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The Third Industrial Revolution: Implications for Planning Cities and Regions
Brian H Roberts1
Urban Frontiers Working Paper 1
Industrial revolutions have had a profound impact on shaping the way we produce things, where we live, and our progress
towards more equitable and prosperous societies. The first and second industrial revolutions were driving forces in the shaping
of modern-day society. Those revolutions witnessed significant changes over two and a half centuries – in ideology, social
hierarchy, manufacturing and distribution, international relations, trade linkages and, most notably, technological
advancements. Unlike the two former industrial revolutions, the emerging Third Industrial Revolution will also have significant
effects – changing almost every aspect of our society, especially in the way we live and plan. This working paper provides a
brief overview of the dimensions of the Third Industrial Revolution (TIR), postulates the implications it may have on urban
and regional planning, and suggests strategies for cities and regions to manage and benefit from its potential impacts.
In 1781, James Watt patented the rotary steam engine that became the driving force behind the first
industrial revolution. Within 30 years, steam engines were driving the first trains, boats and farm machinery.
Today, we are at the beginning of a new industrial revolution: the Third Industrial Revolution. This
revolution is driven not by an a physical engine, but by technologies of the digital engine of Internet,
renewable energy and 3D printing. The transformations that will be generated by the Third Industrial
Revolution (TIR) will change almost everything we do, make, use and plan in the future. Planning for the
age of the TIR will be challenging, as the limits and boundaries of it are not defined by the dimensions of
space and time, but by imagination and the power of the mind. Planning for the future of cities and regions
must now step outside the limitations of geographic space, and embrace the dimensions of cyberspace.
Planning for development has just become more difficult.
Industrial revolutions begin slowly, but over time they gather momentum and ultimately have a profound
impact on shaping the way, and where, we produce things, and the way we live, consume, communicate
and move. The first industrial revolution began in Britain in the late 18th Century. It was to have a
profound localised impact on the rural landscapes of Europe and the Americas. The Revolution brought
about a massive shift in the scale of manufacturing from cottage and small-scale industry to industrialised
factories engaging in large-scale production. It transformed the textile and iron industries and resulted in
the development of advanced-level transportation systems such as canals and the iconic creation of the
steam engine and railway.
The first industrial revolution saw the invention the expansion of the canal and later the railway networks,
increasing communication ability and the invention of the stock exchange, leading to the rise of banks,
financiers and private investment. The first industrial revolution saw an overall increase in quality of life.
However, it resulted in increased class segregation and the outbreak of disease, due to an inability to meet
The second industrial revolution, which began in the late 19th Century led to significant technological
advancement in mobility and production. Automobile, aerial, steamship and telegraph technologies
emerged to impact on every aspect of development from the economy to social change. The second
industrial revolution produced ground-breaking inventions such as the telephone, automobile, aeroplane,
1 The author acknowledges the research contribution of Simone Roberts in preparation of this paper. The author is
Director, Urban Frontiers Pty Ltd, Australia and Emeritus Professor, The University of Canberra, Australia
electric light bulb, the radio and witnessed a shift in energy use from coal to electricity and petroleum.
Employment sectors shifted significantly in the post-WW II era from manufacturing to services.
The first revolution led to a change in the urban landscape from towns to row and tenement housing estates,
serviced by trams and railways. The second revolution gave rise to the suburb and the decline of the inner
city. Cities became linear and polycentric. The effect of rapid urbanisation created large slums in developing
cities and decline in inner areas of mature cities. Redevelopment in the post-WW II era saw the emergence
of high-rise buildings, which changed the face of cities greatly as material, construction and lift technology
resulted in cities competing for the highest buildings or structures. The effects of the second industrial
revolution have been felt globally.
The Beginnings of the Third Industrial Revolution
One of the first triggers of the Third Industrial Revolution began in 1969 with the development of the
Advanced Research Projects Agency Network (ARPANET), which was an early packet switching network
and the first network to implement the protocol suite TCP/IP. It triggered the development of the
Internet, and with it the information age. Similar to previous revolutions, the Third Industrial Revolution
(TIR) is driven mainly by technological advances in manufacturing, distribution and energy factors. The
Third Industrial Revolution is global, but it is also local, giving rise to the term ‘glocal’. The TIR is set to
change the way we work, produce, and entertain. It will fundamentally change the way we plan and manage
cities and regions. It will also lead to the glocalization of production and the re-shoring of jobs.
The Economist magazine (Markillie, 2012, Rivkin, 2011) said of the third industrial revolution:
“As manufacturing goes digital, a third great change is now gathering pace. It will allow things to be made economically in
much smaller numbers, more flexible and with a much lower input of labour, thanks to new materials, completely new processes
such as 3D printing, easy-to-use robots and new collaborative manufacturing services available online. The wheel is almost
coming full circle, turning away from mass manufacturing and towards much more individualised production. And that in turn
could bring some of the jobs back to rich countries that long ago lost them to the emerging world. “
Led by the advancement of the Internet, fast communication and metadata, the Third Industrial Revolution
will see a shift in the reliance on labour as the largest component of production. Global labour share and
ratio to capital has significantly declined since the early 1980s. The TIR is likely to bring about a further
reduction in the labour to capital ratio. Information technology will drive greater automated, robotic and
technology-dependent working, living and travel environments. The TIR will see the increase in localised
production aided by 3D printing and robotics, uncapped Internet potential for trade, manufacturing and
production and significant advances in renewable energy – wind, solar and resources.
Rifkin (2011) describes five energy pillars supporting the Third Industrial Revolution. These are (i) the
shift to renewable energy; (ii) transformation of the building stock into green micro-power plants to
collect renewable energies on-site; (iii) deployment of hydrogen and other storage technologies in
every building and throughout the infrastructure to store intermittent energies; (iv) use of Internet
technology to transform the power grid of every continent into an energy internet that acts just like
the Internet; and (v) transition of the transport fleet to electric plug-in and fuel cell vehicles. Tesla
recently released the Powerwall battery (Cooper, 2015), which has the potential to turn every home and
workplace into a self-sufficient energy entity with three-day storage capacity and which can feed surplus
energy into a localised power grid internet.
An important transformation driver of the TIR will be 3-dimensional (3D) printing and robotics for
manufacturing production and domestic services. The United States leads in this field; with robot sales
growing by 43% in both the US and the European Union in 2011. Rifkin argues that the manufacturing
sector is moving ever closer to near worker-less production, or what the industry calls ‘lights out’
production. These developments will fundamentally change manufacturing at scale. 3D printing will reduce
marginal costs for short production runs to almost zero. Economies of scale will all but disappear in
industries like pharmaceuticals and fashion, with medications and clothing being designer-driven and
produced locally. As the Economist (2012) states:
“Everything in the factories of the future will be run by smarter software. Digitisation in manufacturing will have a disruptive
effect every bit as big as in other industries that have gone digital, such as office equipment, telecoms, photography, music,
publishing and films. And the effects will not be confined to large manufacturers; indeed, they will need to watch out because
much of what is coming will empower small and medium-sized firms and individual entrepreneurs. Launching novel products
will become easier and cheaper. Communities offering 3D printing and other production services that are a bit like Facebook
are already forming online—a new phenomenon that might be called social manufacturing”.
Potential Impacts of the Third Industrial Revolution
The TIR will affect every aspect of society. The most immediate impact has been on the development of
advanced technology and the explosion of knowledge. The TIR is being driven fundamentally by business
in a quest to reduce production costs for goods and services to wider markets. It has subsequently spilled
over into advances in medical, economic, defense, agriculture, construction, and government services.
Finally, the TIR is moving into personal services, giving individuals access to knowledge and opportunities
never before possible. The impacts of the TIR will not be without consequences. In all revolutions, there
are winners and losers, but few could argue that the two previous industrial revolutions have not had a net
positive effect on human development.
