Ambassador of Hungary to the OECD, Paris, France

Three magical transformations First magical transformation

First magical transformation Turning industrial products into digital services ownership industrial product efficiency of production/manufacturing company corporate employment replaced by access service increasing market efficiency platform freelance self-employment Like music and videos, should we download cars as well? traditional economy car manufacturers (Audi, Toyota, Ford) taxi companies car rental services (Sixt, Avis, Europcar) ride-hailing service Uber, Lyft platform economy ( access instead of ownership ) car sharing carpooling private rental Zipcar, Zimride, RelayRides (Turo), autolib, BlaBlaCar, Drivy, Car2Go Carpooling.com Tamyca

First magical transformation We assume page A has pages T1...Tn which point to it (i.e., are citations). The parameter d is a damping factor which can be set between 0 and 1. We usually set d to 0.85. There are more details about d in the next section. Also C(A) is defined as the number of links going out of page A. The PageRank of a page A is given as follows: PR(A) = (1-d) + d (PR(T1)/C(T1) +... + PR(Tn)/C(Tn)) Google s ad revenue, 2001-2015 (USD billion) Note that the PageRanks form a probability distribution over web pages, so the sum of all web pages PageRanks will be one. Sergey Brin Lawrence Page (1998): The Anatomy of a Large-Scale Hypertextual Web Search Engine. Computer Science Department, Stanford University, Stanford, Cal., http://infolab.stanford.edu/pub/papers/google.pdf Statista (2016): Google's ad revenue from 2001 to 2015 (in billion U.S. dollars). https://www.statista.com/statistics/266249/advertisingrevenue-of-google/

Coniunge et impera (connect and conquer) First magical transformation One of us suggested performing the following experiment to prove that the population of the Earth is closer together now than they have ever been before. We should select any person from the 1.5 billion inhabitants of the Earth - anyone, anywhere at all. He bet us that, using no more than five individuals, one of whom is a personal acquaintance, he could contact the selected individual using nothing except the network of personal acquaintances. For example, "Look, you know Mr. X.Y., please ask him to contact his friend Mr. Q.Z., whom he knows, and so forth." Karinthy Frigyes (1929):Chain-Links

Coniunge et impera (connect and conquer) First magical transformation Digitalisation drastically lowers the barriers to market entry, both for companies and, more importantly, for individuals.

Three magical transformations First magical transformation Second magical transformation

Second magical transformations Age of globalisation Age of technology Adidas: more than 300 Adidas: Speedfactory, 500 million pairs of sports shoes thousand pairs of shoes by every year robots, under the control of 160 experts Robots, 3D Printing, Internet of Things, Artificial Intelligence, Cloud Computing, Augmented Reality, etc., and their combined application, the Industry 4.0 have one thing in common: they promise that they could reduce the complexity of product and production processes.

Three magical transformations First magical transformation Third magical transformation Second magical transformation

Third magical transformation The age of the generals is over. Yossi Vardi Previously, innovations were driven by the generals: General Motors, General Electric or even General Eisenhower. Nowadays, innovation is more DEMOCRATIC, you don t need nothing but a good idea, a laptop and Internet connection.

First magical transformation: What comes after the lost battle?

First magical transformation: What comes after the lost battle? During the first battle the digital platforms were driven by private and personal data. BUT How are we prepared for the coming battle that is based on public and industrial data for enhancing public services and industrial production (administration, health, education, etc.)?

Second magical transformation: future of jobs Policies for the labour market impact of robotisation and automation Race between robots and humans Statism Possible policies Free-Market Taxing robots universal basic income basic income with incentives Ownership of robots collective (state, cooperative society, small community) individual Strengthening humans comparative advantages state training programmes, education reforms individual training and improving skills

Second magical transformation: future of global value chains Age of globalisation Adidas: more than 300 million pairs of sports shoes every year Age of technology Adidas: Speedfactory, 500 thousand pairs of shoes by robots, under the control of 160 experts

Second magical transformation: future of global value chains Age of globalisation Adidas: more than 300 million pairs of sports shoes every year Production: China, Vietnam, Indonesia Age of technology Adidas: Speedfactory, 500 thousand pairs of shoes by robots, under the control of 160 experts Production: Ansbach (Bavaria) When I started at Adidas in 1987, the process of closing factories in Germany and moving them to China was just beginning. Now, it s coming back. I find it almost uncanny how things have come full circle. Herbert Hainer, CEO of Adidas

Second magical transformation: future of global value chains The growth rate of world trade compared to the growth rate of GDP of the world 1986-2015 (periods on average) Our trade enigma Trade restrictions Rising wages in emerging countries Servisitation Changing nature of global value chains (shorter and more digitalised) Trade has gone digital Problems of measurement (digital products with marginal cost near to zero) Catherine L. Mann (2017): Short-term momentum: Will it be sustained? OECD Interim Economic Outlook release of 20 September 2017, OECD, Paris, Slideshare, p. 9, www.oecd.org/economy/economicoutlook.htm

Third magical transformation is about innovation ecosystem The age of the generals is over. Yossi Vardi Previously, innovations were driven by the generals: General Motors, General Electric or even General Eisenhower. Nowadays, innovation is more DEMOCRATIC, you don t need nothing but a good idea, a laptop and Internet connection. Key condition: ECOSYSTEM of partners (universities, R D institutes, large industrial manufacturers, start-ups, incubators, accelerators, venture capital, investment banks, digital service providers, etc.)

Three magical transformations and their challenges After the lost battle new battlefield: platforms in public services Can-Be-Won battle new innovation ecosystem Must-Win battle new pattern of global division of labour and trade

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