Digital Transformation and Society 5.0: Türkiye’s Current Situation and Adaptation Process

In today’s world, digital transformation has gone beyond being a mere technology trend and has become a process that deeply affects social and economic dynamics. Digital transformation is the restructuring of the ways of doing business, processes, culture and customer experience of an organisation or society with digital technologies. Digital transformation, which is realised through the implementation of technological innovations and innovative solutions, has become one of the cornerstones of being present in the business world today and achieving a competitive position. Digital transformation can be defined as “the cultural, organisational and operational change of an organisation, industry or ecosystem through the smart integration of digital technologies, processes and competencies at all levels and functions in a phased and strategic manner”. (i-SCOOP, 2020). Embracing this transformation is therefore critical to the future sustainability of organisations.

Countries have been developing various strategies to accelerate digital transformation processes and adopt technology-based innovations for many years. The COVID-19 pandemic has accelerated this transformation process. Physical distancing requirements and logistical constraints have forced businesses, educational institutions and healthcare services to quickly transition to digital platforms. While many companies have adopted remote working practices, the education system has also had to step into online learning. With the rise of e-commerce, digital solutions have become not just an alternative but a vital necessity. Most organisations have started to take steps rapidly in this regard by including the medium-term digitalisation plan among their short-term strategies.

As a result, COVID-19 has not only accelerated the digital transformation, but also emphasised the importance of social inclusion by increasing the reliance on digital technologies in all segments of society. This is an important contribution to the vision of Society 5.0, as a society empowered by digitalisation has the potential to create a more sustainable and integrated structure by improving the quality of life of individuals. From smart cities to digital healthcare, from innovative solutions in education to IoT applications in agriculture and artificial intelligence (AI) technologies, digital transformation enables more efficient use of resources and raises everyone’s living standards. Rapid developments in AI technologies help optimise processes such as data analytics and automation, strengthening decision-making mechanisms. In this way, it is expected to provide a framework that responds to the needs of individuals and solves social problems by creating a participatory and people-oriented ecosystem accessible to all segments of society. These opportunities provided by artificial intelligence, together with the digital transformation triggered by COVID-19, have led to a critical step towards the realisation of the concept of Society 5.0.

1. What is Society 5.0?

Human history is divided into five different social periods from the first human being to the present day. Society 1.0 (hunter-gatherer society) defines hunter-gatherer human groups living in harmony with nature. Society 2.0 (agricultural society) represents human groups in which agricultural activities come to the fore, social organisations increase and the process of nation building begins. Society 3.0 (industrial society) is a stage that encourages industrialisation with the industrial revolution and makes mass production possible, while Society 4.0 (information society) is defined as a system in which virtual assets combine through information networks and provide added value.

According to another classification, Industry 1.0 represents the transition from manual labour to mechanisation with the use of steam power in the 18th century, while Industry 2.0 initiated large-scale manufacturing with electricity and mass production techniques. Industry 3.0 enabled the digitalisation of production processes with computer and automation technologies. Finally, Industry 4.0 developed smart factories and automation systems with the integration of innovations such as the Internet of Things (IoT), artificial intelligence (AI) and big data. Society 5.0 aims to provide sustainable and inclusive solutions by combining these technological changes with a human-centred approach.

Japan has introduced the concept of Society 5.0 as the next stage of the information society. This stage builds on Society 4.0 and represents a society in which technology serves for the benefit of humanity and adopts a human-oriented lifestyle. For this reason, it is called “super smart society”. One of the most striking innovations of Society 5.0 is the full integration of the physical and cyber domains. Objects that previously operated independently will now be able to interact by connecting to systems through the cyber environment. Thanks to this integration, separate systems in various sectors will be brought together through automation, thus creating a more efficient structure. Society 5.0 will encourage the effective use of advanced technologies such as the Internet of Things (IoT), artificial intelligence (AI) and big data to process all the data of individuals, resulting in a smarter and connected living environment at the societal and individual level (Keidanren, 2018).

The concept of Society 5.0, pioneered by Japan, offers an innovative perspective on how technology can improve human life. While Industry 4.0 emphasises digitalisation and automation, Society 5.0 aims to go beyond these technologies to improve people’s quality of life, increase social welfare and solve social problems by focusing on different verticals. To this end, it promotes the balanced development of the economy, social life and the environment by enabling a deeper co-operation between man and machine through technology integration

2.Current Situation in Türkiye

Technology has a critical importance not only at the level of specific sectors but also at national scales. As one of the main factors determining the level of development and progress of countries, technological advances stand out as a dynamic component that shapes the economic structure and competitiveness levels of nations. Especially for emerging economies, technology is of great importance as one of the driving forces of economic growth and development.

