According to a recent report from Moody's Investors Service, emerging economies like Vietnam will face significant risks from the increasing application of automation and robotics in manufacturing.
Accordingly, the countries most affected include Vietnam, Hungary, the Czech Republic, Slovakia, Malaysia, and Thailand. These are all countries where manufacturing accounts for a large proportion of GDP, thanks to the advantage of lower production costs compared to developed countries. However, as importing countries from these nations, such as the US and Germany, shift to using more robots and reducing production costs, emerging economies will lose their competitive advantage.
The number of robots globally is constantly increasing. Photo: Bloomberg
Currently, the United States, China, Germany, Japan, and South Korea together account for 75% of global spending on automation technology, according to Moody's calculations.
The report's author, analyst Samar Maziad, wrote: "As manufacturing becomes increasingly integrated across countries, one country's adoption of automation technology will impact others. How a country is affected will depend on changes in private sector investment strategies, public policies, and labor market structures."
The proportion of manufactured goods exports to GDP of several emerging economies. Photo: Bloomberg
In Asia, from 2013 to 2015, exports of high-tech manufactured goods accounted for approximately 30% of Thailand's GDP, 35% of Malaysia's, and 31% of Vietnam's. A significant portion of these goods were destined for China, a country that has made automation a central focus of its industrial policy and is one of the most active investors in robotics. Many in China are planning to increase robot usage to 150 robots per 10.000 workers by 2020, according to Bloomberg data.
The number of industrial robots manufactured in China (in red) has increased dramatically in recent years. Photo: Bloomberg
Maziad added: “To adapt to automation, emerging economies need to find ways to integrate their economies into production chains that increasingly utilize robots, whether as suppliers or competitors. In other words, technologically ready economies will secure their role even as labor-intensive production methods become obsolete.”
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