The TIR will affect every sector of national and local economies; however, the impacts will not be the same
for every sector nor will they occur concurrently. The first industrial revolution was to have a profound
effect on the energy, mining and metal and machinery manufacturing sectors. Later it was to spread to
other industry sectors such as transportation, defense, construction, agriculture and utility services. Its
impact on the service sectors was not immediate, but it did enable enormous amounts of wealth to be
accumulated and provide the basis for emerging capital markets to expand manufacturing, infrastructure
and housing investment. The flow-through into education, health, social and emergency service sectors
was to be much lower.
The second industrial revolution was to have a profound effect on the energy, telecommunications and
transport sectors. These sectors led to the expansion of markets, global access to resources, colonialization
and international migration. The shift to petroleum resulted in the development of pharmaceuticals,
plastics, fertilizers and new materials used in construction and manufacturing of electronic goods and
services. In many cases, there was a cascading impact of one technology upon others, leading to new
discoveries, materials and products used for a broad range of purposes.
The Third Industrial Revolution has had a profound impact on the ICT, knowledge, defense, health,
education, advanced manufacturing, financial and administrative sectors. These sectors will continue to
advance very rapidly as a result of new discoveries, innovations and commercialization of new products
and services. A key feature of the Third Industrial Revolution will be the move to nanotechnology, new
materials, intelligent systems, robotics and 3D printing. These vanguard fields of technology development
will bring about significant changes in the way that goods and services are produced, the management of
systems and logistics systems, design and development practices, and life-cycle use of materials.
The TIR will fundamentally change both the nature and spatial location of manufacturing processes;
capital/labor cost ratios; place a much greater focus on efficiencies and time delivery costs of manufacturers
and distributors. It will increase demand and reduce unit costs in the production and supply chain for
designer-driven products such as fashion, pharmaceuticals, construction and accessories. It will also
provide equity of access to many goods and services in regions which are not able to create competitive
advantage through economies of scope and scale. In essence, for many products and services (especially
for simple manufactured goods and replacement parts), product supply chains will become more
concentrated on the sourcing and delivery of materials for 3D printing and materials recycling.
The TIR and Jobs
A significant challenge of the TIR for all societies is: will it help to create jobs? The evidence to date
suggests the TIR is generating more value and output for business from workers, and this will fuel more
economic activity and create more jobs. These jobs may not be in manufacturing but in logistics, research
and development, education, health, creative products design and the arts sector. Two economists,
Brynjolfsson and McAfee (2011), have noted that technology is behind both the healthy growth in
productivity and the weak growth in jobs in the USA. Their analysis shows that up to the year 2000,
productivity and employment rose robustly.
However, a significant gap or decoupling appears to be showing in economic growth, with no parallel
increase in job creation since then. Economists like Robert Gordon (2014), have predicted significant job
losses in the next few years through the application of new technology. Rotman (2013 ) in The MIT
Technology Review suggests that job losses may just be part of the initial shock. This is most likely to be
temporary, but painful; as workers adjust their skills and entrepreneurs create opportunities based on the
new technologies, the number of jobs will rebound.
History shows that the two previous industrial revolutions provided a significant boost to employment,
knowledge, science, discovery and economic development. The TIR will do the same. No one could have
anticipated the impact that the steam engine, the automobile, the elevator and electricity could have had on
employment and economic development. What the effects of the Internet, 3D printing, artificial
intelligence and clean energy will be is anyone’s guess, but they will be significant in job creation, economic
development and improvements in quality of life.
Changes in the Economic Geography of Production
The TIR will change the way we look at the economics of agglomeration and clusters. The advantages of
agglomeration in production will be reduced for many industries such as pharmaceuticals and fashion.
These industries will become more personalised, and production localised in smaller, more specialised
centres of economic activities. Smaller localised micro-clusters will likely emerge, producing a broad range
of commercial and personalised designer products. Large corporations are likely to concentrate R&D
activities spatially, as they engage in developing new products, which will retail online to print individually
or be produced more locally, depending on the size of local markets and new franchising arrangements.
The emergence of virtual clusters of knowledge and innovation in communities of interest engaged in
collaborative developments will also become commonplace. These will drive a range of new technology
ITC, manufacturing and especially creative industries products. Virtual skills will fill many gaps currently
existing in towns and cities, enabling local business and specialised enterprises to overcome the tyranny of
distance and barriers to entry into markets, as transaction costs of manufactured products, using 3D
printing, become insignificant. To some extent, it may help regions to regain competitive advantage, where
populations have shrunk, or the demographics have changed.
TIR and 3D Printing
The development of 3D printing and robotics will be significant drivers of the change. The number of
shipments of 3D printing is still small (See Graph) but the market is growing at more than 100% per annum
(Taylor, 2014, Gartner, 2014). The growth rate is comparable to the rate of growth in PC computers when
these first became cheap and commercially available in the early 1970s (Reimer, 2005). A recent IBM study
(IBM, 2013:1) has notes on the impacts of the TIR on manufacturing:
“The historical rules hardened by a century of experience are being overturned by three emerging technologies: 3D printing,
intelligent robotics and open source electronics. Together, they are creating a manufacturing environment that can be defined and
executed through managing software and data files – a transformation we describe as moving from a hardware-based supply
chain to one that is “software-defined.
Source: (Gartner, 2014)
The report goes on to state
“Newer ITC technologies will produce an average 23 percent unit cost benefit and reduce entry barriers by an astounding 90
percent… To compete in this fast-approaching future, companies and governments must understand and prepare for this new
software-defined supply chain … Being cost-competitive is only the beginning. The most astounding finding of this study relates
to scale. Software-defined supply chains can be cost-competitive with production volumes up to 98 percent lower than traditional
supply chains. Across our model, the average was 75 percent lower within five years and 90 percent lower over a decade.”
Many large corporations and franchises are already recognising the potential to use 3D printing to reduce
transaction costs, to produce goods and services closer to markets and to respond better to local and
personalised customer needs. 3D printing will revolutionise trade and consumption patterns. It offers the
possibility for local regions, within the context of local economies of scale, to use 3D printing to produce
everything from mechanical spare parts, to fashion, pharmaceuticals, body parts, and building fixtures and
3D printing, intelligent robotics and open source electronics will lead to radical “relocalization” of global
manufacturing (IBM, 2013). By way of example, it is already cheaper to make significant components of
hearing aids using 3D printing. By 2022, hearing aids made with open source electronics and 3D printers
will be up to 65 percent cheaper than with traditional manufacturing approaches (IBM, 2013). However, it
would be optimistic to assume that 3D printing, intelligent robotics and open source electronics will lead
to a rapid change in the economic geography of production systems and supply chains. It will be at least a
decade before the real transformation of the TIR takes hold, and it will affect the economic geography of
production systems in different ways.
Agglomeration of large-scale industries such as aircraft, shipbuilding, automobiles, heavy specialised
equipment and the like will remain mostly concentrated, but supply chains are likely to shorten, and in some
cases, vertical and horizontal integration is likely to become more concentrated as 3 D printing and CAD-
CAM reduce transaction costs to the point where import substitution become more viable. Some
manufacturing and service industries will continue to agglomerate, but not at the same scale. Others will
become more dispersed bit it is still too early to say which ones. There will, however, be massive changes
in the economic geography of production and supply chains systems in the decades to come, and this
presents significant challenges for those responsible for planning, financing, developing and managing the
strategic infrastructure of the TIR.
The TIR is more than a technology and science led industrial revolution. Technology is a significant driving
factor in the expansion of knowledge, improving manufacturing productivity and creating new products
and services, but social, governance and environmental factors also run in parallel to this, driving the TIR.