While technological developments play a decisive role in the development process of nations, they are also seen as a fundamental element in increasing the living standards and general welfare levels of countries. The use of advanced technologies enables to increase productivity, encourage innovation and utilise existing resources more efficiently. In addition, the global competitiveness of nations is in direct interaction with qualities such as human capital, innovation capacity and technology development level. Therefore, countries’ education systems, R&D investments and innovation policies are of critical importance for them to achieve a stronger position in global markets. Thus, technology is a fundamental element not only in economic development but also in social developments and increasing social welfare.

Türkiye has made significant progress in its digitalisation journey in recent years. In 2012, the “Internet Access Rate in Households” was 47.2 per cent. While it increased to 95.5 per cent in 2023, “Internet Usage Rate of Individuals” increased from 47.4 per cent to 87.1 per cent in the same period (TurkStat, 2023c). These values show that Türkiye is close to the OECD (91%) and European Union (93%) averages and even exceeds these averages in some areas. (European Commission, 2023b). For example, in 2021, the proportion of the population in Türkiye with access to at least 4G connectivity service was 96.8 per cent, very close to the OECD average (98.4 per cent). (OECD, 2023b).

The expansion of e-government services is another indicator of Türkiye’s success in digitalisation. According to the “eGovernment Benchmark 2023” report of the European Commission, Türkiye has reached a maturity level above the European Union average (70 points) with 81 points out of 100. (European Comission, 2023a). This achievement reflects Türkiye’s commitment to providing digital public services and its rapid development in this area. Indeed, Türkiye’s maturity score increased by 10 points from 71 in 2022 to 81 in one year. (European Comission, 2023a). In addition, the fact that the rate of those using e-government services reached 73.9% in 2023 shows that citizens’ trust in digital services and the rate of adoption of these services are increasing. (TurkStat, 2023c).

However, despite these positive developments, Türkiye still has a long way to go in its digitalisation journey. In 2023, 71.7 per cent of enterprises in Türkiye used fixed broadband connections with speeds above 30 Mbps. (TurkStat, 2023b). The OECD average of this rate is 82.2 per cent. (OECD, 2023b). Moreover, the ratio of R&D expenditures made by enterprises in knowledge industries to gross domestic product (GDP), regardless of the source of financing, was 0.283% in Türkiye in 2020, while the OECD average was 0.433%. (OECD, 2023b). These data show that Türkiye needs to develop policies to increase digital infrastructure investments and innovation capacity of enterprises.

The number of patent applications in the field of Information Processing Technologies (ICT) per million inhabitants in Türkiye is 2.75 (TÜBİSAD, 2022). Japan, the country with the highest number of patent applications per million inhabitants (399.9), has approximately 17 times the number of patent applications per capita in Türkiye. (TÜBİSAD, 2022). Increasing this number is important for the realisation of Society 5.0.

Türkiye also has room for improvement in adopting new technologies. In 2023, the rate of enterprises in Türkiye that reported using any of the artificial intelligence technologies was 5.5 per cent, while this rate was 8 per cent in the European Union average (OECD, 2023b). Penetration of machine-to-machine (M2M) communications, i.e. the number of M2M SIM cards in mobile networks per 100 inhabitants, which includes sensors for smart cities, agriculture and manufacturing, is 9.5 in Türkiye compared to an OECD average of 42.6 (OECD, 2023b). These data show that Türkiye needs to develop policies to popularise the use of next generation technologies such as artificial intelligence and M2M and increase investments in these areas.

However, it should be noted that these industries cannot be created overnight and the need for trained human resources is critical. Indeed, Türkiye’s low rate of adults with problem-solving skills in technology-rich environments, at 7.8 per cent, and inadequate digital skills and limited access to fast broadband, as revealed by the OECD, prevent Turkish firms from adopting the most advanced digital technologies. (OECD, 2023a).

Another obstacle is inequality in access to opportunities in Türkiye. Türkiye ranks first in Europe in terms of income inequality according to the Gini coefficient, which is used to measure the distribution of national income among individuals. (Euronews, 2024). Gender inequality in access to the internet is also among the problems that Türkiye needs to solve. (TurkStat, 2023c).

Finally, another issue that should be emphasised is that according to the Turkish Statistical Institute (TurkStat), Türkiye’s total R&D expenditure will reach 198 billion 670 million TL in 2022, with an increase of 96 billion 932 million Turkish Liras (TL) compared to the previous year. (TurkStat, 2023a). It is noteworthy that this expenditure has increased 10-fold in the last 21 years, from 1.2 billion USD in 2002 to 12 billion USD in 2022. Moreover, the share of R&D expenditure in the Gross Domestic Product (GDP) has been determined as 1.32 per cent. (TurkStat, 2023a). However, considering Türkiye’s young and dynamic population and its great economic potential, these figures are considered to be insufficient. Compared to developed countries, the ratio of R&D expenditure to GDP is much higher; for example, in OECD countries this ratio is around 2.5-3 per cent on average (World Bank Group, 2024).

