it should be noted that the country has achieved significant results in recent years in the development of innovation. The conducted SWOT-analysis by groups of countries allowed to systematize the strengths and weaknesses, as well as opportunities and threats to their competitiveness from the introduction of Industry 4.0 technologies.

3. The results of the assessment of the impact of innovative technologies on the economy of Ukraine proved that the state really has great potential for the introduction of the latest technologies in Industry 4.0. However, it has a number of problems that were identified during the SWOT-analysis, the most significant are Ukraine's significant debt, lack of adequate funding for the research and innovation sector, as well as the lack of state orientation towards the introduction of new technologies. In order to form the competitive advantages of the national economy of Ukraine in terms of Industry 4.0, a number of measures are proposed, namely: implementation of the program of expanded financing of the IT sector, system of motivation of labour force intellectual property rights in Ukraine, digitalization of basic sectors of industry and infrastructure, etc. We believe that their implementation will increase the level of international competitiveness of the country.

Thank you for the attention!

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