Concerns about climate change, food security, privacy and security, aging populations, and wealth
disparities are raising questions about the type of society we want to live in in the future, the value systems
we hold and to what extent we place our trust in technology, especially with the development of artificial
intelligence. These questions raise significant challenges for those responsible for planning and managing
the development of cities and regions in the future. How do we plan and manage the cities and regions of
the future, in the age of the TIR?
The Third Industrial Revolution: Impact on Planning
The technological and production shifts created by the TIR will place significant pressures on governments
and public officials responsible for the planning, development and management of cities and regions. The
re-shoring of industries, localization, glocalization and growth of small integrated technology-based
industries and services that support more designer and personalised needs, offer new opportunities for
manufacturing service industry jobs in regions, but many of these are a decade away. It will take this long
for established large corporation production and supply chain systems to retool and invest in more localised
production and distribution systems.
Many large multi-nationals are already well advanced in this, but it will take many years to re-tool and re-
engineer the entire supply chain of some industries. Some economy of scale dependent industries like
metals manufacturing, aviation, shipbuilding, automobile manufacturing, heavy machinery and plant
equipment will remain location dependent, but the finishing of many downstream manufactured products
and services may not. It is very likely that high valued-added products and services will be produced in
more centralized production centres, but that a broad range of low-value consumer products and
accessories will be decentralised, localized and even personalised.
New materials, technologies and designs will revolutionise the production of buildings, infrastructure, living
environments, and open up opportunities that were never before possible. Fibre carbon and other polymer
based products will introduce a new dimension of space and interior design in urban design and
The location, nature and times that humans work will be affected by information and a knowledge
dependent workforce. Possibly the most significant and devastating impact of the TIR is the potential for
urban and rural communities to fracture, resulting in severe disparities between the technologically rich,
and the rest. This impact could threaten the overall positive benefits of the Third Industrial Revolution
The impacts of the TIR on planning will be widespread, and create a need for cities and regions to be better
prepared to take advantage of the opportunities created and to manage the risks and changes it brings. Old
technology jobs and industries will be lost, as has been the case in the two previous industrial revolutions.
The potential impacts, both positive and negative, will be significant in some regions, but more so in cities
and regional towns. Many new jobs will be created, but cities and regions will only be able to capitalise on
these if they start to plan for the Third Industrial Revolution now. Cities and regions that fail to plan for
the TIR are unlikely to benefit from the opportunities, and will suffer the consequences.
The pace of change and the increasing level of unpredictability created by the TIR raises a major challenge
for planning: Can planning lead and shape the TIR for the benefit of regions and cities, or will it be left to
manage the impacts from behind? Based on the experience of previous revolutions, planning is likely to
follow the revolution and manage from behind. However, the author argues that the former needs to be
the case. Cities and regions must think forward, imagine and develop the strategic infrastructure to foster
TIR opportunities and adapt to changes as these eventuate. This will necessitate a much more flexible
approach to planning, development and change management at all levels of society.
Table 1 shows how different dimensions of spatial planning in cities and regions will be influenced by the
drivers of the TIR. These impacts will not be just physical, but will include the dimensions of economic,
physical, social, environmental and governance planning. Because the TIR is at its nascence, it is impossible
to predict the scale and intensity of the impacts these dimensions will have on planning, but they will be
Table 1: Impact of Planning Systems in Shaping Drivers of the Third Industrial Revolution
Moderate to High Moderate Moderate to Low
For cities and regions to gain from the TIR requires bold and flexible planning systems, coordinated at a
national and local scale. The TIR operates on an open digital platform for networks and systems that are
integrated, instantaneous and constantly changing. The planning systems and strategic infrastructure
needed to build, manage and maintain this digital platform for the TIR is highly reliant on collaboration.
This response to the TIR calls for collaborative approaches to planning, governance, production and service
delivery systems in a way never done before.
Rivkin (2011), proposes that intelligent TIR infrastructure is becoming an internet of things that will
connect everyone and everything into a seamless network. He goes on to state:
“People, machines, natural resources, production lines, logistics networks, consumption habits, recycling flows, and virtually
every other aspect of economic and social life will be connected via sensors and software to the TIR platform, continually feeding
Big Data to every node—businesses, homes, vehicles, etc.—moment to moment in real time. The Big Data, in turn, will be
analysed with advanced analytics, transformed into predictive algorithms, and programmed into automated systems, to improve
thermodynamic efficiencies, dramatically increase productivity, and reduce the marginal cost of producing and delivering a full
range of goods and services to near zero across the entire economy.”
Some of the world’s largest ICT companies have already developed an ‘internet of things’. Rivkin (2011)
cites GE’s ‘Industrial Internet’, Cisco’s ‘Internet of Things’, IBM's ‘Smarter Planet’, and Siemens
‘Sustainable Cities’ as initiatives that bring online an intelligent infrastructure that can connect
neighbourhoods, cities, regions, continents and the global economy, with what industry observers call a
global ‘neural network’ (Russell and Norvig, 2010). (Goodwin, 2015) made an interesting observation that
‘Uber, the world’s largest taxi/ride-sharing company, owns no vehicles; Facebook, the world’s most popular
media owner, creates no content; Alibaba, the most valuable retailer, has no inventory; and Airbnb, the
world’s largest accommodation provider, owns no real estate’.
Clearly, significant changes are occurring in the way business is being done and to the way planning for its
development will be done in the future The areas where some of the most significant impacts on planning
are likely to be experienced are described below.
The Multi-Dimensional Impact of the TIR on Planning
Planning has become a multi-dimensional discipline, all dimensions of which have the characteristic features
of working within the constraints of space, time and substance. The TIR will affect all three constraints,
and go beyond them. The TIR takes us into a new universe of planning – the aspatial, instantaneous and
the nano. The TIR will force planning into a parallel universe, where dimensions that shape spatial planning,
move into value systems that shape the way we behave, respect and rebuild damaged human systems that
have led us to a pathway of unsustainable development. The following briefly describes different fields of
planning, in the spatial context; that will be influenced by the divining forces of the TIR.
The economics of development are changing rapidly. The economic model of competitive advantage based
on agglomeration, economies of scale and low labour costs, will remain for some time, but it has peaked,
and a paradigm change is under way. The TIR will bring about a significant increase in re-shoring and
localised production of manufacturing goods and services. The implications of this on local economic
planning and development are significant. The development of strong base economies supporting export
based industries will be critical to developing a solid foundation for new hybrid industries. The focus of
local economic development planning will be on developing new cross-bred industries and economic
activities which leverage and stretch resources, and provide a virtual substitute for skills, knowledge and
technologies by acquiring these through the internet and multimedia.
For many regions, the TIR offers the opportunity to fill skills vacancies, in small scale service and
manufacturing industries via tapping into the virtual business networks of contractors. Virtual reality and
model and microsimulations (virtual and physical using 3D prototypes) will reduce the need for building
large scale facilities, which are expensive and time consuming. Economic factors such as economies of
scale, skills agglomeration and time-distance transactions costs, which currently make it excessively costly
and uncompetitive to export, will be reduced to a much more level playing field as the marginal cost of
producing short runs and local orders are reduced to almost zero in some cases.
Perhaps the greatest change that the TIR will bring will be the move to a more circular economy (Benton
et al., 2015). The circular economy is a term used to describe an economy that is designed to minimise waste
and by-products so that emissions, material flows and nutrients are designed to re-enter the biosphere
safely. The circular economy is focused on restoration of natural capital, and the substitution of non-
renewables with renewable resources. Technology and energy efficiency provide the fundamental catalyst
for a circular economy. The development of the circular economy will be one of the mechanisms cities will
use to combat climate change, food security and greater self-sufficiency. Many cities are adopting green
city and green economy policies, in recognition that the current economic model of urban development is
not sustainable in the long term.