Although Türkiye has taken important steps in its digitalisation journey, there are of course areas for improvement in order to make this transformation inclusive and sustainable. In particular, strengthening the digital infrastructure of enterprises, increasing R&D expenditures, encouraging the adoption of new technologies such as artificial intelligence and M2M, and eliminating gender inequality in digitalisation are critical for Türkiye to achieve its Society 5.0 goals and sustainable development. In addition, aligning the education system with digital transformation, creating programmes to improve individuals’ digital competencies and increasing lifelong learning opportunities are among the requirements for all segments of society to be prepared for a technology-oriented future. To this end, innovative approaches applied in education play an important role in contributing to Türkiye’s social and economic development and catching up with the Society 5.0 trend.

3.Türkiye’s Adaptation Process to Society 5.0: Challenges and Strategies

Türkiye has made significant progress in its digitalisation journey in recent years. When we examine the general situation under the previous heading, it is clearly seen that various policies and programmes have been developed to support digitalisation in Türkiye, investments have been made in information and communication technologies, and the integration of digital solutions in many sectors such as education, health, transportation and industry has gained momentum. In the coming period, it is important for the harmonisation process to develop and implement short and medium-term policies in order to increase Türkiye’s competitiveness in the digital economy and to prepare the ground for the emergence of innovative business models.

So, despite the progress Türkiye has made in digitalisation, what kind of a foundation should it create in the process of adapting to the Society 5.0 vision? This foundation should definitely be based on a strong human resource, advanced technological infrastructure, innovation and entrepreneurship ecosystem, public-private sector cooperation and sustainability principles. Türkiye’s young and dynamic population can be the driving force of the Society 5.0 transformation when equipped with the right education and digital skills. Changes in the demographic structure and the gradual decrease in the young population make it critical to unlock the potential of individuals.

Türkiye’s Industry 4.0 performance is far behind the European Union countries in terms of various criteria such as enterprise resource planning (ERP) software, customer relationship management (CRM) software, the number of companies using mobile connection, and the number of companies using paid cloud software. (Ünlü & Atik, 2018).

Figure 1: Industry 4.0 Performance of the EU and Türkiye (Ünlü & Atik, 2018).

The technological and digital infrastructure offered by Industry 4.0 constitutes the basic building block for realising the human-centred and sustainable approaches of society 5.0. Countries that fail to realise this transformation will lag behind in areas such as digital skills, data management and innovation, making it difficult to achieve social, economic and environmental sustainability goals. There is no doubt that it would be beneficial to question the extent to which it is possible to prepare both companies and society for a comprehensive transformation such as Society 5.0 under current conditions and to make preparations in this context. Especially the resistance to technological innovations in certain segments of society, infrastructure deficiencies and inadequacies in the education system are among the obstacles to this transformation.

Figure 2: Ratio of Enterprises’ Awareness of Technologies Related to Industry 4.0 (Republic of Turkey Ministry of Science, Industry and Technology, 2019)

When the rates are examined, it is revealed that a significant portion of the relevant organisations either do not have sufficient information about the technologies in question or do not fully understand the importance of these technologies for their businesses. (Republic of Turkey Ministry of Science, Industry and Technology, 2019). This situation is actually an indicator of the scarcity of those who intend to invest in technology. So, can Society 5.0 become widespread in a place where technology awareness is not at a high level? Is only technology an obstacle, or are there other problems?

The process of implementation and dissemination of Society 5.0 requires significant and radical transformations. The main obstacles to be overcome in this transformation process are as follows (Calpa & Bütüner, 2022):

• Obstacles in the legal system
• Technological barriers
• Qualified human resource barrier
• Sociopolitical barriers
• Social resistance

These factors emphasise the importance of addressing social issues with the technological transformation to be carried out in the industrial field. In this process, legal transformation and transparent management understanding also play an important role.

The transition to Society 5.0 involves significant opportunities and challenges for Türkiye, and several main strategies need to be identified for the successful progress of this process. Firstly, it is important to strengthen the digital infrastructure and expand high-speed internet access. Especially in developing countries, making the necessary digital infrastructure investments may take time and require resources. In this context, the implementation of the determined strategies with the necessary budget will enable rapid progress in the harmonisation process. In addition, the private sector should be encouraged to increase its investments in this field with government support.

