4 Changing global production trends and Industry 4.0

In the past decades, emerging countries have made an increasing contribution to global industrial production, primarily due to the Chinese economy's export-oriented growth model, built on foreign direct investment, cheap labour and on the application of foreign advanced technology. In parallel with China's progress, the contribution of advanced economies to global industrial production dropped, and the sector's weight within GDP typically fell. In the case of the European economies, a shift towards production with higher value added may serve as a response to the challenges posed by the emerging economies and the relative of the industry in the past period. Among the European countries, the real economy importance of industry is still high in Germany and in the CEE countries. The German economic strategy, formulated with a view to preserving the competitiveness of the sector, aims at making the economy comply with the new requirements by focusing on the stimulation of technological progress and innovation. The key point of the German economic strategy is Industry 4.0, the purpose of which is to prepare German industry for the changing production processes by the more focused application of the advanced technological achievements and procedures (digitalisation, cyber-physical systems, Big Data). The basis of the concept is that machinery and equipment, as well as the manufacturing units participating in the production and the suppliers – i.e. the entire real economy – are integrated in an intelligent information system. As a result of the robotisation and the higher complexity of the production processes, the role of education, vocational training and data protection gains importance. The application of new technology may result in changed consumer expectations and may thus also alter corporations' product development and innovation activity. The technological solutions coming the forefront of Industry 4.0 may fundamentally change companies' operation and transform the production chain. Hungary joining in these changing value chains essentially depends on the preparedness of the country. The support of the appropriate technological infrastructure and of the research and development activities, as well as the alignment of the education and training system with the new requirements, may greatly contribute to the technological changeover of Hungarian production. The wider use of robotisation and digitalisation may put the emphasis of labour force substitution, which increases the importance of mobility between sectors on the labour market. On the other hand, the transformation of the production structure generates higher demand for certain skills, qualifications and jobs. Production with higher value added entails an increase in the importance of the service sector. Services connected to production and the end-product significantly enhance corporations' value-creating capability. The competitiveness of the domestic industry may be strengthened by increasing the domestic value added content of manufactured exports, which may be supported by raising the domestic, complex service content of exports. The easing of corporate duality, development of the domestic supply chain, as well as the higher innovation and service performance of the SME sector may contribute to enhancing the Hungarian economy's value-creating capacity.