Industry 4.0: The Future of Tech
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Industry 4.0: The Future of Tech

Photo by:   Lior Yafe
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By Lior Yafe - Embassy of Israel
Economic Counselor


Over the past decade, the global high-tech sector has experienced dramatic and unprecedented rates of technological advancements that have the potential to transform countless industries. The exponential growth of such technologies has led experts to refer to the phenomenon as the Fourth Industrial Revolution, or Industry 4.0.

Under this framework, the First Industrial Revolution (Industry 1.0) refers to the advancements in water and steam-powered machines beginning in 1760 that led to the rise of large-scale factories as hubs of manufacturing and industry. During the Second Industrial Revolution (Industry 2.0) in the late 19th and early 20th centuries, rapid electrification and expansion of rail and telegraph networks enabled mass production and distribution of commercial products. Industry 3.0 took place in the late 20th century with the production and advancement of computer and information technologies, such as personal computers, the internet, and cellular phones.

Beginning in the 2010s, the Fourth Industrial Revolution marks the technological transition toward automation, interconnectivity, and decentralization. Unlike the gradual changes of the first three revolutions, Industry 4.0 is developing at such an exponential pace that growth is often measured by year rather than decade. Over the past few years, significant advancements in artificial intelligence, machine learning, cloud technology, and more can drastically change how products are developed, distributed, and used. Industry 4.0 is expected to impact manufacturing as "smart factories" have begun using computer-integrated autonomous machinery and advanced data analytics that substantially lower production costs. 

Unsurprisingly, the “Start-Up Nation” has positioned itself as a key player in developing innovative technologies. As demonstrated in StartupBlink's Startup Ecosystem Index 2022, Israel ranks second-best in the world for Hardware & IoT (Internet of Things) and Software & Data, as well as third-best in the world for its startup ecosystem. According to the report, 67 percent of startup funding for the Middle East and Africa went to Israeli innovations. 

One notable example is that Israeli startups have made numerous advancements in automatic delivery systems. Although widespread deployment is years away, drones and other unmanned vehicles now have the ability to make autonomous commercial deliveries. Companies, such as HighLander, Flytrex Aviation, Gadfin and Heaven Drones, are working to maximize the efficiency and effectiveness of drone deliveries at all stages of the delivery process. Once integrated into existing delivery systems, these technologies have the potential to thoroughly transform commercial product distribution.

Although Industry 4.0 presents encouraging possibilities for societal and industry development, some experts worry about a lack of proper regulation with such novel technologies. In 2019, it was decided that Israel would join the World Economic Forum's Centers for the Fourth Industrial Revolution (C4IR), a global network dedicated to sharing knowledge, experience, and best practices regarding innovative technology regulation. Led by Israel's Innovation Authority, the C4IR-affiliated Israeli Center for Regulation of Innovative Technologies promotes the responsible development and regulation of new devices, most notably in the context of smart transportation, AI, and autonomous vehicles.

Accordingly, it is important to note the importance of the Mexico-Israel partnership, as the Latin American country represents the most important manufacturing center in the Latin America region, for which manufacturers from all corners of the world consider Mexico as the place to establish their operations as it represented 2.16 percent of the world’s trade  — a result of its economic openness and wide network of trade agreements (11 free trade agreements that give preferential access to 43 countries). These include  the US-Mexico-Canada Agreement (USMCA), the Mexico-European Union Free Trade Agreement (TLCUEM), and the Mexico-Israel Free Trade Agreement.

Due to its competitive advantages, Mexico is the leading exporter in Latin America. In 2020, exports from the Mexican manufacturing sector reached 38 thousand 702 million dollars, which represent 90 percent of total sales abroad. In that sense, Mexico is developing into an advanced manufacturing sector, focusing on certain technologies, such as robotics, the Internet of Things (IoT), artificial intelligence (AI), 3D printing or additive manufacturing, automation and digitalization, cyber-physical systems, fifth-generation wireless technologies, autonomous vehicles, cloud computing, and big data, quantum computing and nanotechnology.

Consequently, more than 80 percent of high-tech exports in Latin America are produced in Mexico, with the country exporting even more sophisticated goods than Canada. Therefore, the panorama has attracted multiple companies in the past few decades interested in Mexico as an export platform. In addition, these companies want to take advantage of the qualified engineers and labor force, international trade agreements, and Mexico's adscription to a dollar zone. European and Asian companies are among the most attracted by Mexico's competitive advantages, mainly when the US is the final market. Even though this economic development model has allowed Mexico to keep its export volume, it is insufficient to maintain its competitive position.

Although Israel does not have car manufacturing plants or vehicle assembly lines, Israel is leading the way in mobility and intelligent transportation technologies. The global automotive industry desperately needs innovative solutions, and Israeli startups are on their way to becoming the primary providers of next-generation technologies in this fast-changing ecosystem. 

Autonomous vehicles, electrification, connected cars, and shared transportation are the prominent trends transforming the auto industry. Israel has a strong presence in computer software and hardware, semiconductor technology, IoT and AI expertise, radar technology, cybersecurity, LiDAR solutions, satellite communication solutions, computer vision, and sensors. Like all IoT devices, cars are getting smarter by connecting to the internet to gather and transmit valuable data. But with increased connectivity comes increased gateways for cyberattacks, which could prove lethal in the case of moving cars.

Hence, Israel and Mexico will benefit greatly as they continue collaborating on improving Industry 4.0 in both countries. This shift will benefit not only these countries' economies but technology and innovation. Please contact the Israel Economic Office in Mexico to learn more about Industry 4.0 in Israel.

Photo by:   Lior Yafe

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