Main trends in the development of industry 4.0 on an international scale and its possible impact on the economic prosperity of Uzbekistan: identifying prospective aspects and potential threats to the development

Abstract

Abstract: In this article the main trends of Industrial Revolution 4.0 have been analyzed along with the history of this term. Moreover, current innovation state of Uzbekistan has been analyzed and possible recommendations have been provided which can be helpful for future research and decision makers.

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Komilov, A. (2025). Main trends in the development of industry 4.0 on an international scale and its possible impact on the economic prosperity of Uzbekistan: identifying prospective aspects and potential threats to the development. Raqamli Iqtisodiyot Va sun’iy Intellekt Texnologiyalarining Jamiyat Rivojlanishidagi Ahamiyati, 1(1), 32–39. Retrieved from https://inlibrary.uz/index.php/risitjra/article/view/69014
Asror Komilov, Graduate School of Business and Entrepreneurship
Doctoral Student
Crossref
Сrossref
Scopus
Scopus

Abstract

Abstract: In this article the main trends of Industrial Revolution 4.0 have been analyzed along with the history of this term. Moreover, current innovation state of Uzbekistan has been analyzed and possible recommendations have been provided which can be helpful for future research and decision makers.


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32

MAIN TRENDS IN THE DEVELOPMENT OF INDUSTRY 4.0 ON AN

INTERNATIONAL SCALE AND ITS POSSIBLE IMPACT ON THE ECONOMIC

PROSPERITY OF UZBEKISTAN: IDENTIFYING PROSPECTIVE ASPECTS

AND

POTENTIAL THREATS TO THE DEVELOPMENT

Komilov Asror Akmalovich

Doctoral Student of Graduate School of Business and

Entrepreneurship https://doi.org/10.5281/zenodo.14196782

Abstract: In this article the main trends of Industrial Revolution 4.0 have been

analyzed along with the history of this term. Moreover, current innovation state of
Uzbekistan has been analyzed and possible recommendations have been provided which
can be helpful for future research and decision makers.

Key words: Industry 4.0, innovation, AI, Machine learning, IoT, Cloud Computing,

Digital economy

Introduction

The expeditious developments in digital technology have triggered a rise to the

Fourth Industrial Revolution, or Industry 4.0, fundamentally altering the global industrial

landscape. Characterized by intelligent automation, interconnected systems, and the

integration of cyberphysical technologies, Industry 4.0 is transfiguring traditional industries

and leading to new economic opportunities. At an international level, these developments

are paving the way for increased productivity, innovation, and economic growth. Countries

that efficaciously adapt to these rapid changes are positioned to benefit from enhanced

industrial efficiency, resource optimization, and a strengthened ambitious position in the

global market.

For Uzbekistan, a country undergoing economic reforms and industrial

modernization, the significance of Industry 4.0 presents both favorable opportunities and

momentous challenges. With its capacity to catalyze growth in fields such as manufacturing,

agriculture, and services, Industry 4.0 could play a pivotal role in fostering Uzbekistan’s

economic development. Nevertheless, the implementation of these technologies also brings

possible threats, including the problem of digital inequality, the disruption of traditional

industries, and the challenge of establishing a skilled workforce to manage and innovate

within this new industrial paradigm.

This thesis tries to explore the main trends in Industry 4.0’s development on a global

scale, evaluating their relevance to Uzbekistan’s unique economic context. By analyzing
the prospective aspects and potential threats, this study seeks to provide vision into how

Uzbekistan can strategically straighten its industrial policies to channel the benefits of

Industry 4.0 while undertaking the risks associated with digital transformation.



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Literature review

Manufacturing value chains are convoluted. Technological advances have created

several advantages for business world; new concepts such as digitalization, Internet of

Things (IoT) and Cyber Physical Systems (CPS) have received a great importance across

the industries. These terminologies are utilized in defining the Fourth Industrial Revolution

(Industry 4.0), also known collectively as a German high-tech strategy for future

manufacturing industries [4]. Industry 4.0 precipitates a staggering effect by transforming

the manufacturing and production processes in industries. Thus, Industry 4.0 will play

crucial role in transforming traditional companies into Smart Factories with the help of

Internet of Things (IoT) and Cyber Physical Systems (CPS).

Before diving into the benefits and applications of Industry 4.0, it is worth to

analyze the history of industrial revolutions and what are the main differences are there

among them.

Thus, the First Industrial Revolution commence at the end of the XVIII century,

with origination of the steam engine and mechanized equipment, which revolutionized

industries such as textiles and iron. And led to the transition from manual production

methods to automated production.