The TIR will be a significant driver in the development of green city economies, especially in the transition
from non-renewable to renewable energy use, in consumption patterns and the use of recyclables. The
circular economy calls for closing the loop (focus on zero waste) on consumption so that all waste is
converted into useable resources or products that do not contaminate the biosphere. Economic planning
will move to a stronger focus on cleaner production, industrial ecology (Roberts, 2004) and bio-energy,
using organic waste from domestic and agricultural sources. The transition to green economies for cities
will be challenging. It will take time, will be linked to the technological, economic and physical lifecycle of
assets, but it is essential if cities and regions are to become more sustainable.
The TIR will impact on education and training. The need for local economies to shift and plan for lifelong
learning will be essential to provide the competencies and demand-based skills required for the operation
of very different types of economies. The TIR will cost local economies old jobs. Hence, youth,
redundancy, and mid-career retraining will be necessary. The focus is likely to be more on simulation and
mentoring than on formal instruction and learning. Formal education and lifelong learning courses for
spatial planning and development disciplines and educators will need to change. The focus of planning for
the TIR will be more in anticipating and managing change to ensure that adverse impacts are reduced, and
innovation and creativity encouraged.
The TIR will lead to local economic plans being more integrated, with land-use, infrastructure, human
resource development, environmental and technology planning becoming much more seamless and
interactive. Because of the rapidity of change and the need for quick responses, regional economics will
need to give greater consideration to local economic risk planning and management. As a risk mitigation
and competitive advantage measure, greater emphasis will be placed on trade and investment collaborations
and partnerships between cities and regions.
A major focus of economic development planning in cities and regions in the age of the TIR will be to
become more glocalised. Glocalisation involves a twofold planning strategy. It requires cities and regions
to think and act both locally and globally. It requires local economies to capture opportunities created by
the TIR to produce and sell more commonly used and consumed goods and services locally, effectively
substituting for imports, and to produce and sell export niche or traditional products and services more
effectively and efficiently. In many case the TIR will enable critical gaps in industry supply chains to be
filled by gaining access to virtual services and more efficient logistics systems, but it will also enable
horizontal product inputs in supply chains that involve short runs, or seasonal inputs to be supplied locally,
reducing import dependency.
Finally, for cities and regions to benefit from the TIR, access to finance will become critical. Venture
capital markets will become more virtual, and traditional centralised financial market analysis will be
outsourced to developing economies transitioning from manufacturing to services. This is occurring rapidly
as cities in India, and the Philippines capture a growing proportion of financial analysis for stocks, banking,
financial and insurance markets. Crowdfunding will become an important alternative source of capital for
new R&D industries and developments (Callaghan, 2014). As a flow-on from the global financial crisis, a
large amount of capital is available for new economic investment and development opportunities. Cities
and regions will need to identify how to tap into and capture some of these sources of capital if local
economies are to benefit from the TIR.
Physical Planning and the TIR
While the impacts of the TIR will mostly be felt economically and socially, the physical and spatial impacts
are likely to be the most noticeable. The dynamics of the TIR will demand a more flexible and integrated
physical development planning system. This will be felt most in infrastructure, urban design and
architecture. The following discusses areas of physical spatial planning which will be affected by the TIR.
The Internet is the infrastructure and machinery which is powering the TIR. Operation of the Internet
requires massive investment in telecommunications and digital infrastructure, especially in optical fibre and
wireless systems. In some developed countries, such as India, Rwanda and Vietnam, the Internet has
bypassed the installation of hard fibre infrastructure and is into the wireless age. This is partly because of
the difficulties and costs of rolling out telecommunications infrastructure. In countries like Rwanda, the
roll-out of broadband infrastructure is seen as a way of developing a creative and service based economy
that will become an information hub for Africa. Being a landlocked country, with a small population, the
pathway to development through industrialization is unrealistic.
The priority for future infrastructure development of lowly populated landlocked countries and remote
regions is digital. This does not dismiss the need for countries, cities and regions to develop good national
transport infrastructure and services. The two types of infrastructure go hand in hand. Planning for
continuous rollout and improvement of Internet systems will be as essential as roads, ports, railways,
airports and electricity were to the development of cities and regions in the 19th and 20th Centuries. Cities
and regions with slow or low Internet capacity will miss out on opportunities created by the TIR.
While the use of the Internet is heavily inclined to social demands, future demand for Internet capacity will
be increasingly in computer-aided design, manufacturing, and knowledge and information exchange
systems connected to more open-platform/access metadata servers. The secreting of public and private
data will become more difficult in a world which is hungry for raw data and information and the mining of
and value adding to it. For many businesses, the secreting of data and information will not offer competitive
advantage in the future. The value of data is in pooling and adding to it, just as Wikipedia has demonstrated.
Developing open platform infrastructure for data sharing is critical to opening up the opportunities to
benefit from the TIR. It will enable data and information to be mined, more rigorously verified, and used
in management information and manufacturing systems to improve productivity and sustainability
The TIR will bring significant changes to the way that we plan and develop infrastructure that provides
essential services such as electricity, energy, sanitation and water. The move towards renewable energy for
electricity generation will substantially reduce demand for and dependency on national power transmission
grids and networks. Driven by climate change, the beginnings of the transformation from centralised
generation electricity, to the establishment of local energy networks is already being seen. The next stage is
an electricity internet, where buying and selling of electrical power will be common in cities and regions,
with houses and buildings acting as energy storage centres. The recent release of the Tesla Powerwall
storage battery, enabling three days of home-based solar energy to be stored, is just the beginning of the
transition to more energy efficient cities and the building of localised energy internets.
For gas, water, wastewater and domestic and commercial waste, the TIR will require the planning and
development of new localised infrastructure. There is a growing trend towards communal and local sewage
treatment, and for wastewater to be used for landscape, industry and non-potable uses. Solid waste will
undergo similar transitions, as robotic sorting creates opportunities to use recyclable materials as materials
for construction, manufacturing and recreation purposes. Automated waste transfer sorting and processing
stations will become part of the essential infrastructure in cities and regions to reduce the level of waste
being returned to the biosphere.
Gas energy, from residential and commercial organic waste, offers significant opportunities to fuel central
heating and air conditioning systems while non-recyclable, but combustible products offer opportunities
for gasification to do the same. Planning for infrastructure utilities will require careful consideration to be
given to planning and the location of sites to optimise collection processing and redistribution of energy
and resource materials. In this respect, the application of industrial ecology to capture opportunities to
recover waste and energy will become an integral part of planning for energy, waste and water utilities in
Logistics will become a primary focus of the TIR. Logistics is concerned with optimising the location of
infrastructure and services to minimise time and transaction costs involved in the collection, assembly,
sorting and distribution of goods and services used by cities, regions and local communities, and their
economies. Intelligent transport, integrated modalities and risk management will change the face of current
logistics systems. Smart order and delivery systems applications for services such as Uber and Airbnb will
continue to grow in size and scale. Localised warehousing of goods, and common use warehouse and
storage facilities will become more apparent, together with the co-location of utility services that will reduce
costs and increase savings in construction, operations and maintenance. Self-navigating cars and transport
movement systems will decrease congestion, as well as increase public transport usage and reduce road
The TIR will drive the need for ever greater efficiencies in the logistics systems of infrastructure,
communications, labour, materials supply, resources and energy. Connectivity at the local, national and
international levels is expected to expand dramatically, placing ever increasing demands on collection, and
assembly distribution systems. Many of these will struggle to cope with growing demand. The TIR is likely
to require substantial investment in a broad range of infrastructure and services in logistical centres and
interchanges to keep up with demand from increasingly interconnected economies, markets, travel and
access to knowledge. An essential requirement of planning for logistics infrastructure will be the
identification of sites for specialised logistics facilities and systems; the demand for their use will not always
be constant. Optimising the use of such utilities will call for innovative land-use planning solutions, some
of which may involve greater subterranean or airspace developments.
