Manufacturing 4.0 Relevance to Commonwealth SIDS
This section provides background information and analysis of the relevance of Manufacturing 4.0 to Commonwealth Small Islands Developing States (SIDS).
Commonwealth SIDS are spread across three regions: the Pacific, Caribbean and Indian Ocean.
The Caribbean is home to largest number of Commonwealth SIDS. These are Antigua & Barbuda, The Bahamas, Barbados, Dominica, Grenada, Guyana, Jamaica, St Kitts & Nevis, St Lucia, St Vincent & The Grenadines, and Trinidad & Tobago.
The Pacific is home to the second largest number of Commonwealth SIDS. These are Fiji, Kiribati, Nauru, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.
The Indian Ocean is home to three Commonwealth SIDS: the Maldives, Mauritius and the Seychelles.
To allow for full regional comparisons, we also include three non-SIDS member states in these regions: Belize and Guyana in the Caribbean and Papua New Guinea in the Pacific.
Manufacturing 4.0 in the context of Commonwealth Small Island Developing States (SIDS) is an emerging area of research for academics, international organisations and private consulting firms. As a result, there are significant gaps in information currently available, such as a specific lack of published research papers on Manufacturing 4.0 pertaining to Commonwealth SIDS.
Commonwealth Caribbean member states
Commonwealth Pacific member states
Commonwealth Indian Ocean member states
Regional Manufacturing Trade & Value-Add
Commonwealth Pacific
All stats most recent available. Source: World Bank
Manufacturing baseline in Commonwealth Pacific
Manufacturing contributes US$1.1 billion of Manufacturing Value Add (MVA) in the nine Commonwealth Pacific countries. This represents 3% of regional GDP, which is significantly less than the 9% of regional GDP in the Commonwealth Caribbean and Commonwealth Indian Ocean.
The Commonwealth Pacific enjoys a merchandise trade surplus, exporting twice as much merchandise as it imports (US$12.4 billion versus US$6.9 billion), unique amongst the three regions here. This is largely due to Papua New Guinea's significant merchandise export total of US$10.9 billion, which accounts for 88% of the region's total merchandise exports and more than ten times that of second place Fiji's exports.
Commonwealth Pacific snapshot
- Manufacturing value added (MVA) totals US$1 billion, or 3% of total output (GDP) in the region
- Papua New Guinea dominates regional merchandise exports (88%) but only 9% of these exports are manufactures, while also accounting for around half of regional merchandise imports, 70% of which are manufactures
- Fiji (51%) and Papua New Guinea (37%) are by far the biggest regional manufacturers in terms of value-add, collectively contributing 88% of the total regional MVA
- Manufacturing value-add contributes to GDP most significantly in Nauru (15%), Fiji (11%), and Samoa (8%)
- Papua New Guinea (75%) has by far the largest GDP in the region, as well as the highest population (79% of the Commonwealth Pacific)
- Nauru has the highest GDP per capita at US$12,252, owing to its small population, whereas the remaining countries hover around US$4,000-5,000
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Pacific MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Pacific MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Pacific MVA
Commonwealth Caribbean
All stats most recent available. Source: World Bank
Manufacturing baseline in Commonwealth Caribbean
Manufacturing contributes US$5.8 billion of Manufacturing Value Add (MVA) in the twelve Commonwealth Caribbean countries. This represents 9% of regional GDP, on par with the three Commonwealth Indian Ocean countries combined and three times the contribution in Commonwealth Pacific.
The Commonwealth Caribbean runs a merchandise trade deficit, importing around US$2 billion more than it exports. Each country in the region runs a merchandise trade deficit with the exceptions of Trinidad & Tobago and Guyana.
Commonwealth Caribbean snapshot
- Manufacturing value added (MVA) totals US$5.8 billion, or 9% of total output (GDP) in the region
- Merchandise exports are predominantly manufactures in St Kitts & Nevis (86%) and Dominica (74%), though from relatively small export bases, as well as in Trinidad & Tobago (69%)
- At least half of all merchandise imports are manufactures in all Commonwealth Caribbean countries, led by Guyana (75%), St Kitts & Nevis (71%) and Trinidad & Tobago (71%)
- Trinidad & Tobago (61%) and Jamaica (19%) are by far the biggest regional manufacturers in terms of value-add, collectively contributing 80% of the total regional MVA
- Manufacturing value-add contributes to GDP most significantly in Trinidad & Tobago (61%), Jamaica (19%), and Guyana (8%)
- Trinidad & Tobago (32%), Jamaica (20%) and The Bahamas (17%) account for the largest shares of regional GDP, as well as nearly three-quarters (69%) of the regional population
- The Bahamas has the highest GDP per capita at US$28,239, followed by St Kitts & Nevis at US$18,230 though with a significantly smaller population owing to its small population
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Caribbean MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Caribbean MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Caribbean MVA
Commonwealth Indian Ocean
All stats most recent available. Source: World Bank
Manufacturing baseline in Commonwealth Indian Ocean
Manufacturing contributes US$1.5 billion of Manufacturing Value Add (MVA) in the three Commonwealth Indian Ocean SIDS. This represents 9% of regional GDP, on par with the Commonwealth Caribbean but with far fewer countries and all island states.
