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Digitalisation in manufacturing

The expansion of the digital economy – the convergence of fixed, mobile and broadcast networks, the increasing connectivity of devices and objects, and the changes in social interactions and personal relationships that these developments bring about – is reshaping the manufacturing and services sectors in Emerging Asia. This process of digitalisation has brought about rapid change and presents further opportunities and challenges for the region. In Emerging Asia, the increased use of ICT in manufacturing and services is affecting business activities, trade and productivity. It has led to the expansion of existing industries and the emergence of new ones in the region, such as electronics manufacturing, software development and ICT in Viet Nam; business and knowledge process outsourcing in the Philippines; and mobile payments in China. ICT services embodied in manufacturing and services account for a considerable share of the value of exports from some of the region. Interestingly, it is primarily domestic digital added value that is being embodied in services exports. There is also evidence that improvements in aggregate and firm-level productivity are associated with the use of new technologies in many countries. Despite the progress made, access to the digital economy is uneven across and within Emerging Asian countries. For example, rates of Internet use, a prerequisite for participation in most aspects of the digital economy, varies between 81% of the population in Singapore and 22% in Lao PDR. Policy makers in the region seeking to foster the continued responsible development of digitalisation should consider addressing the issue of trade restrictions, particularly those affecting trade in services; barriers to investment in the digital economy; the development and reform of physical and regulatory infrastructure; and ways of addressing labour market and social challenges. As digitalisation is influenced by a range of factors, policy strategies will need to be adapted to local needs. Continued regional co-operation is also needed in addressing shared and cross-border challenges in the digital economy.