What is the Fourth Industrial Revolution? | CNBC Explains

It was in these Swiss mountains that the world was first introduced to the phrase "Fourth Industrial Revolution", and it has been a hot topic among academics, politicians and business leaders ever since. But

what

exactly does it mean? The term "Fourth Industrial Revolution" "Revolution" was coined by the founder of the World Economic Forum, a former professor named Klaus Schwab. Schwab wrote a book with that title to describe an era marked by: Let's break that down. Technologies such as artificial intelligence, autonomous vehicles or the Internet. Many things are taking root in our daily lives, and even in our bodies.

Let's think about voice-activated virtual assistants, facial identity recognition or health sensors. Schwab first presented his vision of the Fourth Industrial Revolution at the annual meeting of the World Economic Forum. We met here in Davos in 2016. But to understand the idea, we need to go back much further in history, to

industrial

revolution

number one. The First Industrial Revolution began in Britain around 1760 and spread to Europe and North America until the early 19th century. It was driven by an important invention, the steam engine. The result? New manufacturing processes, creation of factories and a booming textile industry. Since the end of the 19th century, the Second Industrial Revolution was marked by mass production and new industries such as steel, oil and electricity.

The light bulb, the telephone, and the internal combustion engine were some of the major inventions of this era. The Third Industrial Revolution, sometimes known as the Digital Revolution, occurred in the second half of the 20th century. In just a few decades we witnessed the invention of semiconductors, the personal computer and the Internet. So

what

separates the Fourth Industrial Revolution from the Third? Experts say the main difference is that technology is increasingly merging with human life and that technological change is happening faster than ever. Consider this: it took 75 years for 100 million users to adopt the telephone. Instagram registered 100 million users in just two years, while Pokémon Go captured that amount in one month. 3D printing is just one example of the technology accelerated in the Fourth Industrial Revolution.

The industry has gone from business idea to big business, with 3D printer shipments expected to rise from just under 200,000 in 2015 to 2.4 million in 2020. Today, a replacement is possible hip from a 3D printed bone or use a 3D implant. printed bionic arm. Talking about blurring the line between humans and technology, right? This new era of technology is driving a lot of innovation. You can see in this graph that the number of patents related to the Fourth Industrial Revolution, for things like 3D printing or AI, has been increasing since the early 2000s. Organizations are adopting new technologies to make their businesses more efficient, so similar to how they embraced the steam engine during the First Industrial Revolution.

But some companies and governments are struggling to keep up with the rapid pace of technological change. Research shows that innovators, investors and shareholders benefit the most from innovation. The risk is that the Fourth Industrial Revolution is making inequality, which is already a big problem, even worse. One study found that billionaires have driven nearly 80 percent of the top 40 breakthrough innovations over the past 40 years. This is a problem when the richest one percent of households already own almost half of the world's wealth. Experts warn that we are in a winner-take-all economy, where highly skilled workers are rewarded with high wages and the rest of the workers are left out.

Studies confirm that technologies like AI will eliminate some jobs and create demand for new skills that many workers do not have. Privacy concerns are another issue as the Fourth Industrial Revolution turns every company into a technology company. Industries from food to retail to banking are going digital and, along the way, collecting a lot more data from their customers. Users are starting to worry that companies know too much about their private digital lives. The World Economic Forum says most leaders are not confident their organizations are prepared for the changes associated with the Fourth Industrial Revolution. Since technology changes rapidly every day, it's time to catch up.

Hello everyone, Elizabeth here in Davos, Switzerland. Be sure to check out our other CNBC Explains videos here. And leave us any other ideas in the comments section. See you later!