Industry 4.0 and World Economic Divergence - A Novel Perspective on the Impact of Fourth Industrial Revolution on the World Economy

Industry 4.0 is a current trend of digital transformation and integration of processes into the digital environment using automation, big data, and Internet of Things (IoT). The divergence of the world economy, contrary to the convergence infers the increasing gap between developing and developed countries. Although it is true that there are significant productivity and efficiency gains with the upcoming fourth industrial revolution, it is also essential to examine the differences in the impact of automation on these two economies. The thesis is an attempt to investigate how unanticipatedly Industry 4.0 and the upcoming era of automation supports the divergence of the world economy, contributing to the gap between the developed (Japan, USA, Germany) and developing countries (India, Nigeria, Mexico). The higher the population, the higher the number of people contributing to economy, has been the centre argument for convergence. But how different is the economic impact, when it is the industrial robots working for the economy and when the country even with low population can achieve equally high output? The paper dives over these topics with 1) comparative analysis where an outlook of Industry 4.0 is observed by examining previous three industrial revolutions 2) macroeconomic analysis, where population demographics, labour redeployment and marginal cost-benefit of Industry 4.0 are inferred to discuss divergence of economies. The transdisciplinary paper uses concepts from economics and business disciplines and concludes with policies for developed and developing countries to prepare for the upcoming transition.