Thursday, 28 November 2013

Industry in the new global development agenda

The Millennium Development Goals (MDGs) have been the global benchmark for development progress since their adoption in 2000, but are scheduled to expire in 2015. Right now, the international development community is considering what happens next. 

So far, preparations have included an array of thematic, national and regional consultations bringing the UN system together with a broad range of development partners; the report of a high-level panel of eminent persons appointed by the UN Secretary-General; intergovernmental discussions on sustainable development arising out of the Rio+20 conference; and countless initiatives from the grassroots up. All of these are aimed at informing the multilateral negotiations kicking off at the UN General Assembly in the fall 2014. 

It is no secret that the MDGs, despite their undoubted successes, suffered from shortcomings. In particular, they had little to say about the means by which they should be achieved. As an organization dedicated to achieving prosperity through inclusive and sustainable industrial development, it was especially apparent to the UN Industrial Development Organization (UNIDO) that this aspect was sadly lacking. 

It is ironic that, while in the 1990s industrial development fell out of fashion in the so-called “North” due to the hike in the services sector and the prevailing gospel of Washington Consensus policies, at the very same time industrialization was slashing poverty rates in East and South Asia. In fact, it is largely through industry that MDG Goal 1 – to halve extreme poverty and hunger – will be met at the global level. 

However, things have changed immensely since the turn of the millennium. Preparations for the post-2015 agenda have given the sense that the new goals should be rooted in the three dimensions of sustainable development – economic, social and environmental. Meanwhile, industrial policy is firmly back on the agenda in countries around the world and at all stages of development. This stems from the realization that manufacturing and entrepreneurship are the key drivers to create the growth rates, jobs and economic structures needed to eradicate poverty and provide sustainable livelihoods for all. 

For many developing countries, accelerating the transformation of their productive structures is increasingly an integral part of their strategies for achieving inclusive and sustainable development. This is supported by the fact that almost one-third of manufacturing value added is now created in developing countries, up from under 20% about 15 years ago. In fact, the real question about industrial policy in the years beyond 2015 is not whether but how it should be practiced to best strengthen the global approach to development. 

While concrete measures depend very much on country-specific challenges, endowments, and levels of integration in the global economic system, we can see three broad streams of action for countries at different stages of development.  For least-developed countries (LDCs), industrial development offers the most promising opportunity for adding value to their natural resource endowments or agricultural produce, hence bringing about the structural transformation that lies at the heart of inclusive and sustainable development.  For middle-income countries (MICs), faced with the prospect of being caught in the “middle-income trap” as their cost structures rise but their capacity to produce higher-value products remains constrained, appropriate policy options need to support the upgrading of their manufacturing sectors to maintain their international competitiveness. Meanwhile, where “developed” countries are concerned, the lasting legacy of the financial crisis highlights the structural problems hindering their recovery, including the dangers of de-industrialization, which accentuates the relevance and pertinence of industrial policymaking today. 

And how should this fit with the post-2015 goals? First, it is clear that the best of the MDGs should be retained after 2015. Eliminating extreme poverty should still be the overarching aim. But it is also clear that the new agenda has to better promote a comprehensive approach to sustainable development, providing cross-sectoral solutions to allow for goals to be met simultaneously without one coming at the expense of another. 

In this context, fostering inclusive and sustainable industrial development not only promises to effectively contribute to shock-resilient economies and flourishing societies, but also presents a welcome meeting point between the aid agenda of traditional donors, the priorities of emerging development partners and the current development concerns of recipient countries, thus laying the foundation to realize a truly global partnership for sustained prosperity for all. 

The issue of sustainable industrialization is currently being considered in the Rio+20-mandated Open Working Group on Sustainable Development Goals, the main intergovernmental body discussing the post-2015 framework in New York. A few days later, UNIDO will host its General Conference in Lima, Peru – the last to be held before the new global goals are finalized. Both events will be important opportunities for confirming the centrality of industry to development. 

Let’s hope that development partners take the opportunity to address a glaring deficiency of the MDGs and bring industrial development back where it belongs.


By Ulla Heher, Post-2015 Strategic Planning Coordinator at UNIDO

Posted November 2013 (this feature article was first published in UNIDO’s quarterly discussion magazine, Making It: Industry for Development)


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