The TIR will influence land-use planning at all levels. It offers opportunities for the decentralisation and
growth of secondary systems of cities. These may be secondary cities that form a polycentric urban
structure for metropolitan regions or smaller cities along an economic or trade development corridor,
defined by trunk rail and freeway systems. Figure 1 shows the concept associated with corridor economic
developments that focus on creating new growth node opportunities for regional towns and cities to
become more integrated into the structure of large metropolitan and mega-city economies.
Figure 1 Concept for Economic Trade Corridor Development
Source: (Roberts, 2014)
India and China are already moving to the development of economic corridor cities to capture some
advantages and value-adding opportunities created from transport routes linking dominant metropolitan
economies. Smaller secondary cities located within urban corridors have the potential to make use of
underutilized back-loading capacity to freight materials and to produce first stage value-added products
using advanced manufacturing technology at costs more favourable than producing these in one or other
city at the end of the corridor. The Delhi Mumbai development corridor is the largest planning project of
its kind. It aims to integrate more than 28 cities in six states into a network system of cities within the
corridor, to capture opportunities that will arise out of the TIR. Another region to do so is the North Calais
region of France (TIR Consulting Group, 2013), which has focused on the TIR as the driver to revitalise
economic activity in an important coal mining and industrial centre of Europe.
The TIR will call for significant changes in land-use planning at the city and local regions level. New
industries associated with the TIR will seek locations that optimise access to knowledge, human capital,
business services, social business spaces, education, training and recreation facilities. The TIR is manifesting
New Secondary City
Border Growth Pole
New Secondary City
Existing Sub national
and Port Secondary
Lateral Economic Development Corridors
Economic Trade Development Corridors
Rail/road Fast Transit System
Key Investment Strategies for
Corridor Secondary City Development
•Integrated regional trade corridor
governance and planning
•Integrated Open transport,
information and logistics systems
•Focus on Urban growth nodes,
Industry clusters and specialization
•Managed Peri-urban Corridor
•Secondary City Employment,
Education and Investment
•Affordable and sustainable housing
•City Revenue base underpinning
development and services delivery
•Maintenance and rehabilitation of
Corridor Environmental services
itself strongly in the re-emergence of the urban village. Many of these have a strong focus on research and
development, ITC, industrial design, health and education, cultural and creative industries. Integrated
mixed-use development employment districts, with low-rise energy-efficient buildings and technologies, are
emerging as a favoured destination for many TIR industries. In many cases, these employment districts are
developed at public transport nodes and interchanges where interactions and transactions between people
The TIR is likely to see the end of urban sprawl and suburban greenfield development. This is not liable
to eventuate in some of the most advanced economies for at least two decades until more efficient
mechanisms are put in place to free up grey-field land for redevelopment. The continued growth of high-
rise development and urban grey areas is inevitable and essential for sustainability. With cities in many parts
of the world expanding in area at almost double the rate of population growth, the unit cost of infrastructure
development, operations and maintenance will become prohibitively expensive. The trend towards
expanded urban villages can only be supported by increased urban density, which is likely to see significant
mixed-use, integrated and virtual reality development occurring in urban areas. In rural areas, compact
villages will provide opportunities for those seeking a more spacious environment to live and work. Smart
transport and logistics will reduce travel time between home and work, and technology will drive green
design, space and local amenity. Land-use planning will also be impacted by industry cluster development
and innovation precincts.
Architecture and Planning of the Built Environment
The TIR is already driving a significant revolution in architecture and design. New materials, new
technology, multi-functionality of internal spaces and improved energy efficiency are being driven by a
combination of economic efficiency and the technologies of the TIR. New materials, especially fibre
carbon, will enable architectural structures that were previously unthinkable and unbuildable to be created,
and open up new opportunities for the way urban spaces are designed and used. New technologies will
also enable the building of structures to make greater use of airspace and multilevel connectivity between
high-rise buildings, along with the construction of subterranean urban spaces, such as is occurring beneath
the CBD of Singapore.
The multi-functionality of buildings will also change, with many becoming energy stores harvesting solar
energy during the day for use during peak hours. Building facades with good solar aspect will also encourage
food production, as is already occurring in some Latin American cities, while rooftops will become the
private green spaces of the future, as is happening in Chicago and elsewhere. The TIR offers opportunities
to create multilevel and multi-utility buildings, places and spaces currently not conceived in many planning
schemes and zoning plans. Much of the architecture and new built environment of the TIR will occur in
larger cities. Smaller secondary and intermediary cities, to reduce energy and business transaction costs, are
likely to opt for greater consolidation and revitalization, through urban resilience schemes that incorporate
a wide range of new technologies.
The TIR will enable regions to maintain, reproduce and replicate styles and forms, but in a more modernist,
functional and energy efficient way. At the detailed design and development control level, planning
authorities need to ensure planning rules and regulations, assessment and approval processes allow for
greater openness and flexibility in design, using virtual reality as a way of engaging communities and building
and development projects that embrace wider community interests and considerations.
The first two industrial revolutions completely transformed societies and social attitudes. The Third
Industrial Revolution has the potential to do the same. The Internet and social media has changed the
nature of communications so that any individual has the potential to have a worldwide voice through media
like Twitter, Facebook and LinkedIn. The TIR is already removing the privilege of privacy, creating more
open and transparent governance systems, increasing accountability and making inroads into corruption
and nepotism at the highest levels of government and business. Access to metadata enables enterprises
and firms to develop a far deeper understanding of the psychographics and behavioural patterns of peoples
and society. It is already having a very significant effect on marketing, purchasing and ethical practices.
On the positive side, in many workplaces, the TIR is already resulting in more innovative design and creative
industries, flexible work environments, coupled with greater combinations of work and socialisation that
create social business spaces. Global corporations like Uber, Facebook, Airbnb, and Alibaba, etc., which
are internet based, are among the fastest collaborating companies in the world. Thousands of new
businesses, relying on access to metadata and collaborative associations, will emerge with the TIR. Many
of these have the potential to enable more creative solutions to address deep social and economic problems
that currently arise from poor access to knowledge, information, expertise and tools that can enable
individuals to develop new skills and competencies to engage in a more collaborative workforce and
On the negative side, the TIR has the potential to increase income and wealth disparities that are occurring
in all economies. There is a danger of creating a dual society: one of which is super knowledgeable and
technology literate, and the other which has to make a living as best they can when opportunities arise. The
former are the innovators, leaders and winners. The latter will be the new poor, who have the potential to
destabilise societies as wealth and income disparities increase. Authors like Piketty (2014 ) and Rooksby
(2006) warn of this divide and the possible consequences. It is essential that social planning for the TIR
addresses equity, inclusiveness, discrimination and unethical practices to ensure there is equal right of access
to knowledge, technology and opportunity, and that the technologically disadvantaged are not left
marginalised and impoverished. If the TIR were to exacerbate the economic and social divide, there is a
real danger of a counter-revolution where a technological and knowledge underclass will take it in their
hands to claim back what they believe is theirs.
One of the most important drivers for change within the Third Industrial Revolution is the shift towards
renewable energy and the management of climate change. Renewable energies will eventually replace fossil
fuels. Fossil fuels will continue to provide essential feedstock to agriculture, pharmaceuticals, manufactured
products and domestic heating, for which demand is expected to increase substantially as global income
levels rise. The TIR is a major factor driving climate adaptation and mitigation initiatives, as the world faces
the daunting situation of having to relocate millions of people from low-lying areas along coastlines and
river systems, if projected sea level rise cannot be reversed.
Many cities and regions are already planning, and/or have introduced, a wide range of measures to address
climate change adaptation and mitigation. However, for people living in many developing economies, these
measures fall far short of what is required to prevent major disaster resulting from human-induced climate
change. While a collective global effort is needed to reduce greenhouse gas (GHG) emissions and to slow
the effects of climate change, reduction in current levels of GHG to pre-Kyoto levels, is decades away.