The Second Industrial Revolution occurred at the end of the 19th century with the

introduction of electrical energy, which in turn allowed enabled factories to operate more

efficiently. Inventions like the internal combustion engine and the introduction of the

assembly line paved a way for mass production and economies of scale.

During, 1960s and 1970s, the Third Industrial Revolution took place with the

introduction of electronics, computers, and early automation. This phase allowed a shift

from analog processes to digital ones, with automation enhancing precision and

productivity in industries.

Market development, globalization and immense competition have created a

condition to the inception of the Fourth Industrial Revolution as the concept of Industry 4.0,

which is based on the integration of digital devices with smart, interconnected systems.

Machines, data, and people now interact in real-time, underpinned by AI, IoT, and machine

learning, which leads to "smart factories" with automated and effective production

processes [5].


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Source:

[9]

Below are some of Industry 4.0’s core components:

1.

Internet of Things (IoT)

: Devices are integrated with sensors, software, and

other technologies to get connected and traffic the data with other machines and systems

via the internet. This allows real-time monitor and control of machinery and equipment.

Activities are triggered through data transfers in the information technology to make daily

mobility safer, easier and pleasant.

2.

Big Data and Analytics

: The concept of big data applies to substantial,

miscellaneous and intricate datasets that impact the organizational decision making of a

company concerning the long-term strategy. Huge amounts of data generated from

production processes, machines, and customers are analyzed to gain insights that improve

decision-making, optimize production, and reduce costs[2].

3.

Cyber-Physical System (CPS) Each system of CPS has sensors installed on

the entire physical machines to connect the physical things with virtual models. CPS also

serves as the foundation to create the Internet of Things (IoT) which allow become the

Internet of Services (IoS) [6].

4.

Artificial Intelligence (AI) and Machine Learning (ML)

: AI and ML

algorithms allow machines to learn from data, predict errors, optimize workflows, and carry

out complex tasks autonomously, increasing effectiveness and great flexibility.

5.

Cloud Computing

: Cloud Computing incorporates pools of IT resources

that provide storage and processing capabilities in virtual system by serving multiple users.

There are mainly three frameworks of cloud computing; Software as a Service (SaaS) where

the access will be granted depending on the customer purchase such as ERPs, Platform as a

Service (PaaS) where customers are authorized to access their applications on the cloud

online in any device such as software developers and Infrastructure as a Service (IaaS)

offers mostly basic activities such as storing capabilities [2].

6.

Additive Manufacturing

: also defined as 3D Printing, refers to producing

customized goods for the requirements of customers. The most popular way is the prototype

and 3D printing methods in order to produce small batches reducing waste by gaining


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advantage of having less stock on their hand and overproduction and speeding up the

manufacturing processes.

7.

Augmented Reality (AR) and Virtual Reality (VR)

: it is defined as the

interactive technology that allows harmony between the virtual world and its users while

the virtual world is being utilized as the part of the real surroundings [2].

These technologies

aid training, maintenance, and production planning by providing interactive visualizations

and real-time data to users.

Table 1. Trends in the development of digital technologies

Name

The essence and prospects of development

Leaders

of

implementation

Blockchain
technology

Considering the prediction of the value of Gartner
business chains, after the first phase of growth in
20182021, in 2022-2026, investment flows are
expected to increase, and new successful models will
be created, which is expected to increase them by more
than 3 trillion dollars USA. worldwide


USA, China

Three-
dimensional
printing

Further advancements of three-dimensional (3D)
printing have the potential to disrupt production
processes, encouraging international trade in design
rather than ready products. Developing countries will
have to leap-frog traditional production processes.

USA, China,

Japan, Germany,

Great Britain

Internet

of

Things

(IoT)

In 2018, more "devices" (8.6 billion) were connected to
the Internet than people (5.7 billion), and the number of
IoT connections is projected to increase by 17% per
year and exceed 22 billion by 2025

USA, China,

Japan, Germany,

Republic

of

Korea,

France and Great

Britain

5G networks

5G networks can transfer approximately 1000 times
more data than modern systems. In 2019, 72 mobile
operators tested 5G, it is expected that larger-scale
implementation will begin only in 2025.

USA,

Europe

and

Asia Pacific

Cloud
computing

Cloud computing is disrupting traditional business
models by reducing the need for its own IT personnel,
offering flexibility to scale and consistently deploy and
maintain programs

North America,

Asia Pacific,

Western Europe

Automation
and
robotics

According to the International Federation of Robotics,
global sales of industrial robots have doubled between
2013 and 2017. This trend will most probably continue,
and sales are expected to grow from 381,300 units in
2017 to 630,000 units by 2021.

