Industry 4.0, Proximity Restrictions and Sustainable Development

The influx of digital technologies raises a need for technological adaptation that affects all of the manufacturing industry. The role of external entities will be especially relevant in facilitating the company's adaptation processes. Moreover, the widespread use of digital technologies in creating innovative solutions accelerates the need for adaptation processes, thus reinforcing ongoing dependence on external contexts for these initiatives. Within a cognitive framework where tacit knowledge is pivotal, there will be a need to reinforce the intensity of proximity constraints. Adaptation is bound to have very powerful territorial effects. This paper delves into the territorial challenges that emerge when digital technologies are integrated into the knowledge bases of the manufacturing industry's product fields. It examines two key dimensions: the proximity constraints that stem from the information flows between entities related to innovation goals, and how they affect decisions on business operation locations and explain the clustering of production in specific areas. Our study highlights the significant territorial effects resulting from the widespread adoption of Industry 4.0. This trend leads to the concentration of productive activities within highly technologically advanced areas and prompts reshoring processes. The geography of production is set to undergo profound transformations, yielding substantial impacts on sustainability. By repatriating or regionalising productive activities, production moves closer to developed markets, which notably reduces the ecological footprint. This shift is promoting greater sustainability in value chains and supports the adoption of a circular economy approach.