The TIR will provide many interesting and exciting technologies and innovations to reduce emission levels
and waste. However, the challenge will be to develop the expertise, knowledge and systems required, and
affect behavioural changes in communities where there is the long-term practice of unsustainable energy
Climate change has given rise to a greater appreciation of green cities, buildings and interior design. As
discussed earlier, new materials developed from renewables will be stronger, more flexible and have a longer
lifecycle, leading to new possibilities in size and scale of eco-designed buildings, etc. Green cities are an
integral part of an emerging green economy, and the two need to be linked in both physical and
environmental planning processes.
The cost of environmental damage to the biosphere of unfettered emissions and waste is something that
future generations will have to wear until development practices become more sustainable. Globally,
ecological footprints (the space required to support one human being) are rising (Yang, 2014), as
consumption exceeds the replenishment of non-renewable resources. Greater attention to eco-banking
and green development credit to fund habitat restoration and resilience is necessary to restore the
environmental capital balance sheet and offset habitat lost. Environmental banking; however, presents
significant problems for planning (Jeucken, 2010). How to value environmental capital, especially its
intrinsic value, and incorporate this into planning policy is very difficult. Improved access to, and integration
of, environmental, economic and social metadata, using social ontology (Edum-Fotwe and Price, 2009),
has the potential to address this issue.
Governance and Planning
Institutional governance systems (WEF, 2012) are arrangements, codes and practices that societies use for
sharing responsibilities, powers and finance between a wider range of agencies and organizations at different
levels of civil society. Governments are the most formalised system of governance. Government
responsibilities are usually set out in Constitutions; they are responsible for making and upholding the rule
of law, public policies, plans, programs, laws and regulations. Civil society is made up of many levels of
governance, ranging from customs and conventions, religious practices, and etiquette with respect to
business, communications and practices. Without these formal, common and informal arrangements,
governance systems would cease to function. Industrial revolutions, however, have a very significant impact
on changing governance systems.
The Third Industrial Revolution has, and will continue to have, a significant impact on governance and
decision-making systems. Governance systems, through laws and regulations, have the capacity to slow,
and in some cases, change the direction of the revolution, especially through laws, international agreements
and political ideology. The TIR is data hungry, and governance systems are increasingly information and
data hungry. Decisions that governments, societies and businesses make about development, social change,
consumption and markets will be driven increasingly by access to more data and information.
The TIR, through the development of information and computing technologies, is driving a quest for better
modelling, scenario testing and risk management of critical decisions that affect the physical, social,
economic development and management of ecological systems. Decision-making processes of
government, especially planning, will become increasingly reliant on new TIR innovations and
developments in the ITC sector. Subsequently planning analysis, using multiple integrated sets of data
linked to GIS systems, will become an increasingly important tool in governance decision-making processes
The TIR is driving a more collaborative approach to business. The trend towards collaboration is a way
for businesses to reduce externality and other transaction costs. By collaborating on marketing, purchasing,
common-user storage, knowledge, collective energy purchasing, pooled labour and infrastructure, business
is finding new ways to reduce transaction costs and become more competitive. As business moves to a
more collaborative competitive model of operation, the TIR is beginning to drive a new model of
collaborative governance as a way of reducing transaction costs (Ansell and Gash, 2008, O'Flynn and
Wanna, 2008, Roberts and Addison, 2014). New forms of collaborative governance arrangements and
partnerships are emerging through public-public, public-private and public-community partnership
agreements. These new models of collaborative governance are blurring the traditional lines of
responsibility between public, private and community in response to development, finance, decision-
making, operations and maintenance of traditional public functions.
Social media, such as Facebook and Twitter, are becoming a large part of the new governance of cities, as
authorities test ideas or policies. As a result e-governance is emerging as the new form of collaborative
governance in cities and regions, replacing traditional closed-door decision-making. E- governance is
expanding into areas of community consultation and e-plebiscites, as communities demand a greater say in
local government decision-making. The use of e-plebiscites is a new form of governance which, potentially,
adds risks to the certainty of planning and the approval of contentious development projects. Local
development plans will need to be crafted much more rigorously and carefully. The separation of plan-
making and plan administration will need to be clearly defined to avoid uncertainty in development planning
Devolution, decentralisation and delegation of the role of government, have a significant impact on the
decision-making, institutional cultures and operations, civic engagement, information sharing and trust in
governance. New hybrid administrative models of governance are emerging which cut across the historical,
political boundaries of sectors, government departments, geographic units. Some of these are becoming
embedded into local governance processes as a result of international agreements on environment and
trade. Multi-media models of governance and polling are also increasingly influencing or cutting across the
traditional dichotomies of governance. Poll-driven politics will become an increasing part of governance
resulting from the TIR.
To manage future rapid change, governance systems must change from closed to consultative, and from
cooperative to collaborative (resource and information sharing). Greater devolution of government, urban
services, and maintenance and revenue management will take place. Further local decision-making, policy
development and budgeting will occur with a greater emphasis on integrated budgeting, planning and
financing for spatial and sector agencies.
How Cities and Regions can Plan for the Third Industrial Revolution
It is difficult to plan for a revolution that is just beginning to unfold. There is no clear indication of the
direction, or form that the TIR will take, or the impact it will have on the spatial, economic, social, natural,
and governance environments. However, the impacts of the TIR will be very significant, and the changes
that result will be much more rapid than was experienced in the two previous industrial revolutions. The
TIR adds two dimensions to planning that were not associated with earlier revolutions: the TIR is virtual,
and it is instantaneous. It will bring about a change in the way communities and regions are planned. The
planning processes of the future will become more concerned with anticipating and managing changes to
the way we live, build, and consume. The forces behind these changes, largely, will be beyond the control
of governments and communities; and this raises important questions about how cities and regions should
go about glocalising planning, to retain local values, customs and industries, but at the same time engage in
a wider global marketplace of culture, information, ideas, investment and trade.
The TIR will affect every sector of national, regional and city planning. Some regions and cities will be
winners; others will be losers. It is hard to predict the winners or losers, but the reactions to the changes
by political, business, academic and community leaders, together with local attitudes, will have a very
significant impact on the outcome. It is essential that cities and regions that may become lesser beneficiaries
of the TIR recognise the need for transition. Building a strategy to take advantage of the opportunities and
manage the risks of the TIR will be a challenge for all cities and regions.
One of the key challenges will be to manage effectively the effects of possible depopulation. Depopulation
does not mean benefits from the TIR cannot be realised. The TIR creates opportunities to fill knowledge,
professional, production and service gaps by accessing virtual substitute services and 3D printing more
locally. It has the potential to enable poorer cities and regions to access services, technology and human
capital not previously available. It will start to level the playing field which has become distinctively lopsided
and biased in favour of metropolitan regions, subject to one proviso: Poorer cities and regions need the
same access to quality internet services as prosperous cities.
Strategies that government, institutions, business and communities to consider for managing the transition
and wave of the TIR are outlined below.
Economies of 21st Century cities and regions will become more knowledge and information dependent;
their future development will depend on the ability to embrace and capitalise on digital technology. The
demand for ITC services is likely to double every four years (International Trade Centre, 2004). Building
the ITC infrastructure to respond to the TIR will be critical for knowledge building as is building access to
the global knowledge networks that are essential to facilitating the lifelong learning required by local
communities to ensure their skills and knowledge remain relevant to the rapid changes taking place. This
access to lifelong learning applies to all areas of society – from remote, indigenous and disadvantaged
regional communities to communities of interest associated with the professions and labour organizations.
Failing to invest in knowledge infrastructure, new skills and competencies at city and regional levels will
leave communities in a position of perpetual catch-up. No city or region can afford to risk this. Cities and
regions must plan and build information and knowledge economies – as their standards of living, quality of
life and opportunities for sustainable employment are critically dependent on it.