China, Japan, the

Republic

of

Korea,

the

United

States

and Germany


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Artificial
intelligence

(AI)

and

data

analysis

General-purpose AI technologies have the potential to
increase the global economy by $ 13 trillion in 2030,
which will provide an additional 1.2 percent to annual
GDP growth.

China, USA and

Japan

Source:

[5]

Analyzing the current state of innovation in Uzbekistan

For a lower-middle-income country, Uzbekistan, the largest potential advantage of

innovation come from focusing on importing, absorbing and adapting innovation from

abroad – goods, services, processes and methods that have already effectively worked

before [7]. Investment in R&D is one of the primary inputs to innovation and is vital to

raising productivity and creating additional value within an economy, diversifying product

types and gaining access to international market value chains. It helps to generate high rates

of return and promote long-term growth. However, gross expenditure on research and

development (GERD) in Uzbekistan is relatively low –almost equal to 0.2 per cent of GDP

since 2012, even with a decline to 0.13 per cent in 2018, slightly higher than Tajikistan (0.1

per cent) and Kazakhstan (0.12 per cent) but lower than the income-group average in 2017

(0.58 per cent). In recognition of the low levels of investment in R&D, the Strategy of

Innovative Development 2019–2021 set out to raise these levels to 0.8 per cent of GDP in

2021

[7]

.

It can be seen from the graph below:

In 2019, 304 firms conducted R&D activities,121 of them were from the private

sector (40%), 118 were State-owned enterprises (39%) – especially research and scientific

institutes, a structure retained from the Soviet heritage – and 65 of them were higher

education institutions (HEIs) (21%) [7].

Higher use of and access to the information and communication technology (ICT)

is an important facilitator for innovation, productivity growth and competitiveness across

the sectors in the Uzbek economy. More dynamic ICT sector can serve as a source of

economic growth and job creation.


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The provision of e-governance services as well as digital connectivity has improved

greatly, even though the access to the Internet is still not yet equitable across the country.

The number for broadband subscriptions raised from fewer than 1 per 100 people in 2012

to almost 14 per 100 in 2019, the highest in Central Asia – followed closely by Kazakhstan

(13 per 100).

Patent activity, the indication of the potential for research commercialization for

innovations, remains relatively low in Uzbekistan. Overall, trademark filings show the

largest increase in the past decade, from 4,510 in 2011 to 8,494 in 2020, whereas the patent

filings indicate a smaller increase, from 304 in 2011 to 379 in 2020, with a highest of 480

in 2018 (WIPO, 2021a).

Especially, the number of patents filed amounted to 1.5 per billion dollars of purchasing

power parity (PPP) GDP in 2021, higher than in Tajikistan but lower than in Kazakhstan

and Kyrgyzstan.


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Encouragingly, the country’s remittances for intellectual property have been on the

increase since 2016, albeit from a low base, showing that Uzbekistan is importing high

technology products from abroad to upgrade theirs domestically. In fact, 19.35 per cent of

Uzbek firms have licensed foreign technology, which is higher than the ECA average (14

per cent) [8].

The above graph illustrates the main reasons that constrain the innovation activities

based on the opinions of the people. 23.1% of the respondents see the main reason that

hinder the innovations is lack of financing. The second reason is no need for innovation

with 14.7% is followed by high cost of innovation with 12.9%.

Recommendations

:

1.

Development of Digital Infrastructure: The authorities can prioritize

investment in internet and mobile network expansion, particularly in remote and rural areas.

Public-private partnerships agreements can help facilitate infrastructure enhancements.

2.

Education and Training: Fostering educational systems and initiating special

training programs in cooperation with industry can allow eliminate the skills gap. To

establish partnerships with international educational institutions can also attract expertise in

Industry 4.0 technologies to Uzbekistan.

3.

Stimulating Investment: The government can promote private investment in

Industry 4.0 by allowing tax breaks, subsidies, or low-interest loans for businesses who

invest in new technologies. Supporting SMEs in espousing these technologies will be

especially vital.

4.

Enhancing Cybersecurity Capacity: Fostering cybersecurity infrastructure,

introducing well rounded national cybersecurity standards, and increasing awareness about

data security are important steps to protect against cyber menaces. Developing partnerships

with international cybersecurity organizations can also be a way to attract valuable

resources and expertise.

5.

