Service Sectors Role for Economic Development at Local and National Level

Introduction

Production patterns and practices can be studied to understand the workings of the economy. Because it is the production systems that fully reveal the powers of humanity. The most advanced production system during the industrial revolution was mechanized production, which turned into industrial mass production. In our time, it is the digitized knowledge economy. At the core of the digitized knowledge economy is a starting point about the flexibility and adaptability of the workforce, because many of the high-demand jobs today didn’t exist two decades ago, so investing in education would be an important step towards achieving that flexibility if we started investing in education as soon as possible. Private sector companies should cooperate with universities on the issues that industries need, and while universities renew themselves with programs to meet the demands, they should be units where knowledge itself is produced, as well as educating knowledgeable and flexible staff for the economy. Technology is hidden inside the product, as technology develops, it emerges as ←11 | 12→higher quality and differentiated products. The demand for knowledge workers is high in the markets where knowledge economies are moving forward. The supply of programs to train these workers is too small to compare with this demand. In this process, flexible and well-educated individuals are needed. Companies should train workers to be versatile and knowledgeable about every stage of production. For this purpose, joint studies should be carried out with schools and universities that train technical staff (Stiglitz 1999).

One of the ways to make all parts of the economy capable of producing in technologies that lead the knowledge economy in the forms of production stuck in the old technology is to ensure that more people have access to productive resources and opportunities. All educational institutions should be able to respond to this situation that the system has transformed. Of course, this is not a problem that can be solved overnight. It will take time, so act as early as possible. The decentralized market economy, in which different ownership and contracting regimes will experimentally coexist, can no longer adhere to the old version of itself. In the new production systems called Industry 4.0, technological infrastructures that will enable the widespread use of information by digitalization should be created and deepened and expanded in order to increase the productivity of every unit in the economy (Unger 2019).

Starting production with information-based and digital technologies requires the transformation of traditional elements such as production, advertising, marketing and distribution, which have been customary for about 250 years. At this point, the internet, with the opportunities it offers us, facilitates the creation of both individual, economic, commercial and social relations on a new platform, that is, on a digital platform. Since this network can be established much faster and more widely than before, it provides the opportunity to reach all parts of the world in a very short time. For example, Facebook has a social network with connections to 3 billion people. Once the network is established, information can spread between them cheaply and almost instantly. Thus, technology forms the basis of establishing economic and social relations and making transactions between them much more fluent, easier and in a short time than before. In addition, the possibility of unfair attitudes and behaviors that hinder competition in the money economy weakens in digital environments (Brunnermeier, James et al., 2019).

At the level reached in the field of artificial intelligence, machines seem to be candidates to disable the human factor in production and in many parts of the economy, with their equipment that can collect, use and analyze information about almost everything in the digital environment, and even make decisions at the last stage (Ruggles & Holtshouse, 1999; Ruggles, 2009). As can be seen ←12 | 13→in Fig. 1.1, we can understand from the increasing number of manufacturing companies producing robots that the world is going digital in the service sector, as in almost all areas of life. The United States is leading in this regard. The number of companies producing robots in the USA, which was around 150 in 2017, is expected to increase by one and a half times in the near future. In this sector, a considerable number of countries lead after the USA, followed by France, Germany and Japan.

The rapidly expanding use of robots, especially in industries that are traditionally labor-dependent, such as the service industry, and that are sensitive to minimum wages, is fast becoming a necessary de facto proposition for robotics companies. Service industries include cleaning services, security and safety services, delivery services, logistics and warehouse operations, and manufacturing operations. It is clear that the workforce that is expected to be in demand the most in the information economy, besides robots, will be for people who are expert workforce, computer and internet literate, equipped with the ability to process data, develop algorithms and simulation models, and innovate on production processes and systems. Therefore, digitized knowledge is the catalyst and connective tissue in modern economies (Holtshouse 2010).

In the light of all these, the aim of this study is to examine the trends in the service sector within the scope of industry 4.0. In this direction, Industry 4.0 will be discussed in the continuing chapter. Topics such as Web 3 and digitalization, which are the main topics that Industry 4.0 feeds on, will also be examined in ←13 | 14→the following chapters. After the service sector is examined within the scope of Industry 4.0, finally comments and thoughts on the subject will be given.