An Integrated Planning System
Integrated planning will be vital to success in the TIR, yet few countries have developed fully integrated
strategic and development planning systems. New Zealand is one country that has. Planning for public
financing, budgeting, asset replacement and life-cycle replacement, especially of technology, will be
essential. The silo structures that commonly exist in metropolitan and regional public institutions are a
significant impediment to integrated planning. A culture of change management will be necessary to deal
with the silos and create a more open culture of sharing and cooperation, as the TIR will be highly
dependent on open platforms of data and information sharing, acceptance of smart systems, creative design
solutions and innovative finance to pay for local, regional and state-wide infrastructure and essential services
The integration of planning systems, put in place in the North Calais region of France (TIR Consulting
Group, 2013), provides a model of integrated planning that cities and regions can learn from in order to
capture opportunities created by the TIR. The Nord-Pas de Calais Third Industrial Revolution Master
Plan is unlike any Master plan you will see. The overall goal is to make the regional economy one of the
most resource-efficient, productive and sustainable in the world. It is moving fast towards becoming one
of the first regions in the world to produce and share its own locally generated renewable energy at near
zero marginal cost on an Energy Internet. The impact on productivity and the economy of near-zero
marginal cost energy will be every bit as significant as the production and dissemination of information on
the communications Internet at near-zero marginal cost (TIR Consulting Group, 2013). The plan is
interesting in that it recognises the need for integrated planning at the local, global and cyberspace level.
Integrating the spatial and aspatial aspects of land use, as more people in the region work in the virtual is a
very difficult challenge for integrated planning.
Focus on Cleaner Energy
Cities and regions can and should plan for the transition to a localised low carbon economies using
renewable energy and hydrogen. Whilst fossilized fuels will still be used for many decades, the change to
renewable energy to power and heat cities, combined with hydrogen and biofuels for industry and domestic
use, is already well under way. The concerns about global warming, air pollution in cities and the finiteness
of non-renewable resources are driving the agenda on cleaner and cheaper energy. The re-engineering and
retrofitting of economies, buildings, plant, equipment and technologies to low or zero carbon emissions
will require governments and organizations to plan for the physical transformation and conversion, costs
these changes into log-term asset replacement, and to prepare education and information programs for
local communities and business to make the change.
Concurrent with the change in the energy use to renewables or low carbon emissions, governments and
utility agencies should begin planning for local energy networks, and building accommodating storage
systems. Building which new types of batteries and capacitors to store energy generated by zero or low
carbon emission means will become the norm in all residential, commercial, residential or multi-purpose
building. For large complexes, such as hospital and universities, co-generation of electricity will become
the norm, rather than the exception, with surplus power generated into local energy grids. Along with
these changes, will come the need for utility agencies to change their business models in the way produce,
purchase and distribute power in the future. This will change will extend to local area co-production and
distribute for air-conditioning and heating and water.
Developing Circular Economies
The circular economy is a generic term for an industrial economy that is, by design or intention, restorative,
and in which material flows are of two types: biological nutrients which are designed to re-enter the
biosphere safely; and technical nutrients which are designed to circulate at high quality without entering the
biosphere (Benton et al., 2015, Rivkin, 2011). This is often referred to as the green economy. The term
encompasses more than the production and consumption of goods and services; it includes a shift from
fossil fuels to the use of renewable energy, and the role of diversity as a characteristic of resilient and
productive systems. It includes the application of industrial ecology, which is a process of recovering
materials for use as energy or product development. It includes discussion of the role of money and finance
as part of the wider debate. Some of its pioneers have called for a revamp of economic performance
Many cities and regions of the world are moving towards green economies. Phasing out fossil fuels for
energy use does not mean regional economies that have a heavy reliance on the export of these products
will necessary fall into decline. Fossil fuels will continue to be the principal feedstock for the petrochemical,
fertiliser, new materials and pharmaceutical industries. However, the TIR will result in an increase in
localised and household energy production with localised electricity network generation systems.
The move to localised power production is already occurring in some parts of the world. The Australian
Capital Territory Government has a 90% renewable energy target by 2020, much of which will be
generated locally from household tariff feed-in, a significant investment in a 200 MW solar farm, and wind
and hydro power (Benson, 2014). Another good example of electricity decentralization and deployment of
microgrids has occurred in New Jersey, USA, in the aftermath of Cyclone Sandy (National Electrical
Manufacturers Association, 2102). This growth of microgrids will lead many cities towards greater energy
self-sufficiency with less dependence on national power grids.
Similarly, other waste products such as domestic, household, and water waste will be recycled and utilised
for alternative energy or resource purposes. Cities and regions need to recognise that the circular economy
will create many opportunities for new types of sustainable jobs. The transition from fossil fuel to
renewable energy and resources will become core to the planning of most cities and regions in the future.
Value Adding to Core Business
Most cities and regions are net importers of goods, commodities and consumable items. In terms of
competitiveness, cities and regions enjoy a competitive advantage only in the agriculture, natural resources
and tourism sectors. The Australian Local Government Association’s State of the Regions Report points to a
continuing decline in productivity and performance of most state and regional manufacturing and services,
which has led to the import of the goods no longer produced. Import substitution has, generally, been
frowned upon by economists, and opportunities for this have been overlooked in many cities and regions.
Careful examination of industry supply chains, however, shows that the progressive development of 3D
printing will create many opportunities for import replacement, especially in the pharmaceutical, spare parts
and construction industry products. An essential element of economic planning will be to identify
opportunities where industries can value-add to existing supply chains, and fill the opportunities for import
substitution (Hall and Chuck-A-Sang, 2013:4), as the marginal costs of production resulting from 3D
printing make it cheaper to produce and distribute goods locally than to import them.
Strategic infrastructure is infrastructure used to support the development and expansion of economies
(WEF & BCG, 2013). All cities and communities require basic infrastructure services to maintain standards
of living, although some parts of them may be deficient and require substantial augmentation to ensure
equity of services. The building of strategic infrastructure needs to be aligned with future core business
activities with which cities and regions are likely to be engaged to support exports, and create import
substitution and endogenous growth through creative and new technology industries. It is essential that
cities and regions analyse carefully what their competitive advantage may be in value-adding to base
economy activities, and new activities that, through incentives and other measures, could be encouraged to
develop and grow.
Creating Collaborative Advantage
Historically, trade and development theory is focused on the need for regions and industries to develop a
competitive advantage. There are many measures of regional competitiveness, where business and local
governments seek to improve systems and develop specialised infrastructure to attract investment and
develop trade in new industries. Focus on competitive advantage in the 20th Century was on the
achievement of economies of scale. Significant improvements in transportation, technology, knowledge
systems and materials have led to a substantial reduction in marginal costs of production of goods and
services. However, it is still extremely difficult for many cities and regions to develop critical mass
production, infrastructure and labour required to overcome barriers to entry into markets for local
manufacturing and service firms.
One way for business and governments to overcome this barrier is to collaborate on stretching and
leveraging resources and assets between firms, governments, and utility agencies. Collaboration through
industry or city to city partnerships can help to minimise transaction costs for production and service
industries. One such partnership between Chicago and Mexico City (Liu and Donahue, 2013) is already
yielding significant trade benefit. There is a need for cities and regions to work more collaboratively in
competition, rather than try to compete without adequate resources, knowledge skills and the expertise to
The development of urban corridors, trade and economic development corridors are ways in which cities
and regions can benefit from the TIR. Trade and economic development corridors can be used to foster
the development of urban growth poles with small but specialised growth industries. These can be
encouraged to collaborate with other industries along the corridor to produce value-added products that
can be sold at competitive prices in domestic and international markets.
