The Fourth Industrial Revolution

Sep 20

Executive Summary

This report explores how the Fourth Industrial Revolution (4IR)—defined by the convergence of AI, clean energy, advanced materials, and biotechnologies—is transforming global power dynamics. It breaks down the structural competition between nations across five structural layers: energy and materials, industrial systems, intelligence (AI), compute, and governance. It also outlines scenarios and emerging opportunity areas. The goal is to help decision-makers navigate uncertainty and act strategically in the face of systemic change.

The Fourth Industrial Revolution: Who Will Control the New World System?

Something Bigger Is Driving Today’s Instability

From wars and inflation to AI hype and climate shocks, the world seems to be spinning out of control. But what if these aren’t isolated events? What if they’re part of something deeper?

We are not just facing a crisis. We are living through a transition between industrial eras.

Just like the age of steam, electricity, and computing changed everything—so too is the Fourth Industrial Revolution (4IR). The term, coined by Klaus Schwab of the World Economic Forum, describes a world being transformed by AI, clean energy, advanced materials, and biological engineering, all converging at once [1].

This revolution is not just about technology. It’s about power—who owns the systems that run the world.

Every Industrial Revolution Reshaped Global Power

  
      Revolution
      Era
      Core Technology
      Global Impact
    

  
      1st IR
      ~1760
      Steam & mechanization
      Gave rise to the British Empire
    

      2nd IR
      ~1870
      Electricity & oil
      Mass production, modern capitalism
    

      3rd IR
      ~1950
      Electronics & automation
      US tech dominance, globalization
    

      4th IR
      ~2025
      AI, green energy, quantum
      New economic order emerging
    

Each time, those who controlled the dominant production systems shaped the world order. The same thing is happening now—with even higher stakes.

So What Is the 4IR Really About?

The 4IR is not one technology. It’s a contest for control over the entire value chain of the future: from raw materials and computing infrastructure to manufacturing ecosystems and cognitive platforms. Beyond AI and clean energy, the 4IR is also profoundly shaped by advancements in advanced materials and biological engineering.

Advanced materials include innovations like self-healing materials, lightweight composites, and nanomaterials, revolutionizing industries from aerospace to healthcare by offering unprecedented strength, durability, and functionality [2]. For instance, nanoscale engineering enables advanced sensors and devices applicable across multiple sectors [3].
Biological engineering encompasses genetic engineering, synthetic biology, and biotechnology, enabling breakthroughs in medicine, agriculture, and energy production. This includes engineering microorganisms to create industrial products and developing new forms of energy capture and storage [4, 5].

These converging technologies blur the lines between the physical, digital, and biological spheres, creating transformative changes across all aspects of society [6].

Why the US and China see this as existential: The country that wins the 4IR will not just lead in innovation—it will set the rules, standards, and dependencies for the global economy. For Washington, this is about preserving economic and military primacy. For Beijing, it is about breaking Western dominance and locking in its role as the central node of future supply chains.

The Five Layers of 4IR Power

Earth Layer: Energy and Materials

Rare earths, lithium, cobalt, nickel—essential for EVs, AI chips, and clean industry
Stable, carbon-free electricity—including nuclear power—to run data centers and hydrogen production
China controls over 80% of rare earth processing [7]
Global demand for critical minerals will rise 5–7x by 2040 [8]
Grid readiness is now a critical differentiator: China’s ultra-high-voltage transmission buildout allows it to integrate renewables and scale faster, while the US faces bottlenecks with long permitting times and over 900 GW of projects stuck in interconnection queues [8].

Muscle Layer: Hardware and Manufacturing

Semiconductors, robotics, batteries, electrolyzers
China leads in battery supply chains (70%) and solar PV (80%) [9]
US investing $280B into reshoring chips (CHIPS Act) [10]

Brain Layer: AI, Data, Compute

AI foundation models (OpenAI, Google, Meta, Baidu) are the “operating systems” of the new economy
AI is the coordination layer, amplifying productivity across robotics, manufacturing, and materials
Data flows and algorithmic control now define national competitiveness [11]

Compute Layer: Cloud & Hardware Infrastructure

Chip design, fabrication, and advanced packaging determine who can train next-gen AI
US leads in chip design (NVIDIA, AMD), but Taiwan and South Korea dominate fabrication [12]
China is investing massively to close the gap despite US export restrictions [13]

Governance Layer: Standards, Rules, Institutions

Global competition is also about rules: who sets data laws, AI ethics, and trade standards
Governance models are diverging: democratic systems like the US emphasize open models and multi-stakeholder governance, while China promotes a state-led, centralized approach [14]
Emerging markets are battlegrounds for digital and energy governance alignment [15]

The nations that can coordinate across all five layers—from atoms to algorithms to institutions—will shape the next world order.

Why the World Feels So Fragmented

Today’s global instability is not random. It’s the pressure of a new system emerging:

Supply chains are being weaponized
AI is becoming infrastructure
Clean energy is a geopolitical chess piece
Institutions built for a different era are breaking down

Where Are the Opportunities Emerging?

Despite the tension, the 4IR is full of possibilities. It is remaking industries and opening entirely new frontiers.

  
      Theme
      Opportunity Areas
    
      AI Everywhere
      Energy optimization, logistics, healthcare, climate models
    
      Green Industrial Base
      Hydrogen, clean steel, advanced batteries, carbon capture
    
      Resilient Supply Chains
      Nearshoring, critical mineral refining, smart logistics
    
      Digital Sovereignty
      Cloud infrastructure, AI safety, data localization tools
    
      Emerging Market Leapfrogging
      Green grids, digital ID systems, fintech scale-ups
    
      Energy Infrastructure
      Small modular reactors, electrified industry, compute-scale grids

Possible Futures

The Fourth Industrial Revolution presents several potential trajectories for the global landscape:

Scenario	Description	Likelihood
Bipolar Tech World	A significant decoupling where the US and China solidify into two distinct and competing technological ecosystems. This could lead to fragmented global standards, duplicated infrastructure, and increased geopolitical tension as nations are compelled to align with one bloc or the other [16], [17].	★★★★☆ High
Multipolar Ecosystems	Beyond the US and China, other major powers like India and the European Union successfully develop their own sovereign technological capabilities and supply chains, creating a more diversified but complex global tech landscape [18], [19].	★★★☆☆ Medium
Digital Dependency	Many emerging economies, lacking the resources to develop their own 4IR capabilities, become increasingly reliant on imported AI and cloud infrastructure. This accelerates transformation but raises concerns about data sovereignty and autonomy [20].	★★★★☆ High
Global AI Regulation	International bodies and leading nations establish coordinated global rules and standards for AI. This would mitigate risks and foster ethical innovation, but consensus across geopolitical divides remains unlikely in the near term [21].	★★☆☆☆ Low

Final Thought

The Fourth Industrial Revolution is already here. It’s not just changing how we live or work—it’s changing who holds power, who depends on whom, and what kind of future is even possible.

If the steam engine powered empires and electricity built factories, the 4IR will be powered by data, intelligence, energy, and control over value chains.

The question for all of us—governments, companies, citizens—is:
Are you designing the system, or will you be designed by it?