The three countries collectively run a significant merchandise trade deficit, importing nearly four times what they export.
Commonwealth Indian Ocean snapshot
- Manufacturing value add (MVA) totals US$1.5 billion, or 9% of total output (GDP) in the region
- Mauritius accounts for nearly three-quarters (73%) of collective merchandise exports in the region, as well as nearly 60% of merchandise imports
- Mauritius is by far the largest regional manufacturer in terms of value-add, contributing 88% of regional MVA
- MVA is almost identical in the Maldives and Seychelles, but contributes to a higher percentage of GPD in the Seychelles (7%) by a factor of three
- Mauritius (64%) has by far the largest GDP in the region, as well as the highest population (66% of the combined Commonwealth Indian Ocean population)
- Seychelles has the highest GDP per capita at US$13,307, though with by far the smallest population at just under 100,000 people
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Indian Ocean MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Indian Ocean MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Indian Ocean MVA
Challenges to M4.0 Development
The following provides a series of examples for how Manufacturing 4.0 technologies can address specific industrial challenges faced by Commonwealth SIDS.
Though all are small island states and therefore face similar geographic and developmental challenges, there is large diversity amongst Commonwealth SIDS spread across three distinct areas of the world. Attempts are made here to generalise challenges, while recognising the diversity of countries and economies in this grouping. Each country will face these challenges in more or less acute ways, as well as face their own unique challenges due to national circumstances.
SIDS Regional-level Challenges
- Shipping routes: do not service all the SIDS proportionally, therefore, some countries benefit more than others.
- Economy of scale issues: SIDS have large public sectors which hinder private sector industrial development as the wages would be lower in the private sector.
- Competition: several SIDS have competitive rather than complimentary economic profiles
- Climate Change: all SIDS face adverse impacts because of climate change, this can hinder foreign investment in these islands.
SIDS Country-level Challenges
- Production facilities can halt due to unusual weather conditions, impacting labour availability access to inputs, and requiring repairs to damaged plants and equipment.
- Brain-drain as young labour forces are pulled towards advanced economies where there are greater perceived opportunities.
- Small labour forces in several countries preclude large scale industrial development.
- Complexity of doing business can deter investments in some countries.
- Internet access can be a challenge for some islands, e.g., majority of Commonwealth Pacific SIDS population do not have internet access to at least 50% of the population.
- Large public sectors dominate economies in many SIDS because of diseconomies of scales, these further hampers private sector industrial development.
Example M4.0 solutions to regional industrial challenges
Market size disadvantage
- Potential solution: upgrading and connecting local SMEs to regional and global markets and value chains
- M4.0 application: distributed technologies such as 3D printing allow localised production of textiles, foods containers, components, construction materials, etc, gradually reducing the need for imports of these items
Poor connectivity and logistics linkages
- Potential solution: developing strategic and physical infrastructure to connect to global value chains
- M4.0 application: embedding internet of things (IoT) sensors such as tracking devices enhances transparency of supply chains and readily identify bottlenecks
Lack of economic diversification
- Potential solution: identify new product and market opportunities, prioritising specific sectors
- M4.0 application: climate change concerns will lead to new products being manufactured using clean technology, where enhanced tracking for rule of origin and verified information to consumers becomes more important, including connecting consumer with suppliers through big data capabilities.
Limited sources of economic growth
- Potential solution: upgrading existing value chains, reducing barriers to export competitiveness and opening potential new markets to local businesses
- M4.0 application: digital twins / simulations provide novel revenue streams through for example virtual designs created locally which can then be commercialised via licensing arrangements with countries around the world
Aging population coupled with increasing youth unemployment
- Potential solution: enhancing skills of local populations to improve enterprise productivity and enable a future-ready workforce
- M4.0 application: a M4.0-ready workforce can be developed by supporting local curriculum reform and focusing vocational education on STEM subjects
Limited institutional strength and public sector capacity
- Potential solution: provide competitive advantage to manufacturing sectors by providing industry-specific insights into local consumer demand or anticipating bottlenecks
- M4.0 application: enhance vertical (within a firm) and horizontal (across supply chains) data sharing within industries to create large data pools to leverage big data and analytics applications
M4.0 Application in Commonwealth SIDS
The following provides a series of examples for how Manufacturing 4.0 technologies can be applied in Commonwealth SIDS.
