According to one estimate, the IoT industry is projected to have an impact of $11 billion by 2025, with as many as 75 billion IoT devices in consumer hands all over the world. The same study argues that ‘longer run predictions of the IoT contribution based on a growth-accounting framework suggest a potential global annual average contribution to growth of 0.99% per annum (pa) in 2018–2030, approximately $849 billion pa of world GDP in 2018 prices’.
These are extraordinary figures – and yet they could well be realistic. IoT-enabled devices are that perfect combination of being, in many cases, cost-effective and simple to manufacturer and deploy, yet having a substantial impact.
So let’s take a closer look at what that impact looks like. How can the IoT directly boost economies? To do that, we first need to get closer to the specific functions which IoT deployments enable, and explore how they translate into economic growth.
Beginning, then, with the functions that IoT enables, and three emerge over and over. Yes, there are more specialist and unusual functions of the IoT, but most can be categorised like this.
Remote monitoring can mean anything from monitoring the performance and condition of points throughout a vast utilities grid, agricultural area or an entire city – or the performance and condition of a medical device implanted in a patient’s body. From the micro to the macro, remote monitoring has myriad applications, which in turn make devices perform more effectively, generate new intelligence for future developments, and cut down on the resource required to carry out manual monitoring. All of these factors can drive growth.
Preventative maintenance blends remote monitoring with the practical task of keeping devices and equipment in optimal condition, by proactively identifying essential maintenance tasks. In turn, this keeps equipment in peak condition for longer, and reduces incidents which affect operations – both have a positive impact on bottom-line growth.
Asset tracking involves remote monitoring of equipment and fleets, enabling a raft of benefits from a more dynamic and responsive allocation of resources, to reduction of theft and accidents. Once again, this helps businesses both develop new revenue streams, and reduce incidents which can damage growth.
Next, we need to consider the different ways of measuring economic impact. As this article suggests, the IoT has a substantive positive effect across four major categories of economic impact: GDP growth; growth distribution; labour markets; and regulation, rent-seeking and competition.
In terms of GDPR growth, perhaps the most obvious measure of economic impact, the IoT is absolutely integral to digital transformation, which in turn can power the growth of companies – and in turn entire economies – in a variety of different ways. It can help them operate more efficiently, develop new products and services, and foster new, productive partnerships. According to Frontier Economics, in 30 years, a 10% increase in machine-to-machine interactions could boost the United States’ GDPR by $2.3 trillion.
Growth distribution has been said to be a more helpful measure of economic impact because it allows for a better comparison of different sizes of economy. As the same IoT For All article underlines, around 40% of the value of IoT adoption has been predicted to take place in developing economies, so whilst it is a technology skewed towards benefitting more advanced economies, this is by no means a foregone conclusion. IoT adoption offers positive economic impact across a broad range of economies.
Labour markets are boosted by IoT in myriad different ways. As an emerging technology it is creating band-new jobs in everything from design and development to installation and maintenance. It is important to underline that IoT deployments do often involving automating manual tasks and therefore can potentially lead to job losses also but these are offset by the drive to developing more tech-focused positions.
And finally, when it comes to regulation, rent-seeking and competition, there are masses of ways in which IoT deployments will drive the development of new regulation and increase competition – which in turn can boost productivity.
The economic impact of the IoT is only just beginning to be understood – what we know for sure is that it is broad, dynamic and potentially world-changing.