To overcome these challenges and ensure a successful transition to Society 5.0, Türkiye needs to pursue a comprehensive strategy. Modernisation of the education system, development of digital infrastructure and raising social awareness should form the cornerstones of this strategy. This transition will be possible by restructuring the education system to provide students with 21st century skills, updating the curriculum, improving teacher training and adopting student-centred learning approaches.

The transition to Society 5.0 also requires a significant cultural change among individuals and organisations. This change may be met with resistance in various segments of society. It may be difficult for people to transition from traditional ways of working and living to digital and smart systems. With a holistic perspective, sociocultural projects with the theme of adaptation to technology should be developed and the participation of all segments of society in this transformation should be encouraged.

One of the most critical factors to facilitate the transition to Society 5.0 is investments in research and development (R&D). These investments play a critical role in the development of innovative technologies and sustainable solutions. Increasing Türkiye’s R&D capacity is an important determinant for the development of both the private and public sectors. In particular, R&D activities to be carried out in areas such as artificial intelligence, Internet of Things (IoT), big data analytics, cyber security, biotechnology and energy efficiency will contribute significantly to increasing the country’s competitiveness in the international arena. In order to develop digital infrastructure, investments in technologies such as 5G, fibre optic networks and cloud computing, as well as policies to increase access to this infrastructure, need to be implemented. These investments and incentives will support Türkiye’s technology-based innovation, accelerate economic development and contribute to the social transformation process.

The fact that new technologies are not covered by legal regulations and the necessary legal framework is not established will cause some difficulties in the transition process and problems in the harmonisation process. In particular, critical issues such as data security and confidentiality are important obstacles in this process. It is essential for the harmonisation process to adapt the existing legal regulations to the requirements of the age, to strengthen data protection laws and to adopt a transparent management approach. This approach will certainly facilitate the acceptance and integration of technology by contributing to the building of a sense of trust in society.

This paper emphasises that Society 5.0 is of great importance in the face of today’s rapid technological developments and changing socio-economic conditions. By adopting a human-centred approach, this model also aims to improve the quality of life and ensure integration with the Sustainable Development Goals. As for Türkiye, according to statistics, it is observed that there are important opportunities to overcome the difficulties faced in the process of transition to Society 5.0, despite the lateness of Industry 4.0. In particular, adopting technological solutions such as artificial intelligence, internet of things and big data has the potential to increase Türkiye’s international competitiveness and support economic growth.

As mentioned above, Society 5.0 corresponds with the Sustainable Development Goals, enabling concrete steps towards social justice, economic equality and environmental sustainability. However, this transformation process is not only limited to technological innovation; it also encompasses social elements such as social perceptions, education systems and labour dynamics. “Entrepreneurship” plays a critical role in this transformation, enabling the emergence of new business models and innovative solutions. In addition, supporting technology-based initiatives will increase economic diversity and strengthen the capacity to produce solutions to social problems. In the following articles, entrepreneurship and Sustainable Development Goals will be analysed under the title of Society 5.0.

Of course, it should not be forgotten that Türkiye’s transition to Society 5.0 is complex and challenging. Therefore, in order to realise an effective transformation, it is essential to adopt and implement top-down strategies. This approach means establishing policies led by the public sector, implementing them in coordination with all stakeholders and creating a sustainable ecosystem. In this way, Türkiye can both achieve the goals of Society 5.0 and gain a stronger and more competitive position in terms of economic, social and environmental sustainability. All these strategies will serve the purpose of increasing the welfare of the society and laying solid foundations for the future by creating a circular economy.

With the approach that neither too much nor too little regulation is good, enabling the development of local technologies in Türkiye, as well as a structure that supports the use of international technologies/products in the Turkish market will increase the interest in technology and entrepreneurship. This will pave the way for both the strengthening of the domestic technology ecosystem and the emergence of innovative initiatives. Appropriate and balanced regulations should encourage local entrepreneurs to develop their own technological solutions, while minimising the bureaucratic obstacles they will face in this process. In this way, entrepreneurs can act more freely and courageously in developing innovative products and services. Furthermore, the acceptance and adoption of internationally competitive global technologies will help to create new business models in the Turkish market and help local firms to adapt to these global standards. Entrepreneurship is one of the cornerstones of Society 5.0. Innovative initiatives not only support economic growth by developing technology-oriented solutions, but also make significant contributions to achieving sustainable development goals. In this process, entrepreneurs’ creativity and innovative approaches have the potential to transform both social and economic dynamics in society. Therefore, Türkiye needs to strengthen its entrepreneurship ecosystem, make the necessary investments and encourage sustainable business models in order to achieve the vision of Society 5.0.

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