Many of these potential applications are similar to those in Commonwealth LDCs given similar levels of development at the medium and higher levels, though without the island context. Many M4.0 technologies benefit from scale advantages, therefore the smaller market sizes and economies of SIDS may make application more challenging - though sharing and collective application may help mitigate this (e.g., see Horizontal/Vertical Data Integration below). Attempts are made here to generalise application, though each country faces unique circumstances with unique technology application potential.
Big Data & Analytics
Large amounts of data are analysed by advanced computing technology to provide insights and predictive analysis to support decision making.
SIDS Application
Application to large scale production sites which generate significant amounts of data where small efficiency gains will have disproportionately positive impacts. If firms come together to share data, they could distribute the costs for meaningful insights.
Autonomous Robots
Autonomous robots are used in manufacturing to hold and move heavy items on a production line and can also help with order picking at the warehouse level.
SIDS Application
Although perceived to compete with low wage labour, autonomous robots could significantly enhance efficiency as well as safety, especially in port facilities where there can be large numbers of accidents.
Simulations / Digital Twins
Real world environments can be simulated virtually, such as seabeds or entire factory floors using sensors. This allows experimentation, virtual training or exploration without the need to visit or modify real world sites. Additionally, entire product information life cycles can be retained from primary production to end user.
SIDS Application
This can immediately be applied to the clothing and apparel industry where efficiency in cutting fabrics is needed. Future applications can include:
- Mapping coastal or nearby seabed areas for peak fishing spots for local commercial fishery sector
- Sensing soil fertility to maximise agri-production: advanced analytics could determine when to replace older plant varieties for new ones to maintain sustainable plant stocks.
Horizontal/Vertical Data Integration
Large producers have capabilities to share data within their own firm (vertical data integration); further maximised by sharing relevant data with other firms in the value chain such as suppliers (horizontal data integration).
SIDS Application
Applications can include:
- At largest firms where it makes sense to integrate large pools of data, though unlikely to have large potential in SIDS.
- Manufacturing sectors with long supply chains and export orientation could benefit from shared data, e.g., logistics and tracking information.
- Value added features such sustainable and organic labelling of fishery or agri-produce could benefit from enhanced quality assurance enabled by data integration.
Internet of Things (IoT)
Internet of Things (IoT) is enabled by small sensors with computing capabilities that deliver real-time information. A simple example is the use of radio-frequency identification (RFID) devices to determine how fast a production item is moving, which when combined with Big Data analytics can provide meaningful insights.
SIDS Application
There are wide applications for this:
- Large firms can monitor how quickly items are produced and where there are blockages to optimise production set-up or offer enhanced training.
- For logistics and supply chain management, RFID’s can help with real-time location and tracking information.
- Sensors for energy inputs can provide necessary data to enable savings on energy consumption.
- Ubiquitous technologies such as global positioning sensors when applied to simple fishing boats and fishery mapping system can enhance catchment.
Cybersecurity Technology
Cybersecurity technology encompasses anything that protects digital systems from internal and external attack. Modern cybersecurity involves technology such as blockchain or artificial intelligence to protect infrastructure and technology such as IoT devices.
SIDS Application
This would benefit production processes where digital assets are important, especially:
- Designs in clothing and apparel sector
- Digital creative designs
- Payment systems, especially in the context of international trade of goods.
Additive Manufacturing
This technique involves adding layers of material to create a finished product, and is also known as 3D printing. This contrasts with traditional processes where manufacturing has been based on subtractive methods such as cutting from fabric, removing wood etc.
SIDS Application
Applications include:
- Significant potential for SIDS reliant on imports of small parts and component, as 3D printing’s low investment costs can produce complex items without requiring entire factory set-up.
- In Food and Beverage sector, product containers could be mass manufactured using 3D printers.
- In clothing and apparel sector, shoes and clothing could be manufactured using synthetic materials.
Artificial Intelligence
Artificial intelligence and machine learning allow machines to use algorithms to process data and reach conclusions that were not originally programmed into them. It is used in manufacturing for demand forecasting and predictive maintenance, among other applications.
SIDS Application
This has niche use potential for SIDS due to large costs and unknown potential, though potential applications include:
- Use by industry groups to forecast future demand and advise businesses.
- Use by larger firms to support predictive maintenance.
Augmented Reality
Augmented reality utilises extra sensory virtual input, usually visual, overlaid onto the actual world.
SIDS Application
This is still a niche area for SIDS potential, though use cases can include:
- Improving quality and safety standards through spectroscopy technology in the food and beverage industry.
- Identifying and assisting in the exploration of new sites in the mining sector, including deep-sea mining.