2.4. Economic drivers: trade and production changes developing countries set the right course, they can create new prospects for growth. Technological change is also driving global economic developments: the Fourth Industrial Revolution alters trade flows. The reason for this is a transformation of the global industrial sector: companies with large manufacturing plants scattered across different countries are not likely to be the model of the future. AI and lower production costs are driving a trend away from mass manufacturing towards local, small-scale production: this allows companies to relocate production plants closer to their customers and their sales markets. This will on the one hand give international companies a greater incentive to embed themselves more firmly in the local economy, potentially contributing to more inclusive growth in peripheral regions. But on the other hand, some production lines that were offshored to low-wage countries will move back to OECD countries. On balance, high-wage industrialised countries are likely to be in a better position than emerging countries to rise to the challenge of the Fourth Industrial Revolution. This could slow down the structural shift of power from the West to other parts of the world. Nevertheless, how individual countries will ultimately develop in the future remains an open question. 2.4.1. Glocalisation Companies from countries with small domestic markets – such as Switzerland – face particular challenges, but are also presented with new opportunities. The global textile industry, which will undergo a major transformation with the advent of smart fabrics and e-textiles, is a case in point. A combination of lower production costs, Swiss expertise in textile manufacturing and in the electronics sector could give new impetus to the Swiss textile industry. In the industrial sector almost 60% of all exported goods are unfinished products that pass through global value chains. This figure will decline in the future. Production processes will increasingly be glocalised. 2.4.2. Fragmented global trade order The polarisation of global politics is now also mirrored in the fragmentation of the international trade order: The World Trade Organization is struggling to maintain its relevance. It will have to be reformed if it is to regain acceptance. In the field of regulation, the trend is away from multilateral towards plurilateral agreements. Tariff reduction and free trade agreements are now largely regional and bilateral. We are currently witnessing an escalation of protectionist measures and countermeasures between the trading powers which is weakening the global trading order. As long as the global political arena continues to be dominated by tensions between the major powers, political goals and ambitions will play a significant role in world trade. Further geo-economic tensions are likely. Technological advances will place particular demands on developing countries. Industrialisation may in future not be the key driver of development it has been until now. Low-skilled industrial jobs will probably reduce in numbers. The leitmotiv of the 2030 Agenda – not to leave anyone behind – takes on a new meaning in light of technological transformation. Developing countries are, at the same time, under ever greater pressure to improve their economic framework conditions in order to continue to attract investment. Some developing countries have a greater capacity for adaptation than industrialised countries, as they are less encumbered with long-established structures standing in the way of change. Moreover, technological advances – the smartphone is just one example – are now available almost everywhere at the same time. If The world in 2028 – what do we have to prepare for? 10