Chronicle of a revolution foretold – in Hungary Industry 4.0 technologies and manufacturing subsidiaries

The paper discusses the impact of industry 4.0 technologies on the value chain position of production. Another purpose is to investigate the impact of these technologies on a sample of ten manufacturing subsidiaries in Hungary. We find that the implementation of industry 4.0 technologies has neither led to the reshoring of production nor of activities that support production. Conversely, local production capacities have been upgraded: advanced manufacturing technologies deployed and integrated with existing systems. The new technologies have had a complex impact on skills: both de-skilling effects and skill-biased implications can be observed. Drawing on the empirical findings and on the reviewed literature, two predictions are developed regarding the implications of industry 4.0 technologies. First, the share of value chain activities considered operative (non-core) will increase, and the number of activities global value chain orchestrators consider as strategic (core-competence) will decrease. Second, differences in the value chain position (or rather, in the position along the smile curve) of individual operative activities will become smaller: the bottom of the smile curve will be broader and flatter.*

Journal of Economic Literature (JEL) code: O33, O14, F23.