Manufacturing key to job generation, inclusive and sustainable industrial development, says new UNIDO report
LIMA, 5 December 2013 – Manufacturing, with more than half a billion jobs globally, is crucial for employment generation, and for inclusive and sustainable industrial development, according to the latest Industrial Development Report of the United Nations Industrial Development Organization (UNIDO), presented in Lima today.
UNIDO’s flagship publication was launched during the Organization’s fifteenth session General Conference hosted this year by the Government of Peru, which brought together some 1,000 participants from 172 UNIDO Member States.
UNIDO’s Industrial Development Report 2013 makes a solid case by correctly framing the debate on jobs in the world today. Manufacturing remains an important employer, accounting for around 470 million jobs worldwide in 2009 – or around 16 percent of the world’s workforce of 2.9 billion. The report also offers a detailed and largely path-breaking account of how structural change has taken place over the last 40 years.
“One of the key findings of this report is that countries need to move from lower tech to higher tech sectors, from lower value-added to higher value-added sectors and from lower productivity to higher productivity sectors,” said LI Yong, the Director General of UNIDO.
“The structural change analysis performed for this report indicates that while conditions may vary significantly across time and space and technological change may still bring large surprises, the trends of the past are very likely to stretch into the future. There is much to learn from understanding history and what drove it. And there is much to learn by developing countries from countries slightly ahead of them – and far.”
The report also highlights how, nearly 40 years after Member States of UNIDO issued the Lima Declaration at the Second General Conference of the Organization in 1975, in which they expressed their firm conviction of industry’s role as a dynamic instrument of growth essential to the rapid economic and social development of the developing countries, particularly the least developed countries, the underlying principles have stood the test of time: industrialization remains an indispensable route to development. “Industry increases productivity and generates income, reducing poverty and providing opportunities for social inclusion. As countries further develop their industries, the motivation to increase value added drives a greater application of science, technology and innovation, encourages more investment in skills and education and provides the resources to meet broader development outcomes,” said Li.
As the global community embarks on formulating a new development agenda to build on the foundation laid by the Millennium Development Goals, the report underscores the need for integrating inclusive and sustainable industrial development into this new agenda. This calls for an expansion of productive capacities and a growth of responsible value addition to encourage increased job creation and income generation, while respecting planetary boundaries and ensuring an efficient use of scarce resources. It is only through inclusive and sustainable industrial development that countries around the world, be they industrialized or developing, will be able to achieve the socially equitable and ecologically sustainable economic growth that generates employment and income, and creates the wealth to achieve wider developmental goals for health, education and human rights.
Since the eruption of the financial crisis in 2008, much of the public debate has focused, after decades of silence, on development economics: how to sustain growth, create lasting jobs, generate incomes and enable the accumulation of wealth, thus eradicating the scourge of poverty and preventing social polarization and fragmentation. The rising number of unemployed people in industrialized economies, the political unrest in Northern Africa, the increasingly vocal demands from voters in emerging economies and the discussion towards a new international agenda for development, all point in the same direction –at the central role that productive activities and jobs have in the life of individuals and countries.
For developing countries aiming to maintain growth while sustaining job creation, manufacturing offers an opportunity not only to rebalance the economy towards higher value-added sectors but also to provide a relatively wide employment base with higher labour productivity. The transition from agriculture to services, especially for low-income countries, offers the opportunity to achieve only the first objective, not the second.
Structural transformation of the economy lies at the heart of this process, together with conscious and considered measures to encourage economic growth, enhanced productivity and the development of technology, innovation, infrastructure and trade. The report provides ample guidance on how to initiate and sustain such a process – by exploring the key drivers of structural change and providing practical policy options for governments of countries at different levels of development.
“The report underlines the critical need for international cooperation to achieve the structural change and economic growth required to combat poverty, and reaffirm the commitment of UNIDO to fulfil its mandate in support of this effort,” said Director General Li.
For more information, please contact:
Director, UNIDO Research Branch
Key messages of the Industrial Development Report 2013:
- Manufacturing employment is rising in developing countries and falling in developed countries, but the declines in developed countries are mitigated by the growth of manufacturing-related services.
- Least developed countries have immense potential for industrialization in food and beverages (agroindustry), and textiles and garments, with good prospects for sustained employment generation and higher productivity.
- Middle-income countries can benefit from entering the basic and fabricated metals industries, which offer a range of products necessary for investment and are demanded by the more advanced industries and which are facing rapidly growing international demand.
- Developed countries have great possibilities for investing and innovating in high-tech industries and for sustaining jobs in these industries’ related services.
- Industrialization improves not only the number of jobs but also their quality in all countries.
- Manufacturing concentrates in cities at early stages of development and “suburbanizes” at later stages. Cities thus remain crucial for industrialization in developing countries.
- Costs, as well as technology and demand, remain critical drivers of structural change and industrial development.
- Matching the type of skills to the structure of industry as incomes grow can drive industrial structural change.
- Product innovation results in structural transformation and generates employment through the creation of new business opportunities.
- Resource efficiency, emerging as a major driver of structural change and industrial development, will be even more important in the future.
- The impact of the drivers of structural change on sustaining employment depends on the industrial policies adopted.
- Achieving sustained employment generation requires industrial policies to focus on the structural transformation of the economy.
- The state can promote industrial policy either as a regulator, financier, producer or consumer. It should oversee close coordination with other policies as they can undermine the objectives of industrial policy if they are misaligned.
- For industrial policy to be effective, the policymaking process is as important as the policy content.
- International cooperation in the areas of labour standards, investment and sustainable economic development targets after 2015 is key to ensure that industrialization generates much needed high-quality jobs.