Harnessing digital economy

For many Asian countries, including Sri Lanka, adopting 4IR technologies presents an opportunity to leapfrog traditional development stages. Mobile technology and digital banking platforms have revolutionised financial inclusion in countries like Indonesia, the Philippines, and Sri Lanka. Platforms like Sri Lanka’s “LankaQR” have enabled small and medium-sized enterprises (SMEs) to access cashless payment systems, reducing barriers to entry in the formal economy. Many rural areas in Sri Lanka and developing Asian nations lack the connectivity required for the widespread adoption of 4IR technologies

Introduction

How do we define the Industrial Revolution? As per the Asian Development Bank, the term “revolution” denotes abrupt and radical change. Throughout history, breakthrough technologies have brought about periods of significance. The first industrial revolution known as the agrarian revolution followed around the 1760s. The first revolution occurred with the emergence of steam power, railways, and mechanised forms of production. The Second Industrial Revolution happened in the 1890s when the electricity was introduced. The Third Industrial Revolution emerged in the 1960s with the rise of semiconductors and the spread of computers and the internet.

The Fourth Industrial Revolution (4IR) is represented by the technologies that line between the physical, digital, and biological domains. Technologies such as artificial intelligence (AI), robotics, the Internet of Things (IoT), blockchain, and biotechnology are reshaping industries, creating opportunities, and posing challenges. In the context of Sri Lanka, and other Asian countries, the adoption and integration of 4IR technologies have profound implications for economic development. The importance of 4IR and Sri Lanka and Asia itself preparedness for it has gained growing prominence in policy discourse, at a superficial level. Cultivating a “shared, trusted digital environment that is a driver of inclusion, economic development, and social progress” is paramount to succeed in the 4IR era. 

4IR Asia

In this region, the integration of digital technologies is reshaping industries, altering the job market, and transforming how people live, communicate, and access services. As governments, businesses, and individuals increasingly rely on digital tools, the social impact of the digital economy is becoming more pronounced. According to the International Telecommunication Union, Internet users surged from 1 billion in 2005 to 5.4 billion in 2023. Between 2010 and 2023, estimates of annual smartphone shipments more than doubled, from 500 million to about 1.2 billion. Some market estimates expect fifth-generation (5G) mobile broadband population coverage to rise from 25% in 2021 to 85% in 2028. With rapid digitalisation and surging demand for cloud-based services, the overall data centre market size in Asia and the Pacific is estimated to reach around $ 28 billion by the end of 2024 (Eco-Business Research, 2020).

The total population of Sri Lanka is about 21.92 million by 2024. According to the reports, there are 12.34 million internet users in Sri Lanka and the internet speed is 18.91 Mbps. 7.5 million social media users and Facebook’s potential ad reach in Sri Lanka increased by 950 thousand. According to Google users, 7.23 million YouTube users are available in Sri Lanka. There are 309.1 thousand X users in Sri Lanka. There are 32.49 million active mobile connections in Sri Lanka by 2024.

In Malaysia, 31.0 million population as to the reports of 2024. 33.59 million internet users and 66.64 Mbps internet speed traced as to the reports. There are 22.35 million Facebook users, 24.10 million YouTube users and 5.71 million X users. There are 44.55 million active mobile phone users.

In Singapore, the population is around 6.03 million. They have 5.79 million internet users, and the internet speed is around 95.18 Mbp. 3.70 million Facebook users, 5.13 million YouTube users, and 5.88 million X users. There are about 9.78 million active mobile phone users available in Singapore. 

Remedies

Employment opportunities and entrepreneurship

The rise of 4IR technologies has fostered innovation ecosystems in both countries. In Sri Lanka, tech hubs such as Colombo Innovation Tower and initiatives like “Startup Sri Lanka” are nurturing entrepreneurship in fintech, health tech, and e-commerce. Most Asian countries, on the other hand, have seen significant growth in startups leveraging AI and blockchain for financial inclusion and digital services. Startups and entrepreneurship have flourished, particularly in urban centres. The rise of digital platforms allows small and medium-sized enterprises (SMEs) to access broader markets, increasing their competitiveness. In rural areas, digital marketplaces enable artisans and farmers to sell products directly to consumers, bypassing intermediaries.

Enhancing productivity and industrial growth

4IR technologies are revolutionising traditional manufacturing and service sectors through automation and digitisation. In Bangladesh, the textile and garment industry—a cornerstone of its economy—has started incorporating IoT-enabled machinery and AI-based quality control systems. These innovations increase efficiency, reduce waste, and ensure higher product quality, helping the country maintain its competitive edge in global markets. Similarly, in Sri Lanka, 4IR-driven automation is evident in sectors like agriculture and tourism. Smart farming practices using IoT devices help farmers monitor crop health, optimise water usage, and increase yields, addressing food security concerns. In tourism, AI-powered platforms are improving customer experiences through personalised recommendations, while blockchain is enhancing transparency in financial transactions.

Bridging the infrastructure gap

For many Asian countries, including Sri Lanka, adopting 4IR technologies presents an opportunity to leapfrog traditional development stages. Mobile technology and digital banking platforms have revolutionised financial inclusion in countries like Indonesia, the Philippines, and Sri Lanka. Platforms like Sri Lanka’s “LankaQR” have enabled small and medium-sized enterprises (SMEs) to access cashless payment systems, reducing barriers to entry in the formal economy. Many rural areas in Sri Lanka and developing Asian nations lack the connectivity required for the widespread adoption of 4IR technologies. Governments and private sector partnerships are essential to building the necessary digital infrastructure, including expanding 5G networks and improving internet penetration.

Advancing gender equality, workforce transformation and education

The adoption of 4IR technologies has significant implications for the workforce. Automation and AI threaten to displace traditional jobs, particularly in manufacturing and low-skill industries. The digital economy has played a key role in advancing gender equality in Bangladesh and South Asia, but significant gaps remain. Digital platforms have provided women with new economic opportunities, particularly through online businesses, freelancing, and remote work. Asian countries like South Korea and Japan have prioritised investments in education and research to foster a skilled workforce. Sri Lanka can draw lessons from these nations by integrating STEM (Science, Technology, Engineering, and Mathematics) education into its curriculum and encouraging public-private collaborations for vocational training in emerging technologies.

Advancing agriculture and rural development

Agriculture remains a significant component of the economies of Sri Lanka and most Asian countries. 4IR technologies are transforming traditional farming through precision agriculture, AI-powered crop monitoring, and IoT devices that provide real-time weather and soil data. It is better to use, drones and satellite imagery are being used to predict flooding and enhance disaster preparedness, crucial for a country prone to natural disasters. In Sri Lanka, blockchain is being implemented for supply chain transparency, ensuring fair pricing for farmers and reducing exploitation by intermediaries. These advancements not only boost agricultural productivity but also enhance rural incomes and resilience against climate change.

Conclusion

The Fourth Industrial Revolution is a double-edged sword for Sri Lanka and other Asian countries. On one hand, it offers unprecedented opportunities for economic growth, innovation, and global integration. On the other, it demands careful management to address its challenges, including job displacement, inequality, and environmental concerns. By embracing 4IR technologies with strategic planning, investments in education, and inclusive policies, Sri Lanka and its Asian counterparts can unlock their full potential, ensuring sustainable and equitable economic development in the era of technological transformation.

(The writer is a Senior Lecturer, Department of Information and Communication Technology, Faculty of Technology, University of Sri Jayewardenepura.)