Regulatory Reforms: Introducing supportive regulatory framework that

undertakes intellectual property, data privacy, and digital rights will help create an


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innovation-friendly environment. Policies that support innovation, protect intellectual

property, and promote digital transformation in the public and private sectors are vital.

Conclusion

In this paper the Industrial Revolution 4.0 has been analyzed. Its history and main

components have been provided. Moreover, current innovation state of Uzbekistan has been

analyzed and possible recommendations have been provided which can be helpful for future

research and decision makers

.

References:

1.

ADB

report

“HARNESSING

THE

FOURTH

INDUSTRIAL

REVOLUTION

THROUGH

SKILLS

DEVELOPMENT

IN

HIGH-GROWTH

INDUSTRIES IN CENTRAL
AND WEST ASIA” 2023

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Erboz, Gizem. (2017). How To Define Industry 4.0: Main Pillars Of Industry

4.0

3.

Hofmann, E. & Rüsch, M., 2017. Industry 4.0 and the current status as well

as future prospects on logistics. Computers in Industry, 89, pp.23–34.)

4.

Kambarov, I., & Inoyatkhodjaev, J. (2023). Perspectives and challenges of

Assembly

4.0 technologies for final automotive assembly operations in Uzbekistan.

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Polytechnic University

in

Tashkent

,

13

(3),

7–11. Retrieved

from

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Mihus, I., Gupta, S.G. (2023). The main trends of the development of the

digital economy in the eu countries. The development of innovations and financial
technology in the digital economy: monograph. OÜ Scientific Center of Innovative
Research. 2023. 230 p. PP. 23-41,

https://doi.org/10.36690/DIFTDE-2023-23-41

6.

Tay, Shu & Te Chuan, Lee & Aziati, A. & Ahmad, Ahmad Nur Aizat. (2018).

An Overview of Industry 4.0: Definition, Components, and Government Initiatives. Journal

of Advanced Research in Dynamical and Control Systems. 10. 14

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World Bank report 2020

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https://www.disruptiveleadership.institute/fourth-industrial-revolution-

framework/

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Тураев, Шавкат. "Совершенствование методики расчета налоговой

нагрузки." Научные исследования и инновации в индустрии 4.0. 1.1 (2022): 55-62.

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АСОСИЙ ЙЎНАЛИШЛАРИ." INTERNATIONAL CONFERENCES. Vol. 1. No. 2.
2023.

References

ADB report “HARNESSING THE FOURTH INDUSTRIAL REVOLUTION THROUGH SKILLS DEVELOPMENT IN HIGH-GROWTH INDUSTRIES IN CENTRALAND WEST ASIA” 2023

Erboz, Gizem. (2017). How To Define Industry 4.0: Main Pillars Of Industry 4.0

Hofmann, E. & Riisch, M., 2017. Industry 4.0 and the current status as well as future prospects on logistics. Computers in Industry, 89, pp.23-34.)

Kambarov, L, & Inoyatkhodjaev, J. (2023). Perspectives and challenges of Assembly 4.0 technologies for final automotive assembly operations in Uzbekistan. Acta of Turin Polytechnic University in Tashkent, 13(3),7-11. Retrieved from https:/Avww.acta.polito.uz/index.php/iournal/article/view/223

Mihus, I., Gupta, S.G. (2023). The main trends of the development of the digital economy in the eu countries. The development of innovations and financial technology in the digital economy: monograph. OU Scientific Center of Innovative Research. 2023. 230p. PP. 23-41, https://doi.org/10.36690/DlFTDE-2023-23-41

Tay, Shu & Tc Chuan, Lee & Aziati, A. & Ahmad, Ahmad Nur Aizat. (2018). An Overview of Industry 4.0: Definition, Components, and Government Initiatives. Journal of Advanced Research in Dynamical and Control Systems. 10. 14

UNECE report 2022

World Bank report 2020

https://www.disruptiveleadershiD.institute/fourth-industrial-revolution-framework/

Тураев, Шавкат. "Совершенствование методики расчета налоговой нагрузки." Научные исследования и инновации в индустрии 4.0. 1.1 (2022): 55-62.

Бскмуродов, А., Тураев, Ш., Хасанов, Т., & Бозоров, Р. (2022). Социально-экономическое значение бедности и пути ее снижения: передовой зарубежный опыт и национальная практика, in Library, 22(2), 3-13.

Тураев, Шавкат Шухратович. "БЮДЖЕТ-СОЛИҚ СИЁСАТИНИНГ АСОСИЙ ЙЎНАЛИШЛАРИ." INTERNATIONAL CONFERENCES. Vol. 1. No. 2. 2023.