Integrated logistics systems
A significant impediment to trade and investment in cities and regions is the poor quality of intermodal
logistics systems and common-user warehouse and distribution centres. The London Gateway Logistics
Park is an excellent example of this types of facility (WLN, 2015). The need for just-in-time delivery of
materials or export orders is critical to successful business development in an increasingly globalised
economy. Logistics systems need to be integrated, not just in terms of physical infrastructure, but
timeliness, information and knowledge, quality and intelligence. Intelligent logistics systems, including
common-user systems for freight and public transport such as localised Uber, will become an increasingly
important mechanism for maximising the utility capacity of the infrastructure and logistics services needed
to support operation and management of local economies. Planning of the infrastructure, services and
support systems for these must become an essential component of land-use, economic and human resource
development planning to capture opportunities created by the TIR.
Becoming Smarter and More Creative
Cities and communities are becoming smarter and more creative with the advent of digital technologies.
However, there is a need for that smartness and creativity to be directed into the creation of better-managed
cities and regions, new types of industries and more efficient production, logistics and distribution systems.
Becoming smarter requires the development of teaching communities, which are increasingly dependent
on TIR networks and technologies, about what it means to become smarter. The main infrastructure of
smarter learning will be developed around learning management systems, collaborative learning, multimedia
content delivery systems (such as YouTube) and learning analytics and prediction systems which will be
used to develop predictive, game and scenario simulation, and anticipative learning (Yang, 2013). These
systems are part of the new vocabulary of the TIR that will be built into smart and creative learning
Greater use of ITC, robotics and nanotechnologies are inevitable, not just to improve economic
productivity, but for improvements in public health and well-being, time management, creativity and
innovation. However, learning communities are concerned not just with education, but with the
development of social capital, learning networks, virtual communities of interest and knowledge gathering
systems. Local governments can make a significant contribution to support these areas. However, the
reskilling of planners and development managers is necessary, so they have greater foresight about TIR
societal learning and creativity needs than they do at present.
Last, but by no means least, governments at all levels can begin changing governance models to become
more collaborative. Adversarial political systems of government, the perpetuation of silos and the
unwillingness of governments and public agencies to share information and collaborate on reducing the
cost of government is a significant constraint to extracting benefits form the TIR. Collaborative
governance, where government, business, institutions and communities are more collaborative, working
together on building open platform access to knowledge, information and shared use of common resources
and utilities is a way transaction costs across all spectra of society in cities and regions can be reduced
substantially. Introducing collaborative governance in fields of Research and Development, knowledge
sharing, infrastructure, resource and human capacity management will not only make cities and regions
more efficient, but also more competitive.
The TIR is highly dependent of collaboration to drive change, innovation and technological advancement.
However, the enabling environment needed to support the above, is highly reliant on governments, in
particular, following the move of the private sector towards greater collaboration, especially in governance
The Third Industrial Revolution will be a challenge to the planning and development professions,
governments, business and communities. Many of the claims about the impact of the TIR, and the rate of
change it will have on communities and the global economy may be over-optimistic. However, a constant
stream of new technology inventions and innovations and new start-up businesses are announced daily.
The way some of these inventions will change and impact on the way we live, work and enjoy ourselves in
the future is unpredictable. The TIR is gathering momentum, but its pace will be determined, largely, by
the willingness of economic and political systems and societal attitudes to accept technological change.
In the current economic climate, governments are focused on the creation of jobs, encouraging investment
into local industries, and the stability of macroeconomic conditions to minimise unemployment. The TIR
is seen by many as a threat to future employment and local business. However, with real wages falling,
wealth disparities widening, and communities ageing, the need to think beyond the immediate to the future
of jobs and work is paramount if nations, states and cities are to return to stability and sustainable economic
growth. The TIR is a threat to employment; however, a variation of Jevons Principle may well apply in
shifting to acceptance of new technologies, renewable energy and resources creating many new jobs and
industries which have not been thought of yet (Sorrell, 2009).
The TIR offers a way forward to address the loss of momentum in global and local economies. For
developed economies, the TIR provides an opportunity to recreate or restore local wealth, investment and
jobs lost during the structural economic reforms of the 1980s and 90s. It also creates opportunities to
reduce energy and environmental costs associated with the unsustainable use of fossilised fuels. It has the
potential to create more circular local and regional economies, encourage greater self-sufficiency, especially
with the use of 3D printing and, with the aid of better communications, result in more knowledgeable,
informed, and information aware communities. Some of the strategies suggested above are a first step in
building a foundation to develop a deeper understanding and level of preparedness to embrace, but also
address, the challenges that the TIR will bring cities and regions.
Several cities and regions are moving towards adopting or implementing TIR strategies, Master Plans and
Road Maps. The North Calais Region, Utrecht (Rifkin, 2013), Rome (OJR, 2009) and Nottingham
(Nottingham Post, 2012) have embraced the TIR and planning for its development. Although there is no
uniformity of approach to planning for the TIR, incumbent to all strategies is the focus on renewable
energy, energy storage, the circular economy, and planning for greater localization of production systems
driven by 3D printing, robotics and knowledge networks. These are crucial pillars that underpin planning
strategies for the TIR.
The TIR will bring with it negatives, as all industrial revolutions do. Some of the most significant challenges
are likely to be experienced in the developing and newly industrialised economies. Cities in these countries
have benefited greatly from the off-shoring of manufacturing and jobs from developed economies.
Reshoring of manufacturing jobs to developed economies will undermine the competitive advantage
currently enjoyed by newly industrialised economies. As computer and robotics based manufacturing,
transaction costs, smarter technologies and 3D printing become lower, the marginal cost of production, for
some products, will reduce to almost zero. Industries are already beginning to re-shore production closer
to markets and consumers. A study by the Boston Consulting Group (2013) found that 37% of large
manufacturers were planning to re-shore manufacturing operations or were actively considering it. This
does not bode well for significant low-cost labour manufacturing industries in Asia.
Not all industries will experience re-shoring. Large scale industries such as automobiles, metal production
and heavy engineering are likely to remain offshore as they will continue to enjoy economies of scale
associated with agglomeration. However, the wider use of new materials such as carbon fibre and
composites, may become a game changer as these become cheaper and offer new opportunities innovative
for architecture and urban design solutions, the design of places and spaces in cities. For this reason, it is
critical that emerging and mature industrialised countries begin the transition to more service and advanced
value-added manufacturing economies while, at the same time, bolstering the development of endogenous
growth and consumption within the domestic economy.
A significant challenge for many developed economies is that the TIR will significantly reduce job
opportunities for the unskilled. Businesses will shed labour where capital/labour ratio costs make it more
favourable to mechanise. The societal risks associated with a large pool of surplus, low-skilled labour will
place significant stress on social support budgets. The need to up-skill the low-skilled must become a focus
of work and employment policy. Opportunities exist to create jobs in urban food production,
environmental management, personal and domestic services; however, many of these are likely to be under
contracting arrangements, which will require basic business training. How to create jobs for those who
may be disadvantaged through poor skills is one of the most significant challenges of the TIR facing
governments at all levels.
The changes brought about by the TIR need to be anticipated and managed by government, business and
communities. Transition plans will need to be put in place to ensure that, as far as possible, the benefits to
societies will be equitable, and the risks shared. There is a danger that cities and regions that fail to act will
miss out on the benefits of the TIR. The TIR is an energy and digitally driven revolution. Provided
governments ensure more efficient energy and high-level access to Internet services is available to all
communities and households, the benefits of the TIR will be positive.
The TIR must be better presented and understood at all levels of society; it is not just the technologically
informed who should know about it. However, the TIR needs to be taken and accepted with caution. Not
everything about the TIR will be positive. The acceptance of new products and technologies must be
considered in the context of ethical standards and principles of equity, social justice and humanity. Human
value systems must be applied to the introduction of all new technologies and products. Cities and regions
must begin planning for the Third Industrial Revolution now if they want to be a successful player in it.
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